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Keywords

corporation

Related Cases

Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113, 41 S.Ct. 45, 65 L.Ed. 165, 3 A.F.T.R. 3087

Facts

The Underwood Typewriter Company, a Delaware corporation, was assessed a tax by Connecticut based on its net income earned from business conducted within the state. The company contended that the tax was unconstitutional, as it was applied to income derived from interstate commerce. After paying the tax under protest, the company sought relief in the Superior Court, which confirmed the tax's validity following favorable answers from the Supreme Court of Errors regarding the constitutional questions raised.

The Underwood Typewriter Company, a Delaware corporation, was assessed a tax by Connecticut based on its net income earned from business conducted within the state.

Issue

Did the tax imposed by Connecticut on the Underwood Typewriter Company violate the Commerce Clause or the Fourteenth Amendment of the U.S. Constitution?

Rule

A tax measured by net profits is valid even if those profits are derived in part from interstate commerce, and states may impose taxes on corporations based on income earned within their borders.

Analysis

The court determined that the tax did not violate the Commerce Clause, as it was not a condition for conducting business and was based on net profits earned within the state. The court also found that the method of apportionment used by Connecticut was reasonable and did not arbitrarily tax income from outside the state. The company failed to demonstrate that the apportionment method was inherently flawed or that it resulted in an unreasonable tax burden.

The court determined that the tax did not violate the Commerce Clause, as it was not a condition for conducting business and was based on net profits earned within the state.

Conclusion

The court affirmed the judgment of the Superior Court, upholding the validity of the tax assessed against the Underwood Typewriter Company.

Who won?

The State of Connecticut prevailed in the case, as the court upheld the validity of the tax imposed on the Underwood Typewriter Company.

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