In re Nestle USA, Inc.

October 30, 2012 by Justia

Since first imposing a franchise tax in 1893, the Legislature restructured it several times, drawing various distinctions among taxpayers with adjustments, deductions, and exemptions that became elaborate. Petitioner in this original proceeding contended that the franchise tax bore no reasonable relationship to its object, the value of the privilege of doing business in Texas, and therefore it violated the Texas Constitution's mandate that "taxation shall be equal and uniform," the Fourteenth Amendment's equal protection and due process guarantees, and the U.S. Constitution's Commerce Clause. The Supreme Court denied the petition, holding (1) Petitioner failed to establish that the franchise tax violates the Equal and Uniform Clause; (2) the failure of Petitioner's challenge based on the Equal and Uniform Clause foreclosed its equal protection challenge; (3) the franchise tax does not violate due process; and (4) the manufacturing rate does not discriminate against interstate commerce and is fairly related to the services provided by Texas. View "In re Nestle USA, Inc." on Justia Law