General Motors Corp. v. District of Columbia, 380 U.S. 553 (1965)

Topics:  General Motors

From the U.S. Government Printing Office via GPO Access
 
Case:   GENERAL MOTORS CORP. V. DISTRICT OF COLUMBIA 

Case #: 380US553


NO. 352.  ARGUED MARCH 10, 1965 - DECIDED APRIL 27, 1965 - 118 U.S. APP.
D.C. 381, 336 F.2D 885, REVERSED AND REMANDED. 


THE DISTRICT OF COLUMBIA INCOME AND FRANCHISE TAX ACT OF 1947 IMPOSES
A FRANCHISE TAX ON CORPORATIONS ENGAGING IN TRADE OR BUSINESS WITHIN
THE DISTRICT, WHICH IS MEASURED BY THAT PORTION OF THE NET INCOME WHICH
"IS FAIRLY ATTRIBUTABLE TO ANY TRADE OR BUSINESS CARRIED ON OR ENGAGED
IN WITHIN THE DISTRICT."  THE ACT PROVIDES THAT IF THE CORPORATION'S
TRADE OR BUSINESS IS CARRIED ON BOTH WITHIN AND WITHOUT THE DISTRICT,
THE NET INCOME DERIVED THEREFROM SHALL BE DEEMED TO BE INCOME FROM
SOURCES WITHIN AND WITHOUT THE DISTRICT.  PURSUANT TO STATUTORY
AUTHORITY THE DISTRICT COMMISSIONERS ISSUED REGULATIONS PROVIDING THAT
WHERE INCOME IS DERIVED FROM THE MANUFACTURE AND SALE OF TANGIBLE
PERSONALTY, THE PORTION TO BE APPORTIONED TO THE DISTRICT SHALL BE SUCH
PERCENTAGE OF THE TOTAL INCOME AS THE DISTRICT SALES ARE OF TOTAL SALES
MADE EVERYWHERE.  THE PETITIONER, A DELAWARE CORPORATION MANUFACTURING
AND SELLING MOTOR VEHICLES AND PARTS, HAS MANUFACTURING PLANTS IN
MICHIGAN, DELAWARE AND MARYLAND, FROM WHICH ORDERS FOR CAR SALES TO
DEALERS IN THE DISTRICT WERE FILLED.  THE PETITIONER ATTACKS THE
ASSESSMENT OF TAXES PURSUANT TO THE REGULATIONS AS UNAUTHORIZED BY THE
STATUTE AND VIOLATIVE OF THE CONSTITUTION.  THE COURT OF APPEALS
SUSTAINED THE ASSESSMENT FORMULA.  HELD:  THE CHALLENGED REGULATIONS
EXCEED THE STATUTORY AUTHORITY BY ALLOCATING INCOME TO THE DISTRICT IN
DISREGARD OF THE EXPRESS RESTRICTIONS OF THE LAW.  PP. 555-562. 

(A)  WITH RESPECT TO THAT PORTION OF PETITIONER'S INCOME WHICH ARISES
FROM SALES WITHIN THE DISTRICT AND MANUFACTURE OUTSIDE THE DISTRICT,
THE STATUTE REQUIRES THAT SOME PART THEREOF BE DEEMED TO ARISE FROM
SOURCES OUTSIDE THE DISTRICT.  PP. 557-559. 

(B)  SINCE MOST STATES IMPOSING CORPORATE INCOME TAXES APPORTION
CORPORATE INCOME BY GIVING EQUAL WEIGHT TO GEOGRAPHICAL DISTRIBUTION OF
PLANT, PAYROLL, AND SALES, THE USE OF A FORMULA BASED WHOLLY ON SALES
WILL RESULT IN MULTIPLE TAXATION AND UNFAIR ALLOCATION OF CORPORATE
INCOME.  PP. 559-560. 

(C)  THE APPORTIONMENT METHOD USED SHOULD HAVE A REASONABLE RELATION
TO THE CORPORATE ACTIVITIES WITHIN A STATE, AND THE GEOGRAPHIC
DISTRIBUTION OF SALES, STANDING ALONE, PROVIDES A DOUBTFUL CRITERION OF
ALLOCATION.  PP. 560-561. 

(D)  THE STATUTORY LANGUAGE DOES NOT ALLOW THE USE OF AN
APPORTIONMENT FORMULA UTILIZING ONLY THE SALES FACTOR.  PP. 561-562. 

