General Motors Corp. v. Washington

Background

An automaker (General Motors) sold cars, parts, and accessories to independent dealers in Washington between 1949 and 1953. The State imposed a business tax measured by the gross wholesale sales delivered in Washington. GM challenged the tax for four of its divisions (Chevrolet, Pontiac, Oldsmobile, and GM Parts), arguing it taxed interstate commerce, was unapportioned, discriminatory, and multiple taxation violated the Constitution. Washington courts held the sales were taxable because GM had local employees, a Seattle branch, and a Seattle parts warehouse.

Reasoning

The Supreme Court majority (opinion by Justice Clark) focused on whether Washington's tax linked closely enough to GM's local activities. The Court found district managers, service representatives, a Seattle branch office, and a local warehouse were local incidents that gave the State "something for which it can ask return." The Court concluded the unapportioned gross‑receipts tax bore a reasonable relation to GM’s in‑state business and therefore did not violate the Commerce Clause or Due Process protections. The Court declined to decide the multiple‑taxation issue because GM had not shown a constitutional burden.

Real world impact

The ruling allows Washington to collect the wholesale tax on GM’s transactions that were tied to local operations. Businesses with in‑state sales staff, branches, or warehouses may face similar taxes. The decision leaves open questions about potential multiple taxation and how other States might tax the same interstate sales.

Dissents or concurrances

Justices Brennan, Goldberg, Stewart, and White dissented, warning this rule risks burdening interstate commerce, requires fair apportionment, and could encourage duplicative state taxation.