Department of Revenue v. Ass'n of Washington Stevedoring Companies
Headline: Ruling lets Washington apply its 1% business tax to stevedoring, overturning old stevedoring tax immunity and making it easier for ports and loading companies to be taxed.
Holding: The Court held that Washington may apply its 1% business tax to stevedoring because the tax does not unlawfully burden interstate commerce or violate the import-export ban, and it overruled earlier stevedoring immunity cases.
- Allows Washington to collect 1% tax from stevedoring companies and port authorities.
- Overrules earlier cases that gave stevedoring special immunity from state business taxes.
- Requires stevedores to show concrete constitutional problems with nexus, apportionment, or discrimination.
Summary
Background
The dispute involved Washington’s Department of Revenue and stevedoring businesses and port authorities that load and unload ships. In 1974 Washington revised a rule to apply its 1% business-and-occupation tax to stevedoring. The stevedores sued, relying on older decisions that had found such taxes unconstitutional, and the Washington Supreme Court ruled for the stevedores.
Reasoning
The Supreme Court asked whether the tax unlawfully burdens interstate commerce or is a banned import-export duty. The Court concluded that a recent test allows states to tax business activity that has a strong connection to the state, is fairly apportioned, does not discriminate, and reasonably relates to services the state provides. The Court found no developed factual showing that Washington’s tax failed those tests. It therefore rejected the older cases that had given stevedoring special immunity and applied the modern tests instead.
Real world impact
The decision permits Washington to collect its 1% tax from stevedoring companies and port authorities so long as the tax meets the connection, apportionment, nondiscrimination, and benefit-related tests. The Court also applied the import-export policy analysis used in a recent case and found the tax does not offend those constitutional policies. The ruling reverses the Washington Supreme Court and returns the case for further proceedings consistent with this opinion.
Dissents or concurrances
A Justice joined the result but wrote separately, agreeing the tax survives while warning against reviving older formal tests about direct versus indirect taxation.
Opinions in this case:
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