# Petition — GLASER v. SALORIO (Nos. 83-596, 83-353)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1983

## Text

83-596 ws | fame]

I THE | CT 6 1993
Supreme Court of the United ae :
Octoser Term, 1983 ivaens on

SIDNEY GLASER, Director of the Division of Taxation,
Department of the Treasury of the State of New Jersey,

Cross Petitioner,
v.

JOHN SALORIO, ROBERT COE and
JOLN D. McGARR, JR.,

Cross Respondents.

On Cross Petition for a Writ of Certiorari to the
Supreme Court of New Jersey

CROSS PETITION FOR A WRIT OF CERTIORARI TO
THE SUPREME COURT OF NEW JERSEY

Inwoy I. Krretman,
Attorney General of New J ersey,

Attorney for Cross Petitioner, Sidney
Glaser, Director of the Division of
Taxation, Department of the Treasury
of the State of New Jersey,

Richard J. Hughes Justice Complex

T — New J 08625.
renton, ew Jersey
(609) 292-4925

Micuaet R. Cote,
Assistant Attorney General,
Of Counsel.

Mary R. Hamm,
Anprea M. Srixowrrz,
— Attorneys General,
n the Cross Petition.

Adams Press Corp., 50 Park Place, Newark, New Jersey 07102—(201) 623-8611

Questions Presented

1. Can two states enter into an agreement to coordinate
their laws relating to the taxation of individuals who
work in one of the states and reside in the other without
securing congressional approval pursuant to the Compact
Clause of the United States Constitution (Art. I, $10, Cl.
3)?

2. Is the cbjective of the Privileges and Immunities
Clause of Article IV of the United States Constitution of
maintaining harmonious interstate relations satisfied by
the 1962 agreement between the States of New York and
New Jersey which establishes a system for coordinating
the tax laws of the two states by which tax revenues from
individuals who reside in one state and earn their income
in the other are equitably apportioned and the imposition
of double taxation avoided?

3. When viewed as part of New Jersey’s entire taxing
scheme and the benefits received by New York commuters,
does the New Jersey emergency transportation tax, con-
sistently with the Privileges and Immunities Clause of
Article IV of the United States Constitution, fairly ap-
portion to New York commuters the costs incurred by New
Jersey in the construction, maintenance and operation of
interstate transportation facilities servicing that group?

QUESTIONS PRESENTED ..

ST a Se

JURISDICTION

STATUTORY AND CONSTITUTIONAL Provisions INVOLVED

STATEMENT °F THE CASE .

REASONS FOR GRANTING THE Cross PETITION:

Point I—If the Court grants the writ of cer-
tiorari to consider the claim of the petitioners-
cross respondents that the prospective nature
of the judgment below undermines the principle
of stare decisis, it should grant the cross peti-
tion in order to be able to review the entire
case

Point II—The decision of the Supreme Court of
New Jersey, that the 1962 Agreement between
New York and New Jersey is unenforceable
against the cross respondents because it did
not receive congressional approval pursuant
to Article I, Section 10, Clause 3 of the United
States Constitution, is irreconcilable with the
Court’s decision in United States Steel Corp.
v. Multistate Tax Commission, 434 U.S. 452
(1978)

13

15

TABLE OF GONTENTS lii

PAGE

Point I1J—The Emergency Transportation Tax
is consistent with the principles of federalism
which the Privileges and Immunities Clause of
Article IV is designed to serve, because it is
imposed and collected pursuant to a 1962
Agreement between the States of New York
and New Jersey which provides for the coordi-
nation of the tax laws of the two states by
equitably apportioning tax revenues from in-
dividuals who reside in one State and earn
their income in the other ................-..cccccccocssesssoses 18

Point iV—When viewed as part of New Jer-
sey’s entire taxing scheme and in conjunction
with the benefits derived by New York com-
muters, the Emergency Transportation Tax is
consistent with the Privileges and Immuni-
ties Clause of Article IV because New Jer-
sey residents pay subs‘antial other state taxes

which nonresidents do not pay 25
ConcLusion 30
APPENDIX:

A—Opinion of the Supreme Court of New Jer-
sey, dated March 26, 1980 la

B—Opinion of the Superior Court of New Jer-
sey, Chancery Division, dated October 24,
1978 (as amended October 31, 1978 and
November 8, 1978) 38a

C—<Accord of May 6, 1962 between the States of
New York and New Jersey 6la

iv TABLE OF AUTHORITIES

PAGE
Table of Authorities

Cases Cited

Austin v. New Hampshire, 420 U.S. 656 (1975) ........ 20, 27

Blonder-Tongue Labs v. University Foundation, 402
U.S. 313 (1971) 19

Bode v. Barrett, 344 U.S. 583 (1953) .. : 18

Central R.R., In re, 485 F.2d 208 (3rd Cir. 1973)
(en bane) cert. den. sub nom. Timpany v. New

Jersey, 414 U.S. 1131 (1974) 3
Cox Broadcasting Corporation v. Cohn, 420 U.S. 469

(1975) 10
General American Tank Car v. Day, 270 U.S. 367

(1926) 26
Gregg Dyeing Co. v. Query, 286 U.S. 472 (1932) ........ 26
Hicklin v. Orbeck, 437 U.S. 518 (1978) 20
Hughes Tool Co. v. Trans World Airlines, 409 U.S.

363 (1973), reh. den. 410 U.S. 975 2
Interstate Busses Corp v. Blodgett, 276 U.S. 245

(1927) 27

Lemon v. Kurtzman (Lemon II), 411 U.S. 192 (1973)..12, 13

Lawrence v. State Tax Commission, 286 U.S. 276
(1932) 21

Marketstreet Railway Company v. Railroad Commis-
sion of State of California, 324 U.S. 548 (1945) .. 10

Maryland v. Baltimore Radio Show, 338 U.S. 912
(1950) y)

New York v. New Jersey, 429 U.S. 810 (1976) .......... .. 17, 24

TABLE OF AUTHORITIES v

PAGK
Pennsylvania v. New Jersey, 426 U.S. 660 (1976) .... 7,20

Safeway Trails, Inc. v. Furman, 41 N. J. 467 (1964)
appeal dism’d and cert. den. 379 U.S. 14 (1964) .... 27

Salorio v. Glaser, United States Supreme Court

Docket No. 83-353 1
Toomer v. Witsell, 334 U.S. 385 (1948) .. 24
Travelers’ Insurance Company v. Connecticut, 185

U.S. 364 (1901) 25
United States Steel Corp. v. Multistate Tax Commis-

om, GE UD. G68 COTO) dct 10, 15-17
Vlandis v. Kline, 412 U.S. 441 (1973) .................--.00-- 29

United States Constitution Cited

Article 1, Section 10, Clause 3 ..... 2, 15, 16
Article IV, Section 2, Clause 1 ol 2, 8, 14, 18,
19, 21, 24, 25