GENERAL MOTORS CORP. V. DISTRICT OF COLUMBIA. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF
COLUMBIA CIRCUIT. 

MR. JUSTICE STEWART DELIVERED THE OPINION OF THE COURT. 

THE DISTRICT OF COLUMBIA INCOME AND FRANCHISE TAX ACT OF 1947 IMPOSES
A TAX OF 5% ON THE TAXABLE INCOME OF EVERY CORPORATION, FOREIGN OR
DOMESTIC, FOR THE PRIVILEGE OF ENGAGING IN ANY TRADE OR BUSINESS WITHIN
THE DISTRICT.  (FN1)  THE ACT FURTHER PROVIDES THAT "THE MEASURE OF THE
FRANCHISE TAX SHALL BE THAT PORTION OF THE NET INCOME OF THE
CORPORATION  ..  ASS IS FAIRLY ATTRIBUTABLE TO ANY TRADE OR BUSINESS
CARRIED ON OR ENGAGED IN WITHIN THE DISTRICT AND SUCH OTHER NET INCOME
AS IS DERIVED FROM SOURCES WITHIN THE DISTRICT."  (FN2)  THE ACT DOES
NOT ATTEMPT TO DEFINE A SPECIFIC METHOD WHEREBY THE PORTION OF INCOME
"FAIRLY ATTRIBUTABLE" TO THE DISTRICT IS TO BE DETERMINED, BUT
AUTHORIZES THE DISTRICT COMMISSIONERS TO PRESCRIBE REGULATIONS FOR SUCH
DETERMINATION.  (FN3) HOWEVER, THE COMMISSIONERS' DISCRETION IN
DEVISING SUCH REGULATIONS IS NOT UNFETTERED, AS THE ACT FURTHER
COMMANDS:  "IF THE TRADE OR BUSINESS OF ANY CORPORATION  ..  ISS
CARRIED ON OR ENGAGED IN BOTH WITHIN AND WITHOUT THE DISTRICT, THE NET
INCOME DERIVED THEREFROM SHALL  ..  BEE DEEMED TO BE INCOME FROM
SOURCES WITHIN AND WITHOUT THE DISTRICT."  (FN4) 

ACTING PURSUANT TO THE AUTHORITY DELEGATED TO FORMULATE REGULATIONS
GOVERNING THE ALLOCATION OF INCOME, THE DISTRICT COMMISSIONERS
PROMULGATED REGULATIONS WHICH PROVIDE: "WHERE INCOME FOR ANY TAXABLE
YEAR IS DERIVED FROM THE MANUFACTURE AND SALE OR PURCHASE AND SALE OF
TANGIBLE PERSONAL PROPERTY, THE PORTION THEREOF TO BE APPORTIONED TO
THE DISTRICT SHALL BE SUCH PERCENTAGE OF THE TOTAL OF SUCH INCOME AS
THE DISTRICT SALES MADE DURING SUCH TAXABLE YEAR BEAR TO THE TOTAL
SALES MADE EVERYWHERE DURING SUCH TAXABLE YEAR."  (FN5) 

THE PETITIONER, GENERAL MOTORS CORPORATION (G.M.), SEEKS REVIEW OF AN
EN BANC DECISION OF THE COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA
CIRCUIT WHICH APPROVED THE APPLICATION OF THESE REGULATIONS IN
DETERMINING THE PROPORTION OF ITS TOTAL NET INCOME ALLOCABLE TO THE
DISTRICT FOR THE PURPOSE OF COMPUTING THE FRANCHISE TAX DUE.  (FN6)
GENERAL MOTORS ATTACKS THIS METHOD OF COMPUTATION ON THE GROUNDS THAT
IT ATTRIBUTES TO THE DISTRICT AN UNREASONABLY HIGH PROPORTION OF ITS
TOTAL INCOME AND THAT IT IS THEREFORE BOTH UNAUTHORIZED BY THE RELEVANT
DUE PROCESS CLAUSES OF THE CONSTITUTION.  WE AGREE THAT THIS METHOD OF
ALLOCATION IS NOT AUTHORIZED BY THE D.C. CODE AND THEREFORE REVERSE THE
JUDGMENT OF THE COURT OF APPEALS WITHOUT REACHING THE CONSTITUTIONAL
QUESTIONS RAISED. 

