The opinion
Steinert, J.
(dissenting) — I do not agree with the majority upon what is said to be the principal question in the case. Having conceded (a) that the respondent cannot, as a matter of law, retire from its intrastate business, (b) that it is impracticable, as a matter of fact, to so retire without also retiring from its interstate business, and (c) that the intrastate, or local,
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business is conducted at a loss which is taken care of by the receipts from the interstate business, the majority arrives at a conclusion which I think is incorrect and untenable.
The authorities cited in the prevailing opinion establish beyond question, as I view it, that the state may not impose a tax, no matter what its nature or variety may be, that has the effect of burdening or interfering with interstate commerce.
In
Bowman v. Continental Oil Co.,
256 U. S. 642 , 41 S. Ct. 606 , the court said:
“No doubt the state might impose a license tax upon the distribution and sale of gasoline in domestic commerce if it did not make its payment a condition of carrying on interstate or foreign commerce. But the state has not done this by any act of legislation. Its executive and administrative officials have disavowed a purpose to exact payment of the license tax for the privilege of carrying on interstate commerce. But the difficulty is that, since plaintiff, so far as appears, necessarily conducts its interstate and domestic commerce in gasoline indiscriminately at the same stations and by the same agencies, the license tax cannot be enforced at all without interfering with interstate commerce unless it be enforced otherwise than as prescribed by the statute — that is to say, without authority of law. Hence, it cannot be enforced at all.”
In
East Ohio Gas Co. v. Tax Commission,
283 U. S. 465 , 51 S. Ct. 499 , the court said:
“And, while a State may require payment of an occupation tax by one engaged in both intrastate and interstate commerce, the exaction in order to be valid must be imposed solely on account of the intrastate business without enhancement because of the interstate’ business done, and it must appear that one engaged exclusively in interstate business would not be subject to the imposition and that the taxpayer could discontinue the intrastate business without withdrawing also from the interstate business.”
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In
Cooney v. Mountain States Tel. & Tel. Co.,
294 U. S. 384 , 55 8. Ct. Rep. 477, 482, the court, through Chief Justice Hughes, said:
“Where the tax is exacted from one doing both an interstate and intrastate business, it must appear that it is imposed solely on account of the latter; that the amount exacted is not increased because of the interstate business done; that one engaged exclusively in interstate commerce would not be subject to the tax; and that the one who is taxed could discontinue the intrastate business without also withdrawing from the interstate business.
Sprout v. South Bend, Ind., 277
U. S. 163, 171, 48 S. Ct. 502 , 72 L. Ed. 833 , 62 A. L. R. 45;
East Ohio Gas Co. v. Tax Commission,
283 U. S. 465, 470 , 51 S. Ct. 499 , 75 L. Ed. 1171 .”
The other cases cited in the prevailing opinion are either directly or argumentatively to the same effect. Under these cases, one of the essentials to the validity of a tax is that the one who is taxed could discontinue its intrastate business without also withdrawing from its interstate business.
The majority seek to make a distinction between a tax imposed as a license to do business or one upon the instrumentalities used, and a tax on gross income. They concede that a license tax to do business or a tax upon the instrumentality inheres in the interstate as well as in the intrastate business, but they hold that, “where the tax is upon the gross income, the income from the interstate business may be segregated from the intrastate and be held valid.” The distinction is without substance when the result in a given instance is to burden or interfere with interstate commerce. The Federal government having created a field within its exclusive regulatory jurisdiction, the state may not invade it, nor by any act, direct or indirect, interfere with it.
We have before us four cases, including the instant one, involving the same question. The other three are
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State v. Great Northern R. Co., post
p. 698,
Pacific Tel. & Tel. Co. v. State Tax Commission, post
p. 697, and
Home Tel. & Tel. Co. v. State Tax Commission, post
p. 698. The questions being identical in all four, the same barrier exists in each against the state’s right to tax.
That the action of the state will interfere with interstate commerce is, to me, very apparent. If the railroad companies or the telephone companies should be permitted or be compelled to withdraw from their intrastate business, how many trains would continue to run, and how many telephones would remain in place, in this state, merely for the purpose of enabling their users to do an interstate business? Not only would all local service be discontinued, but, with the exception, possibly, of one or two large cities, the people of the state would be without interstate service as well.
If, as a matter of law, the companies may not withdraw from intrastate business, or if, as a matter of fact, it is wholly impracticable for them to do so, then such intrastate business must continue to be operated at the expense of their interstate business. If one state be permitted to impose burdens upon interstate commerce through the medium of taxation, then all states in which the companies operate may do likewise, and the accumulated burdens thus imposed would in the end result in complete strangulation of all their interstate commerce. The sum and substance of it all is that the tax imposed on intrastate business must be borne by the proceeds from interstate business. It is, therefore, a burden upon, and interferes with, interstate commerce, and for that reason is invalid.
I therefore dissent.