View source for Complete Auto Transit, Inc. v. Brady

{{Use mdy dates|date=September 2023}}
{{Infobox SCOTUS case
  |Litigants=Complete Auto Transit, Inc. v. Brady
  |ArgueDate=January 19
  |ArgueYear=1977
  |DecideDate=March 7
  |DecideYear=1977
  |FullName=Complete Auto Transit, Inc. v. Brady, Chairman, Mississippi Tax Commission
  |USVol=430
  |USPage=274
  |ParallelCitations=97 S. Ct. 1076; 51 [[L. Ed. 2d]] 326; 1977 [[U.S. LEXIS]] 56 
  |Prior=''[[Certiorari]]'' from the [[Supreme Court of Mississippi]], 330 [[So. 2d]] [https://law.justia.com/cases/mississippi/supreme-court/1976/48590-0.html 268] (Miss. 1976).
  |Subsequent=Rehearing denied, {{ussc|430|976|1977|el=no}}.
  |Holding= A privilege tax, when used in conjunction with the "four-prong" test, does not discourage interstate commerce.
  |Majority=Blackmun
  |JoinMajority=''unanimous''
  |Concurrence=
  |JoinConcurrence=
  |Dissent=
  |JoinDissent=
  |LawsApplied=[[Commerce Clause|U.S. Const. art. I, § 8]]
  |Overturned previous case = ''[[Spector Motor Service v. O'Connor]]'', 340 U.S. 602 (1951)
}}

'''''Complete Auto Transit, Inc. v. Brady''''', 430 U.S. 274 (1977), is a [[Supreme Court of the United States|United States Supreme Court]] case regarding the [[Commerce Clause]] and [[sales tax]].<ref name=Brady>{{ussc|name=Complete Auto Transit, Inc. v. Brady|volume=430|page=274|pin=|year=1977}}. {{usgovpd}}</ref>

== Background ==
Complete Auto was a Michigan-based auto transporter involved in moving [[General Motors]] vehicles from the [[railhead]] at [[Jackson, Mississippi]] to dealerships in [[Mississippi]]. The vehicles were assembled outside Mississippi.

The Mississippi State Tax Commission levied a tax upon Complete Auto "for the privilege of engaging or continuing in business or doing business"<ref name=Brady/> in the state of Mississippi.<ref name="Cornell">{{cite web |title=COMPLETE AUTO TRANSIT, INC., Appellant, v. Charles R. BRADY, Jr., etc. |url=https://www.law.cornell.edu/supremecourt/text/430/274 |website=LII / Legal Information Institute |accessdate=May 12, 2020 |language=en |date=March 7, 1977}} {{PD-notice}}</ref> The Court refers to the tax as a "[[Sales taxes in the United States|sales tax]]"; however, it was a "transaction privilege" or [[gross receipts tax]] based on Complete Auto's gross receipts.

Complete Auto paid the taxes of $122,160.59 under protest, and then undertook a refund action in the [[Mississippi Chancery Courts|Chancery Court]] of the First Judicial District of Hinds County. Complete Auto claimed that its transportation was but one part of an interstate movement, and that the taxes assessed and paid were unconstitutional as applied to operations in interstate commerce. The Chancery Court, in an unreported opinion, sustained the assessments.<ref name="Cornell"/>

Complete Auto appealed to the Mississippi Supreme Court. The Court unanimously affirmed and concluded:

<blockquote>It will be noted that Taxpayer has a large operation in this State. It is dependent upon the State for police protection and other State services the same as other citizens. It should pay its fair share of taxes so long, but only so long, as the tax does not discriminate against interstate commerce, and there is no danger of interstate commerce being smothered by cumulative taxes of several states. There is no possibility of any other state duplicating the tax involved in this case.<ref name="Cornell"/></blockquote>

=== Arguments ===
Complete Auto argued against the [[constitutionality]] of tax, stating that they were part of an [[Interstate commerce|interstate operation]], involved in transporting vehicles from the factories in [[Michigan]] to the dealers in Mississippi.<ref name=Brady/> According to Complete Auto, taxation on interstate operations not only discourages interstate commerce but also is a violation of the Commerce Clause.

== Ruling ==
The Supreme Court ruled in favor of Mississippi. The ruling established a four-prong test for constitutionality of a tax under the Commerce Clause:<ref name="Revenue">{{cite web|url=http://www.revenue.state.az.us/Audit/nexus.asp|title=Arizona Department of Revenue NEXUS UNIT|publisher=Arizona Department of Revenue|accessdate=2008-10-01|archive-url=https://web.archive.org/web/20080928220630/http://www.revenue.state.az.us/Audit/nexus.asp|archive-date=2008-09-28|url-status=dead}}</ref>

*'''Substantial nexus''' - connection between a state and a potential taxpayer clear enough to impose a tax.<ref name="Revenue" />
*'''Nondiscrimination''' - interstate and intrastate taxes should not favor one over the other.<ref name=Brady/>
*'''Fair apportionment''' - taxation of only the apportionment of activity that transpires within the taxing jurisdiction.<ref name="Sutherland">{{cite web|url=http://www.sutherland.com/file_upload/LegalAlertTexasFranchiseTaxThrowbackApportionmentProvisionAugust32005.pdf|title=Texas Franchise Tax Throwback Apportionment Provision Violates the Commerce Clause of the United States Constitution|publisher=Sutherland Asbill & Brennan LLP|accessdate=2008-10-01|archive-url=https://web.archive.org/web/20110716171104/http://www.sutherland.com/file_upload/LegalAlertTexasFranchiseTaxThrowbackApportionmentProvisionAugust32005.pdf|archive-date=2011-07-16|url-status=dead}}</ref>
*'''Fair relationship to services provided by the state''' - company enjoys services such as police protection while in a state.<ref name=Brady/>

Even though Complete Auto asserted that it was a part of an interstate operation, the Court agreed with Mississippi that while operating within the state, it was afforded services, such as police protection, provided for by taxation.

== Subsequent developments ==
The test enunciated in ''Complete Auto Transit'' received significant interpretation in ''[[Commonwealth Edison Co. v. Montana]],'' 453 U.S. 609 (1981).<ref>Raabe, William A.; Whittenburg, Gerald E.; and Sanders, Debra L. ''Federal Tax Research.'' 8th ed. Florence, Ky.: Cengage Learning, 2008. {{ISBN|0-324-65965-2}}</ref>

== References ==
{{reflist}}

==External links==
* {{caselaw source
 | case = ''Complete Auto Transit, Inc. v. Brady'', {{ussc|430|274|1977|el=no}}
 | courtlistener =https://www.courtlistener.com/opinion/109615/complete-auto-transit-inc-v-brady/
 | findlaw = https://caselaw.findlaw.com/us-supreme-court/430/274.html
 | googlescholar = https://scholar.google.com/scholar_case?case=13484408162170408611
 | justia =https://supreme.justia.com/us/430/274/case.html
 | loc =http://cdn.loc.gov/service/ll/usrep/usrep430/usrep430274/usrep430274.pdf
 | oyez =https://www.oyez.org/cases/1976/76-29
 }}

{{USArticleI}}

[[Category:United States Constitution Article One case law]]
[[Category:United States Supreme Court cases]]
[[Category:United States Supreme Court decisions that overrule a prior Supreme Court decision]]
[[Category:United States Supreme Court cases of the Burger Court]]
[[Category:United States Dormant Commerce Clause case law]]
[[Category:United States taxation and revenue case law]]
[[Category:1977 in United States case law]]