Aloha Airlines v. Director of Taxation, 464 U.S. 7 (1983)

Aloha Airlines, Inc. v. Director of Taxation of Hawaii

No. 82-585

Argued October 4, 1983
Decided November 1, 1983 *
464 U.S. 7

APPEAL FROM THE SUPREME COURT OF HAWAII

Syllabus

A Hawaii statute imposes a tax on the annual gross income of airlines operating within the State, and declares that such tax is a means of taxing an airline’s personal property. Section 7(a) of the Airport Development Acceleration Act of 1973 (ADAA) prohibits a State from levying a tax,

directly or indirectly, on persons traveling in air commerce or on the carriage of persons traveling in air commerce or on the sale of air transportation or on the gross receipts derived therefrom,

but provides that property taxes are not included in this prohibition. Appellant airlines each brought an action for refund of taxes assessed under the Hawaii statute, claiming that the statute was preempted by § 7(a). The Hawaii Tax Appeal Court rejected this preemption argument, and the Hawaii Supreme Court affirmed.

Held: Section 7(a) preempts the Hawaii statute. Pp. 11-15.

(a) When a federal statute unambiguously forbids a State to impose a particular kind of tax on an industry affecting interstate commerce, as § 7(a) does here by its plain language, courts need not look beyond the federal statute’s plain language to determine whether a state statute that imposes such a tax is preempted. P. 12.

(b) Moreover, nothing in the ADAA’s legislative history suggests that Congress intended to limit § 7(a)’s preemptive effect to taxes on airline passengers or to save gross receipts taxes such as the one Hawaii imposes. Although § 7(a) was enacted to deal primarily with local head taxes on airline passengers, the legislative history contains many references to the fact that § 7(a) preempts state taxes on gross receipts of airlines. Pp. 12-13.

(c) The fact that the Hawaii tax is styled as a property tax measured by gross receipts rather than as a straightforward gross receipts tax does not entitle the tax to escape preemption under § 7(a)’s property tax exemption. Such styling of the tax does not mask the fact that the purpose and effect of the tax are to impose a levy upon the gross receipts of airlines, thus making it at least an "indirect" tax on such receipts. Pp. 13-14.

65 Haw. 1, 647 P.2d 263, reversed and remanded.

MARSHALL, J., delivered the opinion for a unanimous Court.