Statutes Cited

N.J.L. 1962, Ch. 70 6, 22, 23
N.J.S.A. 54A:1-1 et seq. 1
N.J.S.A. 54:8A-1 et seq. 7
N.J.S.A. 54:8A-1 to 57 (New Jersey Emergency
Transportation Tax Act) 2,3
N.J.S.A. 54:8A-2 +
N.J.S.A. 54:8A-5(c) 3

N.J.S.A. 54:8A-16(A) 4

vi TABLE OF AUTHORITIES

PAGE
N.J.S.A. 54:8A-16(B) ee Oe
N.J.S.A. 54:8A-20(b) (2) +
N.J.S.A. 54:8A4-58 7
New York Personal Income Tax Law 7
1960 N.Y. Sess. Laws, Ch. 563, New York Tax Law
Sec. 640 (McKinney) (repealed) +
1962 N.Y. Sess. Laws, Ch. 2 : 4, 22
28 U.S.C.:
Sec. 1257 10
Sec. 1257(3) 1

Rule Cited

Rules of the Supreme Court of the United States:
Rule 19.5 1

NO. 83-

IN THE

Supreme Court of the United States

Ocruszz Term, 1983

SIDNEY GLASER, Director of the Division of Taxation,
Department of the Treasury of the State of New Jersey,
Cross Petitioner,
v.

JOHN SALORIO, ROBERT COE and
JOHN D. McGARR, JR.,

Cross Respondents.

On Cross Petition for a Writ of Certiorari to the
Supreme Court of New Jersey

»™
<&

CROSS PETITION FOR A WRIT OF CERTIORARI TO
THE SUPREME COURT OF NEW JERSEY

The cross petitioner, Director of the Division of Taxa-
tion, Department of the Treasury of the State of New Jer-
sey, respectfully prays that a writ of certiorari issue to re-
view the opinions and orders of tlie Supreme Court of New
Jersey entered on June 8, 1983 and March 26, 1980.

Opinions Below

The opinion of the Supreme Court of New Jersey has
been officially reported at 93 N.J. 447, —— A.2d ——
(1983), and also is reproduced in Appendix A to the cross
respondents’ petition for certiorari in this matter (Salo-
rio v. Glaser, United States Supreme Court Docket No.
83-353). The opinion of the Superior Court of New Jer-
sey, Chancery Division, which is not officially reported,
has been reproduced in Appendix B to the petition for
certiorari.

The 1980 opinion of the Supreme Court of New Jersey
is officially reported at 82 N.J. 482, 414 A.2d 943 (1980),
and has been reproduced in Appendix A to this cross-
petition for certiorari. The prior opinion of the Superior
Court of New Jersey, Chancery Division, which is not
officially reported, has been reproduced in Appendix B to
this cross-petition for certiorari.

Jurisdiction

The judgment of the Supreme Court of New Jersey
which is the subject of this cross petition was entered on
June 8, 1983. It followed a remand ensuing from an
earlier opinion of the court dated March 26, 1980. The
petition for certiorari was received on September 6, 1983,
and this cross petition is filed within 30 days of that date,
pursuant to Rule 19.5, Rules of the Supreme Court of
the United States.

The cross petition invokes the jurisdiction of the Court
pursuant to 28 U.S.C. §1257(3). In arguing that the tax
is consistent with the Privileges and Immunities Clause

of Article IV, because it is imposed and collected pursuant
to an agreement between the States of New York and
New Jersey (Points II and III) and in arguing that other
taxes which New Jersey residents pay should be taken into
account in determining the validity of the ETT (Point
IV), the cross petitioner is petitioning from the earlier
opinion of the Supreme Court of New Jersey. The earlier
opinion of the New Jersey court was a final decision on
these issues, but did not terminate the litigation. The
cross petitioner, in its initial cross petition for a writ of
certiorari to this Court from the earlier decision of the
Supreme Court of New Jersey (Supreme Court Docket
No. 80-123), raised the issue of the agreement between the
States of New York and New Jersey. The Court’s denial
of the cross petition in the earlier proceeding (449 U.S.
874 (1980)) does not imply a rejection of the State’s posi-
tion on the merits. Hughes Tool Co. v. Trans World Air-
lines, 409 U.S. 363, 365 n. (1973), reh. den. 410 U.S. 975;
Maryland vy. Baltimore Radio Show, 338 U.S. 912, 919
(1950).

Statutory and Constitutional Provisions Involved

New Jersey Emergency Transportation Tax Act, N.J.
S.A. 54:8A-1 to 57.

Reported in Appendix D to the cross respondents’ peti-
tion for certiorari.

United States Constitution, Art. IV, §2, el. 1

The Citizens of each State shall be entiled to all
Privileges and Immunities of Citizens in the several
States.

United States Constitution, Art. I, §10, el. 3.

No State shall, without the Consent of Congress,
... enter into any Agreement or Compact with an-
other State...

Statement of the Case

The New Jersey tax structure relies very heavily upon
property taxes, which are among the highest in the nation
(Pa 33).* Since real property taxes for the most part are
paid only by residents, nonresidents who commute to New
Jersey traditionally have not contributed materially to State
revenues even though they derive substantial benefits from
the New Jersey transportation system and from other
State services. One of the public services which has placed
heavy stress upon the fiscal resources of the State has been
the transportation of interstate commuters. See, e.g., In re
Central R.R., 485 F.2d 208 (3rd Cir. 1973) (en banc) cert.
den. sub nom. Timpany v. New Jersey, 414 U.S. 1131 (1974).

In 1961, following extensive studies and hearings on the
transportation problem in the North Jersey-New York
metropolitan afea, (see Appendix A at 9 to 10), New
Jersey enacted the Emergency Transportation Tax Act.
N.J.S.A. 54:8A-1 et seq. The ETT is an income tax on
individuals who use interstate transportation facilities.
The imposition of the tax is expressly contingent upon an
annual certification by the New Jersey Commissioner of
Transportation to the State Treasurer of the existence of
a “critical transportation problem” between New Jersey
and a bordering state. N.J.S.A. 54:8A-5(c). The extent of
the transportation problem existing in the New York-New
Jersey metropolitan area was fully documented by the
cross petitioner’s experts in the second trial court proceed-
ing. Over seven million people travel from home to work
every weekday in this area, 2,250,000 of these in northern
New Jersey (Pa 273). The transportation problem is ag-
gravated by the extraordinarily high density of the points

*The reference is to the cross respondents’ appendix in the
Supreme Court of New Jersey.

