Associated Industries of Missouri v. Lohman - Oral Argument - March 28, 1994

Associated Industries of Missouri v. Lohman

Media for Associated Industries of Missouri v. Lohman

Audio Transcription for Opinion Announcement - May 23, 1994 in Associated Industries of Missouri v. Lohman

Audio Transcription for Oral Argument - March 28, 1994 in Associated Industries of Missouri v. Lohman

William H. Rehnquist:

We'll hear argument next in Number 94-397, the Associated Industries of Missouri, v. Janet Lohman.

Mr. Walsh.

Thomas C. Walsh:

Mr. Chief Justice, may it please the Court:

This case is a Commerce Clause challenge to section 144.748 of the revised statutes of Missouri, which imposes an additional use tax of 1-1/2 percent on all goods purchased from out of State for use, storage, or consumption in Missouri.

Now, the Missouri overall taxing scheme is thus as follows.

There is a 4.225 State-wide sales tax.

There is a 4.225 equivalent State-wide use tax.

The challenged statute adds an additional 1.5 percent use tax to be charged across the State on all transactions from out of State.

There is no corresponding additional sales tax State-wide.

Cities and counties and other municipalities within the State, however, are authorized to enact local sales taxes with the approval of the voters.

There is no authority for any such local use taxes.

Now, the result of this unusual statutory scheme is a patchwork taxing scheme within the State of Missouri that has 22 different local sales tax rates, ranging from zero percent in several counties to 3.5 percent in one city, and bear in mind that throughout the whole State, the 1-1/2 percent additional use tax is applicable, so the total use tax applicable throughout the State of Missouri is 5.725 percent.

William H. Rehnquist:

Is there any correspondence, Mr. Walsh, between the size of the local sales tax and the population of the taxing jurisdiction?

Thomas C. Walsh:

Not directly, Your Honor.

Some of the higher sales tax rates are in the larger cities, and some of those that have no additional sales tax are the smaller rural communities, but there's no... you can't really draw a specific correlation.

Sandra Day O'Connor:

Mr. Walsh, at one time was there a provision that said if a local community imposes an additional sales tax of its own, that it would impose an equivalent use tax at the same time?

Thomas C. Walsh:

There was a provision, Justice O'Connor, in 1990, right before this particular law became effective.

Sandra Day O'Connor:

Had that been adopted by the legislature?

Thomas C. Walsh:

Yes, it had.

It was--

Sandra Day O'Connor:

Did it ever go into effect?

Thomas C. Walsh:

--Well, it was on the books for about a year, but it was never implemented.

Sandra Day O'Connor:

Had that been implemented, would you be here?

Thomas C. Walsh:

Not at all, Your Honor.

I... we have no quarrel with that kind of--

Sandra Day O'Connor:

Why was it not implemented?

Why was this shift made?

Thomas C. Walsh:

--The record doesn't really show that, Your Honor, except that a) the state thought it was easier, apparently, to do it the way that it eventually decided to do it, and b) I think there was probably some concern about whether local voters would actually adopt a local use tax.

Sandra Day O'Connor:

Is that the method employed in some other States that allow local imposition of additional sales tax?

Thomas C. Walsh:

The record shows, Your Honor, that there are 28 States that allow local use taxes, and every one of them has some sort of mechanism which prohibits the local use tax from being greater than the local sales tax.