Halliburton Oil Well Cementing Company v. Reily/Concurrence Brennan

Mr. Justice BRENNAN, concurring.

I fully concur in the opinion of the Court insofar as it treats of isolated sales. It seems clear that Louisiana exempts from sales taxation within the State the purchase of items which, if bought outside the State and brought in, would eventually incur a Louisiana use tax. The equality of treatment which my Brother CLARK finds assured by the credit for taxes already paid to other States seems to me wholly fortuitous. The credit for prior sales or use taxes will avert discrimination in the taxation of casual sales only if the out-of-state purchaser has already paid a sales or use tax equal to or greater than Louisiana's use tax, so that the credit is fully effective. If the purchaser abroad has paid no prior tax, or one of smaller amount, then upon his first use of the article in Louisiana he incurs a tax liability which he would clearly have escaped had he made the identical purchase at an exempted casual sale within the State. No justification for such discrimination has been suggested, and I can think of none beyond a mere possibility of administrative convenience.

I also agree that, under the circumstances of this case, the application of Louisiana's use tax statute to appellant is constitutionally impermissible. This result does not, I think, flow from any duty upon the States to ensure absolute equality of economic burden as between sales and use taxpayers. For we have sustained the constitutionality of the sales and compensating use tax system, Henneford v. Silas Mason Co., 300 U.S. 577, 57 S.Ct. 524, 81 L.Ed. 814, even though as a matter of economic fact the out-of-state use taxpayer is likely ultimately to incur a heavier burden than his in-state counterpart, the sales taxpayer. Such a disparity may result, though the rate of taxation upon the two is identical, because the in-state seller is somewhat likelier to absorb some part of the salestax burden than is the out-of-state seller to absorb the burden of the use tax which his customer eventually must pay. Warren and Schlesinger, Sales and Use Taxes: Interstate Commerce Pays Its Way, 38 Col.L.Rev. 49, 70-74 (1938). And we have also intimated, 300 U.S., at 587, that a State may not be constitutionally obliged to credit the amount of sales taxes paid in other States against the use tax it imposes. See Note, 51 Harv.L.Rev. 130, 132-133 (1937). Nevertheless, if the Constitution does not mandate absolute equality of treatment as between in-state and out-of-state sales, it assuredly does forbid discriminatory treatment by the States. Discrimination would result if different rates of taxation were imposed by the State on use and sale, and it is the result here because Louisiana, while it taxes the full value of property assembled without and used but not sold within the State, does not tax the full value of property assembled within the State and used but not sold there.

It does not follow, however, nor do I read the Court's opinion as so holding, that as a result of today's decision Louisiana has no option but to adopt the practice of Ohio, North Dakota, and California, see pp. 74-75, supra, and exclude labor and shop overhead from the tax base of the out-of-state manufacturer-user. That might be the case if the sole justification for the use tax were to offset the effect of sales taxes imposed on in-state purchasers, and thereby to deter domestic consumers from seeking to evade the sales tax by purchasing out of state. But we have recognized an alternative justification for the use tax as a levy upon 'the privilege of use after commerce is at an end.' 300 U.S., at 582, 57 S.Ct. at 526; see Hartman, State Taxation of Interstate Commerce (1953), 162 163. Thus Louisiana surely may if it chooses tax appellant's trucks and equipment, when they come to rest in the State, at their full value. Since this alternative is available to Louisiana and any other use-tax State, I fail to see the inevitability of my Brother CLARK's prediction that 'this decision will deprive Louisiana of millions of dollars under its sales tax.' The Court holds no more than that if Louisiana chooses to levy such a use tax it cannot constitutionally exempt in-state manufacturer-users as it now does; it must tax 'the privilege of use' within the State of the property of such users at full value and at the same rates. Nothing in the Court's opinion nor in my view of the case prescribes the particular manner in which Louisiana must obey the Constitution.

Mr. Justice CLARK, with whom Mr. Justice BLACK joins, dissenting.