American Trucking Associations, Inc. v. Scheiner

PETITIONER: American Trucking Associations, Inc.
RESPONDENT: Scheiner
LOCATION: United States Tax Court

DOCKET NO.: 86-357
DECIDED BY: Rehnquist Court (1986-1987)
LOWER COURT: Supreme Court of Pennsylvania

CITATION: 483 US 266 (1987)
ARGUED: Apr 28, 1987
DECIDED: Jun 23, 1987

ADVOCATES:
Stephen M. Shapiro - Argued the cause for the appellants
Suellen M. Wolfe - Argued the cause for the appellees

Facts of the case

One of the types of fees that Pennsylvania used to finance the cost of its highway maintenance was lump-sum annual fees, also known as flat taxes. In 1980, Pennsylvania increased the fee for an identification marker required of every truck over a certain weight from $2 to $25, but exempted trucks registered in Pennsylvania from the fee _ the marker fee was "deemed" to be included in the registration fee that local truckers had to pay. In 1982, the marker tax was reduced to $5, but a new tax was introduced, taxing trucks by the axle. The axle tax applied to all trucks weighing more than 26,000 pounds, but the registration fee for Pennsylvania trucks was reduced in an amount calculated to offset that new tax for most trucks. These flat taxes were contested in two state court cases on the ground, inter alia, that they violated the Commerce Clause of the Federal Constitution. Since Pennsylvania-based trucks travel, on average, about five times as many miles in Pennsylvania as out-of-state trucks, the cost of the flat taxes was approximately five times as high per mile of road use for out-of-state vehicles as for local vehicles. For that reason, the lower courts in Pennsylvania found that both the marker tax and the axle tax violated the Commerce Clause. The Supreme Court of Pennsylvania considered both cases together and reversed.

Question

Do flat state taxes on the use of a state's highways run afoul of the Commerce Clause by discriminating against interstate commerce?

Media for American Trucking Associations, Inc. v. Scheiner

Audio Transcription for Oral Argument - April 28, 1987 in American Trucking Associations, Inc. v. Scheiner

William H. Rehnquist:

We will hear argument first this morning in No. 86-357, American Trucking Associations versus James I. Scheiner.

Mr. Shapiro, you may proceed whenever you are ready.

Stephen M. Shapiro:

Thank you, Mr. Chief Justice, and may it please the Court, this appeal brings before the Court two taxes, the axle tax and the marker fee which are imposed by the State of Pennsylvania on trucks that travel over its highways.

Appellants challenge both of these taxes under the commerce clause as discriminatory against truckers who engage in interstate operations.

I should make clear at the outset that we do not question the amount of revenues that Pennsylvania seeks to raise by these taxes.

We strongly support the right of every state to raise the funds which it needs to keep its highways safe and unobstructed.

Our objection to these taxes goes only to their discriminatory character and to the penalty which they impose on those who choose to participate in interstate commerce.

I would like to begin today with a discussion of our flat tax challenge which relates to both the marker fee and the axle tax.

The marker fee charged a flat sum of $25 per truck.

The axle tax charges $36 per axle.

That is $180 for almost every truck that travels in interstate commerce.

Under the axle tax a truck that travels a few thousand miles in Pennsylvania pays the same amount as a truck that travels ten, twenty, or fifty times as much.

Truckers from other states who are light users of Pennsylvania's highways end up paying the same amount as local truckers who use the highways on a regular basis.

The result is a cost per mile that is much higher on the average for the out-of-state trucker than for the in-state trucker, and that, as this Court has pointed out on several occasions, is the inherent discriminatory effect of a flat tax which favors local users and disfavors users from other states whose business requires them to move across the country in interstate commerce.

Antonin Scalia:

Mr. Shapiro, how do you know that per mile is the proper apportionment?

I mean, maybe it should be per ton of traffic or per ton mile or... there are lot of different... per hours on the roads of Pennsylvania.

There are a lot of different--

Stephen M. Shapiro:

That is correct.

Antonin Scalia:

--apportionments you could come to, aren't there?

Stephen M. Shapiro:

That is correct, Your Honor.

The Court's recent opinions have made clear that the measure of the tax has to be geared in some respect to the extent of the taxpayer's in-state presence and activity.

Ordinarily when we are discussing usage of the highway that would be mileage but it may be mileage along with weight or other factors.

There is no single way that--

Antonin Scalia:

There is no single one.

It could be hours on the road.

Stephen M. Shapiro:

--It could be hours on the road.

That's correct.

Antonin Scalia:

Is that any different from the discrimination that exists with respect to the citizens of Pennsylvania themselves?

I presume that every Pennsylvania citizen who purchases a car and registers it in the state pays a flat registration fee which isn't dependent on how much he uses the car.

It is the same type of discrimination there, isn't it?