Complete Auto Transit, Inc. v. Brady

Complete Auto Transit, Inc. v. Brady

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"Complete Auto Transit, Inc. v. Brady", 430 U.S. 274 (1977), is a case decided by the United States Supreme Court regarding the Commerce Clause and sales tax.

Background

Complete Auto was an auto-transporter, involved in moving General Motors vehicles from the railhead at Jackson, Mississippi to dealerships in Mississippi.

The Mississippi State Tax Commission levied a tax upon Complete Auto, "for the privilege of engaging or continuing in business or doing business"cite web|url=http://laws.findlaw.com/us/430/274.html|title=COMPLETE AUTO TRANSIT, INC. v. BRADY, 430 U.S. 274 (1977) |publisher=FindLaw|accessdate=2008-10-01] in the state of Mississippi. The Court refers to the tax as a "sales tax", however, it was a privilege tax, based on the gross receipts of Complete Auto.

Complete Auto argues

Complete Auto appealed the constitutionality of tax, stating that they were part of an interstate operation, involved in transporting vehicles from the factories in Michigan, to the dealers in Mississippi.cite web|url=http://supreme.justia.com/us/430/274/case.html|title=Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977)|publisher= Justia|accessdate=2008-10-01] According to Complete Auto, taxation on interstate operations not only discourages interstate commerce, but is a violation of the Commerce Clause.

upreme Court ruling

The Supreme Court ruled in favor of Mississippi. The ruling issued that Complete Auto established a "four-prong" test for constitutionality of a tax under the Commerce Clause:cite web|url=http://www.revenue.state.az.us/Audit/nexus.asp|title=Arizona Department of Revenue NEXUS UNIT |publisher=Arizona Department of Revenue |accessdate=2008-10-01]

*Substantial nexus - connection between a state and a potential taxpayer clear enough impose a tax.
*Nondiscrimination - interstate and intrastate taxes should favor one over the other.
*Fair apportionment - fairly divided between states.cite web|url=http://www.sutherland.com/file_upload/LegalAlertTexasFranchiseTaxThrowbackApportionmentProvisionAugust32005.pdf|title=Texas Franchise Tax Throwback Apportionment Provision Violates the Commerce Clause of the United States Constitution|publisher=Sutherland Asbill & Brennan LLP|accessdate=2008-10-01]
*Fair relationship to services provided by the state - company enjoys services such as police protection while in a state.

Even though Complete Auto asserted they were a part of an interstate operation, the Court agreed with Mississippi that while operating within the state, they were afforded services, such as police protection, that are provided for by taxation.

References

External links

*ussc|430|274|1977 Full text of opinion at findlaw.com


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