4

of origin and destination and by the limited number of
river crossings between the two States (Da 2 to Da 10°
and see App. B to cross respondents’ petition for certiorari
at 32-3). ETT revenues are used exclusively to finance pro-
jects designed to alleviate the transportation problems in
this area, N.J.S.A. 54:8A-20(b)(2) and see App. A at 15.
When enacted, the ETT in effect applied only to New Jer-
sey residents commuting to work in New York. App. A at
12. While the ETT was imposed upon individuals resid-
ing in either New York or New Jersey and deriving income
in the other state (N.J.S.A. 54:8A-2), the Act allowed a
credit to nonresidents for taxes paid to another jurisdic-
tion if the jurisdiction allowed a similar credit to New
Jersey residents. N.J.S.A. 54:8A-16(A). The New York
personal income tax, which was imposed at the same rate
as the ETT, provided for a similar nonresident credit
(1960 N.Y. Sess. Laws, Ch. 563, New York Tax Law $640
(McKinney) (repealed) ) so that New Jersey residents com-
muting to New York were allowed a credit against their
New York tax liability for the ETT.

Apparently dissatisfied with the loss of revenue result-
ing from the nonresident credit contained in its personal
income tax law, New York repealed the nonresident credit
provision and amended the credit allowed to New York
residents. 1962 N.Y. Sess. Laws, Ch. 2, approved January
15, 1962. Since allowance of the nonresident credit in the
ETT is contingent upon reciprocal treatment of New Jer-
sey residents, the repeal of the New York nonresident
credit had the effect of subjecting New York residents to
the ETT. The net result was to render New Jersey resi-
dents liable for both the New York personal income tax
and the ETT on their income derived from New York and

*The reference is to the cross petitioner’s appendix in the
Supreme Court of New Jersey.

to render New York residents liable for only the ETT on
their income derived from New Jersey.

Discussions between New Jersey and New York to resolve
the tax controversy eventually culminiated in an agree-
ment or accord between the two States Appendix C. The
heart of the Accord was that by means of reciprocal legis-
lation, each State would tax residents of the other while
granting their own residents a credit for taxes paid to the
other State. Appendix C at 61, 62, 66-67.

The terms of the Accord between the States were an-
nounced by Governors Rockefeller and Hughes on May 6,
1962 in the following Executive Statement:

Governor Richard J. Hughes of New Jersey and
Governor Nelson A. Rockefeller of New York an-
nounced today that they had reached an understand-
ing in regard to the administration and enforcement
of the personal income tax laws of their respective
States as they affect residents of the other State.

Governor Rockefeller announced that New York,
under legislation enacted at the 1962 legislative ses-
sion, will allow its residents a credit against their
.few York State personal income taxes for income
taxes paid to New Jersey under the New Jersey
Emergency Transportation Act enacted in 1961, as
amended.

Governor Hughes announced that he would submit
to the New Jersey Legislature on Monday legisla-
tion which will grant to New Jersey residents a
credit against the New Jersey Emergency Transpor-
tation Tax for income taxes paid to the State of New
York under New York’s personal income tax law, as
amended in 1962.

In addition, it was agreed that neither State would
contest nor participate in contesting the right of the
other to levy and collect taxes imposed by the two
laws on residents of the other; and that each State
would assist and cooperate with the other in the ad-
ministration and enforcement thereof so as to assure
to the citizens of each who are directly involved the
greatest degree of certainty as to their responsibili-
ties under the two laws.

The Governors expressed the belief that this agree-
ment will clarify for the New York and New Jersey
commuters their status in regard to the income tax
laws of the two States and will insure certainty in
the application and administration of such laws.

The Governors stated that they are taking this ac-
tion in the interest of promoting interstate coopera-
tion and pledged their continued cooperation in other
matters affecting their citizens who live in one state
and work in the other. Noting the progress that has
been made recently in such matters as the Hudson
and Manhattan Railroad, the World Trade Center,
and the program for an integrated regional trans-
portation network, the Governors expressed their
confidence of still further progress through similiar
joint action, conducted in a spirit of harmony, co-
operation and good will [App. C at 66 to 67].

Following this executive action, the New Jersey Legis-
lature enacted Chapter 70 of the Laws of 1962, which was
made expressly retroactive to all taxable years beginning
on or after January 1, 1961. This provision affords a credit
to New Jersey residents against the ETT for any income
tax imposed by another “critical area State” (i.e., New
York). N.J.S.A. 54:8A-16(B). Thus, due to the retroactive

amendment of the New York Personal Income Tax Law re-
pealing the nonresident credit and the subsequent amend-
ment of the ETT granting a credit to New Jersey residents
for taxes paid to New York, the ETT is now paid by New
York residents working in New Jersey.

The reciprocal crediting provisions in the ETT Act and
the New York Personal Income Tax Law remain in effect
today. Neither State has taken action to rescind the 1962
Accord. New York, however, despite its undertaking in
the Accord not to contest or participate in contesting New
Jersey’s right to levy the ETT, in 1977 sought leave to file
a complaint in this Court against New Jersey alleging that
the ETT violated the Privileges and Immunities Clause. Cit-
ing Pennsylvania v. New Jersey, 426 U.S. 660 (1976), the
Court denied New York’s motion.* New York v. New Jer-
sey, 429 U.S. 810 (1976). The Court, however did not reach
the effect of the 1962 Accord.

*In Pennsylvania v. New Jersey, 426 U.S. 660 (1976), the
Court had held in a brief per curiam opinion that Pennsylvania
could not maintain an original action against New Jersey to con-
test the validity of the transportation benefits tax (N.J.S.A.
54:8A-58 et seg.), a tax similar in material respects to the
ETT, which New Jersey imposed upon Pennsylvania residents
commuting to New Jersey. Any harm to Pennsylvania’s fisc
could be remedied by the elimination of the credit which Pen-
nsylvania granted to its residents for payments of the transporta-
tion benefits tax, and the suit was not maintainable by Pennsylvania
as parens patriae because Pennsylvania was asserting a collectivity
of private suits and no sovereign state interest was implicated.

Shortly after the enactment of the New Jersey gross income tax
(N.J.S.A. 54A:1-1 et seqg.), New Jersey and Pennsylvania entered
into a reciprocal personal income tax agreement. Under the agree-
ment, each State taxes its own residents who are employed in the
other but does not tax residents of the other State employed
within the taxing State. The agreement is currently in force and
is not, so far as the State of New Jersey is aware, being challenged
in any court.

Following New York’s unsuccessful attempt—in viola-
tion of the Accord—to challenge the ETT by an original
action against New Jersey, three individual New York com-
muters commenced this lawsuit in 1977 in the Superior
Court of New Jersey. They sought a declaration that the
ETT was unconstitutional, a final injunction against fur-
ther withholding, a declaration that they need not file fur-
ther ETT returns or pay further ETT, and a refund of
“all monies withheld or paid under the Commuter Tax to
date” (Pa 2).

