Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113 (1920)

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Underwood Typewriter Company v. Chamberlain

No. 215

Argued October 13, 14, 1920
Decided November 15, 1920
254 U.S. 113

ERROR TO THE SUPERIOR COURT

OF THE STATE OF CONNECTICUT

Syllabus

1 A state tax upon the proportion of the net profits of a sister-state corporation earned by operations conducted within the taxing state, the enforcement of which is left to the ordinary means of collecting taxes, does not violate Art. I, § 8, of the federal Constitution by imposing a burden upon interstate commerce. P. 119.

2. In considering whether a state tax, purporting to be on the net income of a sister-state corporation earned within the taxing state, violates the Fourteenth Amendment by reaching income earned outside, it is not necessary to decide whether it is a direct tax on income or an excise measured by income. P. 120.

3. A state tax upon the income of a sister-state corporation manufacturing its product within the state but deriving the greater part of its receipts from sales outside the state, which attributes to processes conducted within the state the proportion of the total net income which the value of real and tangible personal property owned by the corporation within the state bears to the value of all its real and tangible personal property is not inherently unreasonable and calculated to tax income earned beyond the orders of the state, and, unless it be shown to be so in its application to the particular case, cannot be held to violate the due process clause of the Fourteenth Amendment. P. 120.

4. Held that the fact that the amount of net income so allocated to the taxing state greatly exceeded in this case the portion actually received there does not prove that income earned outside was included in the assessment.

5. The principle discussed in Southern Ry. Co. v. Greene, 216 U.S. 400, 414, respecting the right of a state under the Fourteenth Amendment to impose discriminatory taxes on a sister-state corporation which had made large permanent investments in railroad property in the state before the tax law was enacted is inapplicable to this case, involving a nondiscriminatory tax on the locally earned income of a manufacturing corporation. P. 122.

94 Conn. 47 affirmed.

The case is stated in the opinion.