GENERAL MOTORS IS ENGAGED IN THE MANUFACTURE AND SALE OF MOTOR
VEHICLES, PARTS, AND ACCESSORIES.  A DELAWARE CORPORATION, THE
PETITIONER MAINTAINS ITS PRINCIPAL OFFICES IN NEW YORK AND DETROIT.  IT
CARRIES ON NO MANUFACTURING OPERATIONS WITHIN THE DISTRICT OF COLUMBIA,
BUT IT MAKES SUBSTANTIAL SALES TO CUSTOMERS LOCATED WITHIN THE
DISTRICT, CHIEFLY RETAIL AUTOMOBILE DEALERS.  DURING THE YEARS IN
QUESTION, 1957 AND 1958, ITS VOLUME OF SALES TO SUCH CUSTOMERS
AGGREGATED $37,185,704 AND $32,542,519, RESPECTIVELY.  (FN7)  ORDERS
FOR THESE SALES WERE RECEIVED AND FILLED OUTSIDE THE DISTRICT, AND THE
PRODUCTS WERE SHIPPED TO CUSTOMERS FROM G.M. MANUFACTURING PLANTS IN
MARYLAND, DELAWARE, AND MICHIGAN. 

IT IS THE CLAIM OF G.M. THAT THE USE OF THE "SALES-FACTOR FORMULA" IN
THE REGULATIONS IS BEYOND THE AUTHORITY OF THE STATUTE, BECAUSE THAT
FORMULA TAXES MORE OF ITS NET INCOME THAN IS "FAIRLY ATTRIBUTABLE" TO
ITS DISTRICT OF COLUMBIA BUSINESS, PARTICULARLY IN LIGHT OF THE
STATUTORY PROVISION WHICH PROVIDES THAT THE NET INCOME OF A BUSINESS
CARRIED ON BOTH WITHIN AND WITHOUT THE DISTRICT SHALL BE DEEMED TO BE
FROM SOURCES WITHIN AND WITHOUT THE DISTRICT.  WE AGREE THAT THE
COMMISSIONERS EXCEEDED THEIR STATUTORY AUTHORITY BY ALLOCATING INCOME
TO THE DISTRICT IN DISREGARD OF THE EXPRESS RESTRICTIONS OF THE LAW. 

WE ARE NORMALLY CONTENT TO LEAVE UNDISTURBED DECISIONS BY THE COURT
OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT CONCERNING THE IMPORT
OF LEGISLATION GOVERNING THE AFFAIRS OF THE DISTRICT.  HOWEVER, AT
TIMES APPLICATION OF THE DISTRICT CODE HAS AN IMPACT NOT CONFINED TO
THE POTOMAC'S SHORES, BUT REACHING FAR BEYOND.  THIS IS SUCH A CASE,
FOR APPROVAL OF THE DISTRICT COMMISSIONERS' REGULATIONS LENDS SANCTION
TO AN APPORTIONMENT FORMULA SERIOUSLY AT VARIANCE WITH THOSE PREVAILING
IN THE VAST MAJORITY OF STATES AND CREATES SUBSTANTIAL DANGERS OF
MULTIPLE TAXATION.  WHERE A DECISION IS OF SUCH SIGNIFICANCE TO
INTERSTATE COMMERCE, AND WHERE THE RESULT REACHED INVOLVES STATUTORILY
UNSUPPORTABLE EXERTIONS OF ADMINISTRATIVE POWER, THE TRADITIONAL
REASONS UNDERLYING OUR CUSTOMARY REFUSAL TO REVIEW INTERPRETATIONS OF
DISTRICT LAW DO NOT APPLY. 

