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General Motors Corp. v. Washington, 377 U.S. 436, 84 S.Ct. 1564, 12 L.Ed.2d 430

Facts

General Motors, a Delaware corporation, engaged in business in Washington from January 1, 1949, through June 30, 1953, selling motor vehicles and parts manufactured outside the state. The corporation maintained a branch office in Seattle and employed district managers and service representatives in Washington to facilitate sales to local dealers. The state imposed a tax on the gross receipts from these wholesale sales, which General Motors contested, arguing that the tax was on interstate commerce and thus unconstitutional.

General Motors in a Delaware corporation which was engaged in business in Washington during the period of time involved in this case, January 1, 1949, through June 30, 1953.

Issue

Whether the Commerce Clause permits a state to assess an unapportioned gross receipts tax on the interstate wholesale sales of automobiles delivered to dealers for resale in that state.

The issue presented is whether the Commerce Clause permits a State to assess an unapportioned gross receipts tax on the interstate wholesale sales of automobiles delivered to dealers for resale in that State.

Rule

A state may impose a tax on the gross receipts from interstate commerce if the tax bears a reasonable relation to the activities conducted within the state and is fairly apportioned to the commerce carried on within the taxing state.

However, local taxes measured by gross receipts from interstate commerce have not always fared as well.

Analysis

The court analyzed the activities of General Motors in Washington, noting that the corporation had established a significant local presence through its employees and branch office. The court concluded that the tax was constitutionally valid because it was based on the substantial local business activities of General Motors, which justified the imposition of the tax under the Commerce Clause.

With these principles in mind, we turn to the facts.

Conclusion

The U.S. Supreme Court affirmed the judgment of the Washington Supreme Court, holding that the tax imposed on General Motors' gross receipts from sales in Washington was constitutionally valid.

Affirmed.

Who won?

Washington prevailed in the case because the court found that the tax on General Motors' gross receipts was constitutionally valid, as it bore a reasonable relation to the corporation's activities within the state.

Thus, in the bundle of corporate activity, which is the test here, we see General Motors' activity so enmeshed in local connections that it voluntarily paid taxes on various of its operations but insists that it was not liable on others.

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