Following certain procedural motions, cross motions for
summary judgment and extensive depositions, on October
24, 1978, the trial court issued a comprehensive opinion up-
holding the constitutionality of the ETT, Appendix B at
53 to 56. The court found that there was indeed a trans-
portation crisis in northern New Jersey, that the “im-
pact of the tax upon residents and non-residents bears a
close relation to the challenge of correcting the traffic and
commuting problems” (Appendix B at 54), and concluded
that the ETT did not violate the Privileges and Immuni-
ties Clause or the Equal Protection Clause of the United
States Constitution. The court also found that New York
and New Jersey had entered into a reciprocal agreement,
consistent with the principles of interstate comity embodied
in the Privileges and Immunities Clause of Article IV, pur-
suant to which the ETT and its companion legislation in
New York had been enacted and remained in effect. In
finding the existence of such a mutual undertaking between
the States the trial court stated:

In the 1962 Act and thereafter, these two sover-
eign states by compact, by arrangement, by agree-
ment, by attitude and by legislation set up an ar-
rangement whereby they agreed on a taxing method
which would govern commuters. New York accepted

the 1961 legislation and what developed later. It
arranged for certain credits to be given residents of
both New York and New Jersey. New York saw to
it that its residents did not pay anything extra by
virtue of their working in New Jersey. New Jersey
took the same attitude.

... [T]here is no question in this Court’s mind
that the 1962 accord between the two states and the
actions and inactions of the parties thereafter
through 1975 represented a reciprocal understand-
ing, compact or the like between the legislative and
executive branches of these two states... [App B
at 55].

On appeal to the Supreme Court of New Jersey, that
court, as an initial matter, ruled that the cross respond-
ents had standing and that New York State was not the
real party in interest in the law suit. The court went on to
uphold the ETT as consistent with the Equal Protection
™lause, but, concluding that the record before it was insuf-
ficient to determine whether or not the ETT violated the
Privileges and Immunities Clause, remanded the case to
the trial court. Responding to the cross-petitioner’s argu-
ment that New Jersey residents pay substantial other taxes
which should be taken into account in determining the con-
stitutionality of the ETT under the Privileges and Im-
munities Clause, the court prohibited the inclusion of any
tax in the comparison “unless its scope is restricted to col-
lections for transportation services, the asserted ground of
justification for the ETT” (Appendix A at 25). The
Supreme Court of New Jersey further held that the 1962
Accord between the States of New York and New Jersey
was not an enforceable agreement. In the court’s view, if
if the Accord were interpreted to “bind New York’s

10

power over the extension of tax credits to its residents,”
(Appendix A at 30), New York would be relinquishing
a portion of its sovereign power. Under its reading of the
rule of United States Steel Corp. v. Multistate Tax Com-
mission, 434 U.S. 452 (1978), such an agreement would re-
quire the consent of Congress.

While the remand order of the New Jersey Supreme
Court was clearly not a final judgment from which a
party may appeal pursuant to 28 U.S.C. §1257 (see
Marketstreet Railway Company vy. Railroad Commission
of State of California, 324 U.S. 548, 551 (1945) and Cox
Broadcasting Corporation v. Cohn, 420 U.S. 469, 477
(1975) ), cross respondents nevertheless sought review of
that order in this Court. Cross petitioner moved to dis-
miss and simultaneously cross-petitioned for a writ of
certiorari on the ground that the portion of the New Jer-
sey Supreme Court’s opinion which concluded that the
Accord between the States of New York and New Jer-
sey was unenforceable was incorrect under this Court’s
decision in United States Steel Corp. v. Multistate Tax
Commission, supra. Cross petitioner further urged that
the Accord was consistent with the goals of the Privi-
leges and Immunities Clause because it provided for
a system of coordinating the tax laws of the two
States respecting interstate commuters and avoided
double taxation of those commuters. On October 6, 1980,
this Court dismissed cross respondents’ appeal for want
of jurisdiction (449 U.S. 804) and on the same date de-
nied the State’s cross petition for certiorari. 449 U.S.
874.

On remand, cross petitioner, with the assistance of ex-
perts in the transportation field, developed extensive evi-
dence on the exact nature of the transportation problem,
the extent to which New York commuters contribute to

11

it, the benefits they derive from New Jersey’s expendi-
tures for transportation facilities, and net ETT collec-
tions over the twenty-year history of the tax. Cross
respondents produced experts’ opinions themselves, pur-
porting to refute the State’s evidence. In May, 1981 the
remand hearing mandated by the New Jersey Supreme
Court was held before the trial court. After hearing,
the trial court concluded that in light of the New York
commuters’ contribution to the interstate transportation
problem, the costs 1nposed by New York commuters on
the State’s transportation facilities, and the transporta-
tion benefits they received from ETT expenditures, the
ETT did not offend the Privileges and Immunities Clause.
Indeed, the trial court concluded that $182.9 million of
State transportation expenditures were properly allocable
to the New York commuters over the twenty-year his-
tory of the ETT Appendix B to cross respondents’
petition for certiorari at 36. Moreover, the trial court
concluded that these substantial expenditures by the State
on behalf of New York commuters produced benefits be-
yond the mathematical dollar value of the expenditures.
Those benefits consist in savings in time and user costs
attributable primarily to uew highway construction and
widening, highway resurfacing, operational improvements,
safety improvements, maintenance and drainage, and,
in the transit area, savings in time and costs.

Cross respondents again moved for direct certification
to the Supreme Court of New Jersey, and on June 8, 1983
that court, reversing the trial court, concluded that the
ETT violated the Privileges and Immunities Clause be-
cause the burden of the ETT on New York residents was
not substantially related to the burden which those resi-
dents placed upon New Jersey’s transportation facilities.
Appendix A to cross respondents’ petition for certiorari
at 14. Of net ETT collections amounting to approxi-

12

mately $381 million over the history of the tax, approxi-
mately $182 million of costs incurred by the State for
transportation facilities were, in the court’s view, prop-
erly allocable to the New York commuters, an amount
slightly less than 50% of the total tax. Jbid. While the
State’s expenditures on behalf of New Yorkers were sub-
stantial, it was the court’s conclusion that the costs in-
curred were of a sufficient level of disproportion to total
collections (a ratio of roughly 2 to 1) so as to offend
the Privileges and Immunities Clause. Tlie court’s analy-
sis was restricted to a comparison of the ETT assess-
ment against transportation costs caused by New York-
ers. The court in its earlier opinion had refused to
include within the analysis other factors, such as the
overall tax burden on New Jersey residents as compared
to the ETT burden on New York commuters, or the costs
of the entirety of governmental services made available
to New Yorkers as contrasted with transportation serv-
ices only. App. A at 25. While granting cross respond-
ents the declaratory relief which they sought, the court,
citing Lemon v. Kurtzman (Lemon II), 411 U.S. 192
(1973), granted prospective relief only, denying refunds
of ETT and ruling that its decision would take effect
with respect to income earned on or after January 1,
1984.*

* A complete statement regarding the portion of the New Jersey
court’s opinion dealing with the remedy afforded the cross re-
spondents is contained in the cross petitioner’s brief in opposition
to the petition for certiorari in this action. However, for present
purposes, suffice it to say that the individual New York com-
muter is not affected one wit by the New Jersey Supreme Court’s
decision. Because of the credit mechanisms involved, taxes not
paid to New Jersey by such taxpayers must be paid to New York
State.