IT IS OF COURSE CLEAR THAT THE DISTRICT CODE DOES NOT EXPRESSLY
PRESCRIBE THE USE OF ANY PARTICULAR FORMULA FOR THE APPORTIONMENT OF
INCOME TO SOURCES WITHIN AND WITHOUT THE DISTRICT.  ON THE CONTRARY,
THE CODE EXPRESSLY AUTHORIZES THE DISTRICT COMMISSIONERS TO PROMULGATE
REGULATIONS FOR THE DETAILED APPORTIONMENT OF THE INCOME OF MULTISTATE
ENTERPRISES.  BUT NEITHER DOES THE CODE LEAVE THE COMMISSIONERS WHOLLY
UNGUIDED IN THEIR EXERCISE OF THIS AUTHORITY.  THE COMMISSIONERS'
AUTHORITY IS CLEARLY LIMITED BY THE PROVISION  (SEC. 47-1580A) WHICH
REQUIRES THAT THE NET INCOME OF A CORPORATION DOING BUSINESS INSIDE AND
OUTSIDE THE DISTRICT BE DEEMED TO ARISE FROM SOURCES SITUATED IN LIKE
FASHION.  TO UNDERSTAND THE MEANING OF THIS LIMITATION, WE NEED BUT
TAKE THE SIMPLE EXAMPLE OF A CORPORATION WHICH HAS ITS MANUFACTURING
FACILITIES LOCATED WHOLLY IN MARYLAND AND SELLS ALL OF ITS PRODUCTS IN
THE DISTRICT OF COLUMBIA.  APPLICATION OF THE COMMISSIONERS' FORMULA
WOULD RESULT IN THE ALLOCATION OF 100% OF THE CORPORATION'S INCOME TO
THE DISTRICT.  YET THERE CAN BE NO DOUBT THAT THE BUSINESS OF THE
CORPORATION IS CARRIED ON BOTH WITHIN AND WITHOUT THE DISTRICT, VIZ.,
MANUFACTURE IN MARYLAND AND SALES IN THE DISTRICT.  THE STATUTE DOES
NOT SAY THAT NET INCOME SHALL BE DEEMED TO BE DERIVED FROM SOURCES
WITHIN AND WITHOUT THE DISTRICT ONLY WHERE THE SALES OF ANY CORPORATION
ARE MADE BOTH WITHIN AND WITHOUT THE DISTRICT, WHICH IS THE EFFECT OF
THE COMMISSIONERS' REGULATION.  THE STATUTE IS PHRASED MORE BROADLY AND
COMMANDS APPORTIONMENT OF INCOME TO SOURCES WITHIN AND WITHOUT THE
DISTRICT WHENEVER "THE TRADE OR BUSINESS OF ANY CORPORATION  ..  ISS
CARRIED ON OR ENGAGED IN BOTH WITHIN AND WITHOUT THE DISTRICT."  AS IT
IS CLEAR THAT SOME PART OF THE TRADE OR BUSINESS OF THIS HYPOTHETICAL
CORPORATION IS CARRIED ON WITHOUT THE DISTRICT, THE CONCLUSION FOLLOWS
THAT THE COMMISSIONERS MUST "DEEM" SOME PART OF THE INCOME OF THIS
CORPORATION TO BE DERIVED FROM SOURCES OUTSIDE THE DISTRICT. 

IT IS SAID THAT THE COMMISSIONERS' REGULATIONS ARE WITHIN THE
STATUTORY GRANT OF AUTHORITY BECAUSE THE LANGUAGE "THE NET INCOME
DERIVED THEREFROM" IN SEC. 47-1580A MUST BE READ TO MEAN THE TOTAL
INCOME OF THE CORPORATION AND NOT THE "NET INCOME ARISING FROM
ACTIVITIES IN THE DISTRICT."  THE SECTION MUST BE SO READ, IT IS
ARGUED, BECAUSE THIS READING LEAST RESTRICTS THE DISCRETION OF THE
COMMISSIONERS IN DEVISING APPORTIONMENT FORMULAE, AND THE TRADITIONAL
CANON OF BROAD CONSTRUCTION OF REVENUE MEASURES DEMANDS THAT
RESTRICTIONS ON THE COMMISSIONERS' DISCRETION BE MINIMIZED.  APPLYING
THIS APPROACH TO THE CASE AT HAND, IT IS ARGUED THAT THE COMMISSIONERS
FULFILLED THEIR STATUTORY OBLIGATION IN APPORTIONING THE TOTAL INCOME
OF G.M. TO SOURCES INSIDE AND OUTSIDE THE DISTRICT IN ACCORDANCE WITH
THE GEOGRAPHICAL DISTRIBUTION OF THE COMPANY'S SALES. 

