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Delaware Wholesaler Tax on Auto Manufacturer Constitutional


Manufacturing

The Delaware Supreme Court found that the wholesalers’ gross receipts tax applied on an out-of-state auto manufacturer’s receipts resulting from vehicles delivered in Delaware did not violate the Commerce Clause of the U.S. Constitution. The Court concluded that the tax satisfied the test articulated by the U.S. Supreme Court in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977). Delaware’s wholesalers’ gross receipts tax did not pose a risk of multiple taxation because it only applied to sales of property physically delivered in Delaware. Only in Delaware did the delivery of taxed goods occur, and only Delaware had jurisdiction to tax this activity. Therefore, as in the Tyler Pipe Industries v. Washington State Department of Revenue, 483 U.S. 232 (1987) case, the tax was not “out of all appropriate proportion to the business transacted” in the state, and thus the Court found the tax was fairly apportioned. Furthermore, the tax did not discriminate again interstate commerce, as the Superior Court explained, the Wholesalers' Tax "treats any wholesaler engaged in wholesaling in Delaware the same. All must pay a tax on the gross receipts of the wholesaling activity without regard to where or how the goods were manufactured or assembled." (Ford Motor Co. v. Director of Revenue, Delaware Supreme Court)

(06/29/2009)
(Archived)
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