13

While detailing no individualized harm to themselves
by reason of the decis'on of the Supreme Court of New
Jersey, cross respondents nevertheless have petitioned
this Court for a writ of certiorari to review that portion
of the lower court’s judgment denying them recovery of
ETT paid. As a basis for granting the writ they allege
that the principle of stare decisis is threatened by the
ruling of the New Jersey court.

REASONS FOR GRANTING THE CROSS PETITION
POINT I

If the Court grants the writ of certiorari to consider
the claim of the petitioners-cross respondents that the
prospective nature of the judgment below undermines
the principle of stare decisis, it should grant the cross
petition in order to be able to review the entire case.

As indicated in the State’s brief in opposition to the peti-
tion for certiorari, it is the position of the cross petitioner
that the judgment of the Supreme Court of New Jersey be-
low does not undermine the principle of stare decisis but
rather is fully consistent with the principles laid down in
Lemon v. Kurtzman, swpra, and the application of federal
equitable remedies. Furthermore, cross respondents’ ab-
stract concern for the principle of stare decisis is not a
sufficient ground for invoking this Court’s jurisdiction when
cross respondents assert no individualized constitutional
(or indeed practical) harm. However, in the event the
Court determines that the prospective nature of the judg-
ment below is inconsistent with the principles of Lemon v.
Kurtzman and concludes further that cross respondents’
concern over the principle of stare decisis presents a sub-
stantial constitutional question, it is imperative that the

14

Court consider the entire case rather than solely the issues
raised by the petition for certiorari. The petition ques-
tions only the appropriateness of the remedy adopted by
the Supreme Court of New Jersey, but the appropriate-
ness of the remedy is an issue only »i the lower court was
correct in invalidating the ETT. Tuus, before reaching the
question of the relief afforded by the lower court, the
Court should determine whether that question is even pres-
ent in the case by considering the substantive validity of
the tax. In order to determine the validity of the tax,
the Court must resolve the issues presented in the «ross
petition, including the enforceability and effect vf the
1962 Accord between New York and New Jersey.

It would require no further expenditure of this Court’s
resources to consider the cross petition in the event the
petition is granted. The record and case authority upon
which the cross petitioner would rely in urging the validity
of the ETT are fully developed in the existing record. The
record documents the 1962 Accord establishing that the
States of New Jersey and New York entered into an agree-
ment in order to resolve a controversey between them re-
lating to the taxation of interstate commuters and that the
Accord results in no economic harm to those commuters.
The record further shows that in the context of New Jer-
sey’s entire taxing scheme, the ETT is consistent with the
Privileges and Immunities Clause because New York com-
muters do not pay more than their fair share of New Jer-
sey taxes. There is no inequity in the taxes paid by non-
residents under the ETT compared with the overall taxes
paid by New Jersey residents; nor is there inequity in
terms of a comparison of total services provided (not just
transportation services) and the total tax imposed.

In short, it is the position of the State that there is
ample credible evidence in the record to support the con-
clusion that the ETT is consistent with the Privileges and
Immunities Clause of Article IV.

15

POINT II

The decision of the Supreme Court of New Jersey,
that the 1962 Agreement between New York and New
Jersey is unenforceable against the cross respondents
because it did not receive congressional approval pur-
suant to Article I, §10, Cl. 3 of the United States Con-
stitution, is irreconcilable with the Court’s decision
in United States Steel Corp. vy. Multistate Tax Com-
mission, 434 U.S. 452 (1978).

As an initial point, it is clear, and the trial court in its
initial opinion so held, that there was in fact an agreement
between the States of New York and New Jersey respect-
ing their mutual taxation of interstate commuters. The
trial court stated:

In the 1962 Act and thereafter, these two sover-
eign states by compact, by arrangement, by agree-
ment, by attitude and by legislation set up an ar-
rangement whereby they agreed on a taxing method
which would govern commuters... .

[T]here is no question in this Court’s mind that
the 1962 accord between the two states and the ac
tions and inactions of the parties thereafter through
1975 represented a reciprocal understanding, com-
pact or the like between the legislative and execu-
tive branches of these two states [Appendix B at
55].

There is substantial evidence in the record to support
these findings of the State trial court. Thus, the joint state-
ment of Governors Hughes and Rockefeller commences:

Governor Richard J. Hughes of New Jersey and
Governor Nelson A. Rockefeller of New York have

16

announced that the Executive Departments of their
respective States have reached an understanding in
regard to the operation and administration of the
income tax laws of the two states.

The Governors declared that it has been agreed
that [there follows a list of undertakings by the
State of New York and the State of New Jersey.]
[App. C at 61; emphasis supplied].

In United States Steel Corp. vy, Multistate Tax Com-
mission, supra, the Court squarely held that reciprocal
legislation between two or more States providing for
the apportionment or allocation of taxes payable by tax-
payers with multistate contacts may be validly enacted
without the consent of Congress pursuant to the Com-
pact Clause of the United States Constitution (Art. I,
§10, cl. 3). The compact which was upheld was re-
markably similar in subject matter and purposes to the
Accord at issue here. Both agreements seek interstate
coordination of tax policy respecting taxpayers with ties
to more than one State, in the interests of equity and
convenience. Specifically, the four stated purposes of
the Multistate Tax Compact are equally applicable to
the 1962 Accord: equitable apportionment, uniformity in
state tax systems, convenience, and the avoidance of dup-
licative tax liability. Id. at 456.

The Court in United States Steel Corp. v. Multistate
Tax Commission reiterated the established doctrine that
the strictures of the Compact Clause apply only to those
interstate agreements that transfer state sovereignty “in
a way that encroaches upon the supremacy of the United
States.” Jd. at 472. The Court found that an agreement
by which the States seek to coordinate the operation of
their tax laws with respect to taxpayers with multistate
contacts does not in any way enroach upon the sovereignty

17

of the United States and therefore does not require con-
gressional approval. In light of the close similarities
in purposes and effect between the compact upheld in
United States Steel Corp. v. Multistate Tax Commission,
supra, and the 1962 Accord between New York and New
Jersey, the Supreme Court of New Jersey should have
recognized in its initial opinion in this case that the
1962 Accord could be fully effective withont congressional
approval,

The court, however, held that the 1962 Accord was
unenforceable without the consent of Congress because,
“if the 1962 Accord were interpreted to bind New York’s
power over the extension of tax credit [sic] to its resi-
dents, it would involve an impermissible relinquishment of
that state’s sovereign power...” (App. A at 30). In
the court’s view this was an impermissible result under
the rule of United States Steel Corp. v. Multistate Tax
Tax Commission absent the approval of Congress.