WHERE, AS IN THIS CASE, SOME PORTION OF A CORPORATION'S INCOME IS
DERIVED FROM MANUFACTURE AND SALE OUTSIDE THE DISTRICT, THERE IS NO
QUESTION THAT THE STATUTE REQUIRES THE COMMISSIONERS TO ALLOCATE THAT
PORTION TO SOURCES OUTSIDE THE DISTRICT.  (FN8)  HOWEVER, IT DOES NOT
FOLLOW THAT THE MAKING OF THAT KIND OF ALLOCATION ALONE RELIEVES THE
COMMISSIONERS OF THEIR STATUTORY RESPONSIBILITY TO APPORTION THAT PART
OF A CORPORATION'S INCOME ARISING FROM MANUFACTURE OUTSIDE AND SALE
INSIDE THE DISTRICT LIMITS.  AS TO THIS SEGMENT OF ITS INCOME, G.M. IS
IN PRECISELY THE SAME SITUATION AS THE HYPOTHETICAL CORPORATION
MANUFACTURING WHOLLY IN MARYLAND AND SELLING SOLELY IN THE DISTRICT;
THAT IS, IT IS CARRYING ON A BUSINESS PARTLY WITHIN AND PARTLY WITHOUT
THE DISTRICT LIMITS.  IT IS NOT ENOUGH UNDER THE STATUTE TO REQUIRE
APPORTIONMENT OF INCOME DERIVED FROM DISTRICT SALES ONLY IN THE CASE
WHERE THE TAXED CORPORATION HAS NO SALES OUTSIDE THE DISTRICT.  THE
INESCAPABLE AND DETERMINATIVE FACT IN BOTH THE HYPOTHETICAL CASE AND
THE CASE BEFORE US IS THAT THE COMPANY CARRIES ON BUSINESS BOTH INSIDE
AND OUTSIDE THE DISTRICT WITH RESPECT TO THE INCOME WHICH IT DERIVES
FROM THE SALES MADE WITHIN THE DISTRICT.  CONSEQUENTLY, SEC. 47-1580A
REQUIRES THAT SOME PORTION OF THIS INCOME BE DEEMED TO ARISE FROM
SOURCES OUTSIDE THE DISTRICT. 

THE CONCLUSION WHICH WE REACH BY ANALYSIS OF THE PLAIN LANGUAGE OF
THE STATUTE ALSO FINDS SUPPORT IN THE CONSEQUENCES WHICH A CONTRARY
VIEW WOULD HAVE FOR THE OVERALL PATTERN OF TAXATION OF INCOME DERIVED
FROM INTERSTATE COMMERCE.  THE GREAT MAJORITY OF STATES IMPOSING
CORPORATE INCOME TAXES APPORTION THE TOTAL INCOME OF A CORPORATION BY
APPLICATION OF A THREE-FACTOR FORMULA WHICH GIVES EQUAL WEIGHT TO THE
GEOGRAPHICAL DISTRIBUTION OF PLANT, PAYROLL, AND SALES.  (FN9)  THE USE
OF AN APPORTIONMENT FORMULA BASED WHOLLY ON THE SALES FACTOR, IN THE
CONTEXT OF GENERAL USE OF THE THREE-FACTOR APPROACH, WILL ORDINARILY
RESULT IN MULTIPLE TAXATION OF CORPORATE NET INCOME; FOR THE STATES IN
WHICH THE PROPERTY AND PAYROLL OF THE CORPORATION ARE LOCATED WILL
ALLOCATE TO THEMSELVES 67% OF THE CORPORATION'S INCOME, WHEREAS THE
JURISDICTIONS IN WHICH THE SALES ARE MADE WILL ALLOCATE 100% OF THE
INCOME TO THEMSELVES.  CONVERSELY, IN SOME CASES ENTERPRISES WILL HAVE
THEIR PAYROLL AND PLANT LOCATED IN THE SALES-FACTOR JURISDICTIONS AND
MAKE THEIR SALES IN THE THREE-FACTOR JURSIDICTIONS SO THAT ONLY 33% OF
THEIR INCOMES WILL BE SUBJECT TO STATE TAXATION.  IN ANY CASE, THE
SHEER INCONSISTENCY OF THE DISTRICT FORMULA WITH THAT GENERALLY
PREVAILING MAY TEND TO RESULT IN THE UNHEALTHY FRAGMENTATION OF
ENTERPRISE AND AN UNECONOMIC PATTERN OF PLANT LOCATION, AND SO PRESENTS
AN ADDED REASON WHY THIS COURT MUST GIVE PROPER MEANING TO THE RELEVANT
PROVISIONS OF THE DISTRICT CODE. 

