Constitutional Law – Commerce Clause – Power of States to Levy Net Income Tax on Businesses Engaged in Soley Interstate Commerce

Appellant, an Iowa corporation, maintained a sales office in Minnesota and employed salesmen who solicited orders from dealers within that state, though all of its sales contracts were made at the corporation’s home office in Iowa. In accordance with a Minnesota statute, a state net income tax, fairly apportioned to the state’s share of the corporation’s interstate business, was levied upon appellant. In a suit brought by the state to collect this tax, appellant contended that the statute as applied violated the commerce and due process clauses of the Federal Constitution because it taxed the net proceeds of a business engaged in solely interstate commerce. The Minnesota Supreme Court sustained the trial court’s finding that the appellant was engaged in solely interstate commerce, but despite this finding upheld the statute and gave judgment for the state. On appeal to the United States Supreme Court, held, affirmed, three justices dissenting. A fairly-apportioned, non-discriminatory state net income tax levied upon foreign corporations engaged in solely interstate commerce does not contravene the commerce or due process clauses of the Federal Constitution if there is sufficient activity in the taxing state to justify taxation. Northwestern States Portland Cement Co. v. State of Minnesota, 79 S. Ct. 357 (1959).