However, in holding that because “. . . no [congression-
al] approval was given, the Accord cannot be relied on
hy the State here as an enforceable agreement”, the court
confused the question whether New York is free to with-
draw from the 1962 agreement (which it has never done)
with the question whether the agreement is binding upon
taxpayers such as the cross respondents so long as it
remains in effect. The power of New York to withdraw
from the 1962 Accord is not in issue in this case. (As
noted, New York has continued to make credits available
pursuant to the Accord.)

Rather, the question is whether the agreement is bind-
ing upon taxpayers so long as it remains in effect. And
on this latter question, the Court in United States Steel
Corp. v. Multistate Tax Commission squarely held that
two or more states may enter into an agreement relat-

18

ing to the apportionment of tax revenues which would
be binding upon taxpayers without securing congressional
approval. See also, Bode v. Barrett, 344 U.S. 583, 586
(1953) (Illinois highway use tax exemption for nonresi-
dents does not require congressional approval where the
states of the nonresidents reciprocally grant similar tax
exemptions to citizens of Illinois). Therefore, the Su-
preme Court of New Jersey was simply wrong in con-
cluding that the 1962 Accord is unenforceable against
the cross respondents because not enacted in conformity
with the Compact Clause.

POINT III

The Emergency Transportation Tax is consistent with
the principles of federalism which the Privileges and
Immunities Clause of Article IV is designed to serve,
because it is imposed and collected pursuant to a 1962
Agreement between the States of New York and New
Jersey which provides for the coordination of the tax
laws of the two states by equitably apportioning tax
revenues from individuals who reside in one State
and earn their income in the other.*

A reciprocal arrangement between two States to fairly
allocate the financial burdens of government between citi-
zens who reside in one State and work in the other, with-

* While the trial court in its initial opinion of October 24, 1978
concluded that the 1962 Accord between the States of New Jersey
and New York satisfied the obligations of the Privileges and Im-
munities Clause (App. B at 55 to 56), the Supreme Court of New
Jersey did not reach this issue in its first opinion because it ruled
that the 1962 Accord was unenforceable under the Compact

(Footnote continued on following page)

19

out imposing any additional overall tax burden on an in-
dividual simply because he chooses to work outside the
State where he resides, is fully consistent with the ob-
jectives sought to be achieved by the Privileges and Im-
munities Clause of Article IV. This provision, “. .. which
‘appears in the so-called States’ Relations Article, the
same Article that embraces the Full Faith and Credit
Clause, the Extradition Clause ... the provisions for the
admission of new States, the Territory and Property

(Footnote continued from preceding page)

Clause. App. A at 30 to 31. However, while the court held
in its second opinion that the ETT, standing alone, is inconsistent
with the Privileges and Immunities Clause, it strongly implied
that had it not in its earlier opinion “questioned the validity of
the accord under the Compact Clause” (App. to cross respondents’
petition for certiorari at 18), it would have sustained the ETT as
based on an agreement granting reciprocally favorable treatment
to nonresidents. /bid. Thus, the issue of the effect of the 1962
Accord on the validity of the ETT was passed upon by the court
below and should be considered by this Court. In any event, the
failure of a court below to explicitly rule on an issue does not
raise a question of the Court’s jurisdiction. If, as is the case
here, the issue is significant and has been fully briefed and argued
by the parties, the Court may reach the issue. See Blonder-Tongue
Labs v. University Foundation, 402 U.S. 313, 320 n.6 (1971).
Cross petitioner’s position is that the Privileges and Immunities
Clause is directed to unilateral discrimination by one State against
the citizens of another, not to a mutual undertaking by two sover-
eigns to fairly and equitably apportion taxes as between themselves
without disadvantaging citizens of either state. Thus, the Court
in Austin itself notes:

Neither Travis nor the present case should be taken in
any way to denigrate the value of reciprocity in such
matters. The evil at which they are aimed is the unilateral
imposition of a disadvantage upon nonresidents, not recip-
rocally favorable treatment of nonresidents by States that
coordinate their tax laws [420 U.S. at 668, n.12].

20

Clause, and the Guarantee Clause,’ Baldwin y. Montana
Fish and Game Comm’n, 436 U.S. 371, 379 (1978), ‘estab-
lishes a norm of comity’ Austin vy. New Hampshire, 420
U.S. 656, 660 (1975), that is to prevail among the States
with respect to their treatment of each other’s residents.”
Hicklin vy. Orbeck, 437 U.S. 518, 523-524 (1978). The
opinion of the Court in Austin vy. New Hampshire, supra,
reaffirmed the view that the primary purpose of this Clause
was the maintenance of proper relations between sov-
ereign States in a federal union:

The Privileges and Immunities Clause, by making
noncitizenship or nonresidence an improper basis for
locating a special burden, implicates not only the in-
dividual’s right to nondiscriminatory treatment but
also, perhaps more so, the structural balance essen-
tial to the concept of federalism [420 U.S. at 662].

Therefore, while invalidating New Hampshire’s unilateral
action in imposing a tax on Maine residents—described in
Pennsylvania v. New Jersey, supra at 662, as a “beggar-
thy-neighbor tax”—the Court was careful to point out
that the Privileges and Immunities Clause would not re-
quire the invalidation of a tax on nonresidents which was
part of a reciprocal arrangement between the State of
domicile and the State of employment:

Neither Travis nor the present case should be
taken in any way to denigrate the vr 'ue of recipro-
city in such matters. The evil at » ich they are
aimed is the unilateral imposition of a disadvantage
upon nonresider‘:, not reciprocally favorable treat-

21

ment of nonresidents by States that coordinate their
tax laws [420 U.S. at 667, n. 12].°

Therefore, it is clear that the Privileges and Immunities
Clause of Article IV does not preclude sovereign States in
the federal system, each acting in the interests of its own
citizens, from entering into agreements which establish a
fair system for the imposition of taxes upon citizens with
multistate contacts.

The trial court found as a fact that the States of New
York and New Jersey had entered into a reciprocal ar-
rangement in 1962 regarding the taxation of individuals
who reside in one of the States and work in the other. It

*The cross respondents have argued previously that this quo-
tation does not support the validity of the ETT because the ETT
does not accord them “favorable treatment”. This argument is falla-
cious for several reasons. First, it is strongly arguable that the
agreement does assure individuals in cross réspondents’ situation
more favorable tax treatment than they otherwise might receive.
Since the State of New York may constitutionally subject cross
respondents to tax on the full amount of their income wherever
earned (Lawrence v. State Tax Commission, 286 U.S. 276, 280-281
(1932) ) and it is not disputed that cross respondents may be taxed
pursuant to the New Jersey Gross Income Tax Act to the full ex-
tent of their New Jersey income, cross respondents have an ex-
posure to double taxation on their New Jersey income which the
agreement between the states serves to avoid. Furthermore, if the
avoidance of possible double taxation is not recognized as “‘favor-
able treatment”, it is still clear that the ETT does not impose any
disadvantage upon cross respondents but rather, at worst, simply
has a neutral effect upon them, since the amount of taxes which
they pay to New Jersey under the ETT is identical to what they
otherwise would be required to pay New York. A reciprocal ar-
rangement which has a neutral effect on the overall tax obligations
of a nonresident who works in another state is fully consistent with
the principle of federalism which the Privileges and Immunities
Clause of Article IV was designed to serve.