MOREOVER, THE RESULT REACHED IN THIS CASE IS CONSISTENT WITH THE
CONCERN WHICH THE COURT HAS SHOWN THAT STATE TAXES IMPOSED ON INCOME
FROM INTERSTATE COMMERCE BE FAIRLY APPORTIONED.  IN UPHOLDING TAXES
IMPOSED ON CORPORATE INCOME BY CONNECTICUT AND NEW YORK AND APPORTIONED
IN ACCORDANCE WITH THE GEOGRAPHICAL DISTRIBUTION OF A CORPORATION'S
PROPERTY, THIS COURT CAREFULLY INQUIRED INTO THE REASONABLENESS OF THE
APPORTIONMENT FORMULAE USED. 

"THE PROFITS OF THE CORPORATION WERE LARGELY EARNED BY A SERIES OF
TRANSACTIONS BEGINNING WITH MANUFACTURE IN CONNECTICUT AND ENDING WITH
SALE IN OTHER STATES.  IN THIS IT WAS TYPICAL OF A LARGE PART OF THE
MANUFACTURING BUSINESS CONDUCTED IN THE STATE.  THE LEGISLATURE IN
ATTEMPTING TO PUT UPON THIS BUSINESS ITS FAIR SHARE OF THE BURDEN OF
TAXATION WAS FACED WITH THE IMPOSSIBILITY OF ALLOCATING SPECIFICALLY
THE PROFITS EARNED BY THE PROCESSES CONDUCTED WITHIN ITS BORDERS  .. .
TTHERE IS  ..  NOOTHING IN THIS RECORD TO SHOW THAT THE METHOD OF
APPORTIONMENT ADOPTED BY THE STATE WAS INHERENTLY ARBITRARY, OR THAT
ITS  APPLICATION TO THIS CORPORATION PRODUCED AN UNREASONABLE RESULT." 
UNDERWOOD TYPEWRITER CO. V. CHAMBERLAIN, 254 U.S. 113, 120-121. 

SEE ALSO BASS, RATCLIFF & GRETTON, LTD. V. STATE TAX COMM'N, 266 U.S.
271.  WHILE THE COURT HAS REFRAINED FROM ATTEMPTING TO DEFINE ANY
SINGLE APPROPRIATE METHOD OF APPORTIONMENT, IT HAS SOUGHT TO ENSURE
THAT THE METHODS USED DISPLAY A MODICUM OF REASONABLE RELATION TO
CORPORATE ACTIVITIES WITHIN THE STATE.  THE COURT HAS APPROVED FORMULAE
BASED ON THE GEOGRAPHICAL DISTRIBUTION OF CORPORATE PROPERTY AND THOSE
BASED ON THE STANDARD THREE-FACTOR FORMULA.  SEE, E.G., UNDERWOOD
TYPEWRITER CO. V.  CHAMBERLAIN, SUPRA; BUTLER BROS. V. MCCOLGAN, 315
U.S. 501.  THE STANDARD THREE-FACTOR FORMULA CAN BE JUSTIFIED AS A
ROUGH, PRACTICAL APPROXIMATION OF THE DISTRIBUTION OF EITHER A
CORPORATION'S SOURCES OF INCOME OR THE SOCIAL COSTS WHICH IT
GENERATES.  BY CONTRAST, THE GEOGRAPHIC DISTRIBUTION OF A CORPORATION'S
SALES IS, BY ITSELF, OF DUBIOUS SIGNIFICANCE IN INDICATING THE LOCUS OF
EITHER FACTOR.  WE OF COURSE DO NOT MEAN TO TAKE ANY POSITION ON THE
CONSTITUTIONALITY OF A STATE INCOME TAX BASED ON THE SALES FACTOR
ALONE.  FOR THE PRESENT PURPOSE, IT IS SUFFICIENT TO NOTE THAT THE
FACTORS ALLUDED TO BY THIS COURT IN JUSTIFYING APPORTIONMENT MEASURES
CONSTITUTIONALLY CHALLENGED IN THE PAST LEND LITTLE SUPPORT TO THE USE
OF AN EXCLUSIVELY SALES-ORIENTED APPROACH.  IN CONSTRUING THE DISTRICT
CODE TO PROHIBIT THE USE OF A SALES-FACTOR FORMULA, WE SACRIFICE NONE
OF THE VALUES WHICH OUR SCRUTINY OF STATE APPORTIONMENT MEASURES HAS
SOUGHT TO PROTECT.    IN SUM, WE FIND THAT THE LANGUAGE OF THE
AUTHORIZING STATUTE DOES NOT PERMIT THE APPLICATION OF AN APPORTIONMENT
FORMULA WHICH MAKES USE OF THE SALES FACTOR ALONE.  THE CONCLUSION
WHICH WE DRAW FROM EXAMINATION OF THE STATUTORY LANGUAGE FINDS SUPPORT
IN THE CONFLICT WITH OTHER TAXING JURISDICTIONS WHICH WOULD REUSLT FROM
A CONTRARY VIEW.  IT FINDS FURTHER SUPPORT IN THE CONTINUING CONCERN
FOR FAIR APPORTIONMENT WHICH THIS COURT HAS DISPLAYED OVER THE YEARS IN
SCRUTINIZING STATE TAXING STATUTES.  AS THE DISTRICT CODE CONFIDES IN
THE COMMISSIONERS THE AUTHORITY TO PRESCRIBE DETAILED REGULATIONS, IT
IS NOT FOR US TO MAKE SPECIFIC PRESCRIPTION, AND WE LIMIT OURSELVES TO
HOLDING THAT THE PRESENT REGULATION IS UNAUTHORIZED BY THE STATUTE. 
ACCORDINGLY, THE JUDGMENT OF THE COURT OF APPEALS FOR THE DISTRICT OF
COLUMBIA CIRCUIT IS REVERSED AND THE CASE REMANDED FOR PROCEEDINGS
CONSISTENT WITH THIS OPINION.  REVERSED AND REMANDED. 

