Alabama Department of Revenue v. CSX Transportation, Inc. (2014)
- Docket
- 13-553
- Decided
- 2014-01-01
Summary
Question: Does a state violate the Railroad Revitalization and Regulatory Reform Act of 1974 when it requires rail carriers to pay a sales-and-use tax but exempts the railroad's competitors? In resolving such a claim, should a court consider other aspects of the state's tax scheme rather than focusing solely on the challenged provision? Conclusion: Unanswered, and yes. Justice Antonin Scalia delivered the opinion for the 7-2 majority. The Court held that the appellate court correctly examined the railroad's situation in relation to its comparison class of competitors in the transportation industry. The Court also held that, in determining whether discrimination occurred, a court must look at the state's tax scheme as a whole rather than just the challenged provision. A provision may seem discriminatory when examined in isolation, but the tax code as a whole may subject a competitor to a comparable tax. Because the appellate court did not examine the state's justifications for its tax regime, the Court remanded the case for further proceedings to determine whether discrimination in violation of the Railroad Revitalization and Regulatory Reform Act of 1974 occurred. Justice Clarence Thomas wrote a dissenting opinion in which he argued that the majority opinion's definition of discrimination was overly broad and could lead to inconsistent applications of the statute. Because the railroad was unable to prove that the tax "targets and singles out" the railroad as compared to other taxpayers, there was no discrimination. Justice Ruth Bader Ginsburg joined in the dissent.