22

found that “[t]here was in 1962 and there continued there-
after an arrangement between the States of New York and
New Jersey, their governors and their legislators which
accepted as valid the tax situation now being challenged”
(App. B at 50); “... that the 1962 Accord between the
two states and the actions and inactions of the parties
thereafter through 1975 represented a reciprocal under-
standing, compact or the like between the legislative and
executive branches of these two states” (App. B at 55);
and that “[njeither governor has taken formal action to
rescind the limited part of the accord not dependent on
legislative action, nor have they even made a statement
which would challenge the validity of the arrangement”
(App. B at 56).

There is more than sufficient evidence in the record to
support the trial court’s findings. When New Jersey first
enacted the Emergency Transportation Tax Act in 1961,
the incidence of the tax fell exclusively upon New Jersey
residents. New York was dissatisfied with the fiscal conse-
quences of the reciprocal crediting provisions of the ETT
and the New York personal income tax, so appropriate
steps were initiated to reverse the incidence of the taxes of
the respective States. The New York Legislature enacted
chapter 2 of the Laws of 1962 by which it repealed the tax
credit previously afforded nonresidents for taxes paid to
their State of residence and at the same time extended a
credit to its own residents for taxes paid to the State in
which they worked. By chapter 70 of the Laws of 1962, the
New Jersey Legislature enacted similar complementary
amendments to the ETT. The praciical effect of these
legislative enactments by the two States was to change the
interstate taxing system of New York and New Jersey from
one in which each State imposed a tax on its own residents
to one in which each State imposed a tax on the residents

23

of the other State who commuted to work in the taxing
State.

This reciprocal action by the legislatures of the two
States set the essential framework for the May 6, 1962
agreement between Governors Rockefeller and Hughes.
Paragraph 2 of the Agreement is an announcement by Gov-
ernor Rockefeller “. . . that New York, under legislation
enacted at the 1962 legislative session, will allow its resi-
dents a credit against their New York State personal in-
come taxes for income taxes paid to New Jersey under the
New Jersey Emergency Transportation Tax Act enacted
in 1961, as amended” (App. C at 66) (emphasis added).
Similarly, paragraph 3 of the agreement announced the in-
tent of Governor Hughes to submit to the New Jersey
Legislature the bill which was enacted less than a month
later as chapter 70. Complementary to those basic legisla-
tive provisions, the remaining paragraphs of the agree-
ment set forth mutual agreements by the States not to par-
ticipate in contesting the taxes imposed by the two
laws and to assist and cooperate in the administration and
enforcement of the two laws. Therefore, the 1962 Accord
represented a solemn reciprocal undertaking between the
legislative and executive branches of the respective states.

Furthermore, this agreement remains intact today. The
New York Legislature has not sought to repeal the tax
credit extended to its residents for taxes paid to New Jer-
sey, and the New Jersey Legislature has adhered to New
Jersey’s essential obligation under the 1962 Accord by con-
tinuing in effect the credit afforded its residents for taxes
paid to New York. Similarly, neither governor has taken
formal action to rescind the limited part of the Accord not
dependent on legislative action. Therefore, assuming that
either State could unilaterally withdraw from the 1962

24

Accord, the plain fact is that neither State has attempted
to do so.*

The cross respondents seek to circumvent the provisions
of the 1962 Accord by arguing that this case involves indi-
vidual rights which are beyond the power of the States to
address by reciprocal executive and legislative action. How-
ever, the Privileges and Immunities Clause is found in
Article IV of the Constitution dealing with relations among
states. “The primary purpose of this clause, like the
clauses between which it is located—those relating to full
faith and credit and to interstate extradition of fugitives
from justice—was to help fuse into one Nation a collec-
tion of independent, sovereign States.” Toomer v. Witsell,
334 U.S. 385, 395 (1948). The legal import of the 1962 Ac-
cord is not that a State in concert with another State may
limit the constitutional rights of an individual. Rather, the
Accord represents a practical solution by the legislatures
and executiv 2s of New York and New Jersey to the problem
of taxing individuals who work in one of the States and
reside in the other, without increasing the total tax burden
of the cross respovdents or of any other commuters simi-
larly situated. Therefore, if the Court gran‘s the petition
for certiorari, it also should grant the cross petition in

* As noted, however, while New York has not attempted to with-
draw from the Accord, it has breached it, first by seeking a judgment
from this Court that the New Jersey taxing scheme was uncon-
stitutional (New York v. New Jersey, 429 U.S. 810 (1976)) and
then by encouraging and financing this lawsuit (see letter to cross
respondent McGarf} from New York budget director at Da 1)
in violation of itsyundertaking not to contest nor participate in
contesting New Jerfey’s right to levy the ETT. However, neither
the enforceability 9f this provision in the 1962 Accord nor the
appropriate remediés for its breach are issues in this litigation.
The only issue here is the effect of this agreement on the in-
dividual taxpayer, sb long as it remains in effect.

25

order to consider the effect of the 1962 Accord upon the
ETT’s conformity with the principles of federalism which
the Privileges and Immunities Clause of Article IV was
designed to serve.

POINT IV

When viewed as part of New Jersey’s entire taxing
scheme and in conjunction with the benefits derived
by New York commuters, the Emergency Transporta-
tion Tax is consistent with the Privileges and Immuni-
ties Clause of Article IV because New Jersey residents
pay substantial other state taxes which nonresidents
do not pay.

In determining the constitutionality of States taxes im-
posed only upon nonresidents, the Court has made clear
that the analysis must take into account the entire taxing
scheme of a State. If, when all the taxes are taken into
account, the burden on residents and nonresidents is ap-
proximately equal, an individual tax imposed only upon
nonresidents is not infirm. In Travelers’ Insurance Com-
pany v. Connecticut, 185 U.S. 364 (1901), a state property
tax based upon the assessed value of shares of stock in do-
mestic corporations was challenged under the Privileges
and Immunities Clause on the ground that shares held by
nonresidents were assessed at market value while shares
held by residents were assessed at market value “less the
proportionate value of all real estate held by the corpora-
tion on which it [had] already paid a tax.” The Court up-
held the tax. It found that nonresident shareholders effec-
tively paid no local taxes while resident shareholders paid
taxes to the municipalities in which they resided. The
Court reasoned:

26

It was believed that a resident in a city or town, en-
joying all the benefits of local government, should
be taxed for the expenses of that government upon
all the property he possessed, whether that property
consisted in part or in whole of shares of stock. On
the other hand, the nonresident, enjoying little or
none of the benefits of local government, was ex-
empted from taxation on account of the expenses of
such local government. At the same time it was not
right that he should escape all contribution to the
support of the state which created and protected the
corporation and the property of all its stockholders,
and so a tax was cast upon the nonresident stock-
holder for the expenses of the state [185 U.S. at
368 ; emphasis supplied].