FN1  D.C. CODE 1961, SEC. 47-1571A. 

FN2  D.C. CODE 1961, SEC. 47-1580. 

FN3  D.C. CODE 1961, SEC. 47-1580A. 

FN4  IBID. 

FN5  SECTION 10.2(C) OF THE DISTRICT OF COLUMBIA INCOME AND FRANCHISE
TAX REGULATIONS, RELETTERED BY AMENDMENT OF JULY 24, 1956. 

FN6  118 U.S. APP. D.C. 381, 336 F.2D 885, CERTIORARI GRANTED, 379
U.S. 887.  AN EARLIER DECISION (91 WASH. LAW REP. 650) OF A PANEL OF
THE CIRCUIT COURT, REVERSED BY THE DECISION HERE REVIEWED, HAD REACHED
A CONTRARY CONCLUSION IN AFFIRMING THE DECISION OF THE DISTRICT OF
COLUMBIA TAX COURT (CCH D.C. TAX REP. PARA. 200-006). 

FN7  OUT OF TOTAL SALES OF $9,461,855,874 IN 1957 AND $7,853,393,381
IN 1958. 

FN8  THIS IS NOT TO SAY THAT THE COMMISSIONERS NEED ENGAGE IN
DETAILED SEGMENTATION OF CORPORATE INCOME TO SOURCE AND SPECIFIC
ALLOCATION THEREOF.  ALL THAT IS REQUIRED IS THAT THE FORMULA ADOPTED
FOR GENERAL APPLICATION TAKE ACCOUNT OF THE GEOGRAPHICAL SPREAD OF THE
MAJOR DIMENSIONS OF A BUSINESS. 

FN9  OF THE 38 STATES REQUIRING PAYMENT OF SUCH TAXES, 26 EMPLOY
VARIETIES OF A THREE-FACTOR FORMULA WHICH TAKES INTO ACCOUNT THE
GEOGRAPHICAL DISTRIBUTION OF A CORPORATION'S PAYROLL, PROPERTY AND
SALES, GENERALLY GIVING EQUAL WEIGHT TO EACH FACTOR.  ANOTHER THREE USE
SUBSTANTIALLY THE SAME FORMULA, REPLACING THE PAYROLL FACTOR WITH THE
BROADER CATEGORY OF MANUFACTURING COSTS.  YET ANOTHER THREE MAKE USE OF
A FORMULA WHICH INCORPORATES THE SALES AND PROPERTY FACTORS.  ONLY FOUR
TAXING JURISDICTIONS USE FORMULAE BASED SOLELY ON THE GEOGRAPHIC
DISTRIBUTION OF CORPORATE SALES.  SEE H.R. REP. NO. 1480, 88TH CONG.,
2D SESS., AT 119. 

MR. JUSTICE BLACK AND MR. JUSTICE DOUGLAS, AGREEING WITH THE COURT OF
APPEALS THAT THE TAX HERE IS AUTHORIZED BY THE CONTROLLING STATUTE,
WOULD AFFIRM THE JUDGMENT.