See also, General American Tank Car v. Day, 270 U.S. 367
(1926) (State property tax on rolling stock owned by non-
resident corporations held not violative of Commerce
Clause or Equal Protection Clause because, while resident
corporations did not pay the tax, residents paid local prop-
erty taxes). In Gregg Dyeing Co. v. Query, 286 U.S. 472
(1932), the Court squarely faced the issue of whether a
State tax must be nondiscriminatory in and of itself or
whether other taxes may be taken into account in deter-
mining its constitutionality. The Court concluded that a
State tax imposed upon the use or storage of gasoline
brought into the State violated neither the Commerce
Clause nor the Equal Protection Clause because in-state
sales and the in-state use of gasoline by in-state producers
were similarly taxed although under different taxing stat-
utes. The Court stated:

But appellants question the right to invoke other
statutes to support the validity of the Act assailed.
To stand the test of constitutionality, they say, the

27

Act must be constitutional ‘within its four corners,’
that is, considered by itself. This argument is with-
out merit. The question of constitutional validity is
not to be determined by artificial standards. What
is required is that state action, whether through one
agency or another, or through one enactment or
more than one, shal! be consistent with the restric-
tions of the Federal Constitution. There is no de-
mand in that Constitution that the State shall put its
requirement in any one statute. It may distribute
them as it sees fit, if the result, taken in its totality,
is within the state’s constitutional power [286 U.S.
at 479-480].

Moreover, there is no requirement that a tax on nonresi-
dents be duplicated by an identical tax on residents. A tax
on nonresidents may be completely different in form and
rate as long as the overall burden is approximately equal.
Interstate Busses Corp. v. Blodgett, 276 U.S, 245 (1927)
(state mileage tax on interstate buses held not violative of
Commerce Clause when intrastate carriers paid a gross
receipts tax) ; Safeway Trails, Inc. v. Furman, 41 N.J. 467,
490-491 (1964) appeal dism’d and cert. den. 379 U.S. 14
(1964).

Austin v. New Hampshire, supra, is consistent with the
principle of taking into account the entire taxing scheme
of the State. Reviewing all the New Hampshire taxes, the
Court concluded that those paid by nonresidents nowhere
near equalled those imposed upon nonresidents under the
commuter tax. Thus, Austin does not deviate from the
principles set forth in the cases just discussed. Rather, the
State simply could not meet the test which those cases im-

pose.

In contrast to Austin, it is clear in this case and the
trial court so held, that residents of New Jersey pay sub-

28

stantial property taxes. Nonresident commuters do not
ordinarily pay such taxes, and yet they benefit from the
services and protections afforded by the local governments
which are supported by the property tax (App. B at 54).
There is ample evidence in the record to support the trial
court’s findings. In an affidavit filed in conjunction with
the State’s cross motion for summary judgment in the ini-
tial trial court proceeding (Pa 845 to Pa 850), the Director
of the New Jersey Division of Taxation stated that during
the 1976 fiscal year, the average New Jersey resident paid
property taxes amounting to $446.48. The only state in
which per capita property taxes were higher during that
year was Alaska. The Director of the Division of Taxa-
tion further attested that during the 1977 calendar year
the average New Jersey resident household paid total New
Jersey taxes amounting to $2,605.65, while the average
nonresident household paid total New Jersey taxes, includ-
ing the ETT, amounting to $583.15. In short, when the
whole scheme of taxation is taken into account, it is clear
that New Jersey residents pay more than their fair share
of the costs of government, including the costs of trans-
portation services. The New Jersey Supreme Court did
not take the State’s entire taxing scheme nor the govern-
mental services provided (in addition to transportation
services) into account in analyzing the constitutionality
of the ETT under the Privileges and Immunities Clause.

Moreover, even if the ETT were analyzed without con-
sideration of the other taxes borne by New Jersey resi-
dents, the tax would still be consistent with the Privi-
leges and Immunities Clause. As established by the State
in the remand proceeding, the New Jersey highway
system was in place by 1961, the year in which the ETT
was enacted (App. B to cross respondents’ petition for
certiorari at 37). Since that time, State expenditmres
for highway facilities have been used primarily to widen

29

and maintain the existing roads in order to accomodate
commuter demand (Jbid.). Thus, while New York com-
muters, through the ETT, have contributed to the on-
going support of the New Jersey highway system, they
contributed virtually nothing to its initial construction.
The capital costs to construct the system were borne by
New Jersey residents alone.

The Court has sanctioned similar state imposed cost
differentials between residents and nonresidents. In
Vlandis v. Kline, 412 U.S. 441 (1973), the Court struck
down on Due Process grounds a State statute which
created, under certain facts, an irrebuttable presumption
of nonresidency for purposes of determining tuition rates
at the state university. However, the Court made clear
that the State had a legitimate interest in establishing
preferential tuition rates for its residents. 412 U.S. at
448 and 453. That legitimate interest was elaborated
upon in the dissenting opinions. In view of the large costs
incurred by the States in constructing and operating
their state universities and the tax burden imposed on
state residents to fund those costs, the States could con-
stitutionally require nonresidents to pay higher tuitions
than residents.

The position of the New York commuters in this case
is similar. They are benefiting from a highway system
constructed in large part through tax dollars paid by New
Jersey residents. The ETT merely ass-sses the New
York commuters for a small portion of the State’s current
transportation costs. Such an assessment, in view of the
heavy costs borne by New Jersey residents in putting the
highway and transit systems in place, is fully consistent
with the Privileges and Immunities Clause.

In short, the New Jersey Supreme Court misinterpreted
the holdings of this Court in prohibiting the State from

justifying the ETT on the basis of other taxes paid
primarily by residents and the prior contributions made
by New Jersey residents to the transportation infra-
structure, as well as the transportation costs imposed
by New York commuters on the State of New Jerrey.
Therefore, if the Court grants the petition for certiorari,
it should also grant the cross petition.

CONCLUSION

It is respectfully submitted that for the foregoing
reasons the cross petition for a writ of certiorari should
be granted.

Respectfully submitted,

Irwin I. KimMELMAN,
Attorney General of New Jersey,

Attorney for Cross Petitioner, Sidney
Glaser, Director of the Division of
Taxation, Department of the Treasury
of the State of New Jersey,

Richard J. Hughes Justice Complex
ON 112,
Trenton, New Jersey 08625.
(609) 292-4925

Micwaet R. Core,
Assistant Attorney General,
Of Counsel.

Anprea M. Sr_xowirz
Mary R.
~— Attorneys General,
m the Cross Petition,

October 6, 1983

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_0591%3A1. Public record. Not legal advice.