267 POWELL, J., dissenting 3 finding a due process violation. Were it otherwise, any formula deviating in the smallest detail from that used in other States would be invalid. Because there is no ideal means of "locating" any State's rightful share, such uniformity cannot be dictated by this Court. Hence, the decisions of this Court properly require the taxpayer claiming a due process violation to show that the apportionment is "out of all appropriate proportion to the business transacted." Hans Rees' Sons, Inc. v. North Carolina ex rel. Maxwell, 283 U. S. 123, 135 (1931). As appellant has failed to make any such showing, I agree with the Court that no due process violation has been made out here. This conclusion does not ipso facto mean that Commerce Clause strictures are satisfied as well. This Court's decisions dealing with state levies that discriminate against out-of-state business, as Iowa's formula does, compel a more detailed inquiry. III It is a basic principle of Commerce Clause jurisprudence that "[n]either the power to tax nor the police power may be 8 This does not mean, as the Court suggests, ante, at 277-280, that this Court is disabled from ever determining whether a particular apportionment formula imposes multiple burdens upon or discriminates against interstate commerce. See General Motors Corp. v. District of Columbia, 380 U. S. 553 (1965); Bass, Ratcliff & Gretton, Ltd. v. State Tax Comm'n, 266 U. S. 271 (1924); Underwood Typewriter Co. v. Chamberlain, 254 U. S. 113 (1920). Regardless of which formula more accurately locates the State in which any particular segment of income is earned, it is a mathematical fact that the use of different formulae may result in taxation on more than 100% of the corporation's income under the State's own definitions, as well as in skewed tax effects. See n. 2, supra. When this result has a predictably burdensome or discriminatory effect, Commerce Clause scrutiny is triggered. See Part III, infra. The effects of the challenged formula upon the particular corporation's income is strictly related only to inquiry under the Due Process Clause, since Commerce Clause analysis focuses on the impact upon commerce in general. used by the state of destination with the aim and effect of establishing an economic barrier against competition with the products of another state or the labor of the residents." Baldwin v. G. A. F. Seelig, Inc., 294 U. S. 511, 527 (1935); accord, H. P. Hood & Sons v. Du Mond, 336 U. S. 525, 532 (1949); Boston Stock Exchange, 429 U. S., at 335-336, and n. 14. Those barriers would constitute "an unreasonable clog upon the mobility of commerce." Baldwin, supra, at 527. One form of such unreasonable restrictions is "discriminating State legislation." Welton v. Missouri, 91 U. S. 275, 280 (1876). This Court consistently has struck down state and local taxes which unjustifiably benefit local businesses at the expense of out-of-state businesses. Ibid.; accord, Boston Stock Exchange; Halliburton Oil Well Co. v. Reily, 373 U. S. 64 (1963); Nippert v. Richmond, 327 U. S. 416 (1946); Hale v. Bimco Trading, Inc., 306 U. S. 375 (1939); I. M. Darnell & Son v. Memphis, 208 U. S. 113 (1908); Guy v. Baltimore, 100 U. S. 434 (1880). This ban applies not only to state levies that by their terms are limited to products of out-of-state business, or which explicitly tax out-of-state sellers at higher rates than local sellers. It also reaches those taxes that "in their practical operation [work] discriminatorily against interstate commerce to impose upon it a burden, either in fact or by the very threat of its incidence." Nippert v. Richmond, supra, at 425. For example, this Court has invalidated a facially neutral fixed-fee license tax collected from all local and out-of-state "drummers," where it appeared the tax fell far more heavily upon out-of-state businesses, since local businesses had little or no occasion to solicit sales in that manner. Robbins v. Shelby County Taxing Dist., 120 U. S. 489 (1887). See also West Point Wholesale Grocery Co. v. Opelika, 354 U. S. 390 (1957); Memphis Steam Laundry Cleaner, Inc. v. Stone, 342 U. S. 389 (1952); Best & Co. v. Maxwell, 311 U. S. 454 (1940); Real 267 POWELL, J., dissenting Silk Hosiery Mills v. Portland, 268 U. S. 325 (1925); Corson v. Maryland, 120 U. S. 502 (1887). Thus, the constitutional inquiry relates not simply to the form of the particular tax, but to its effect on competition in the several States. As indicated in Part I above, application of Iowa's singlefactor sales-apportionment formula, in the context of general use of three-factor formulae, inevitably handicaps out-of-state businesses competing for sales in Iowa. The handicap will diminish to the extent that the corporation locates its plant and labor force in Iowa, but some competitive disadvantage will remain unless all of the corporate property and payroll are relocated in Iowa. In the absence of congressional action, the Commerce Clause constrains us to view the State's interest in retaining this particular levy as against the constitutional preference for an open economy. See, e. g., Raymond Motor Transp., Inc. v. Rice, 434 U. S., at 440-442; Pike v. Bruce Church, Inc., 397 U. S. 137, 142 (1970); Di Santo v. Pennsylvania, 273 U. S. 34, 44 (1927) (Stone, J., dissenting); Dowling, Interstate Commerce and State Power, 27 Va. L. Rev. 1, 14-15, and n. 20 (1940). The clog on commerce present here is similar to the risk of imposing "multiple burdens" on interstate commerce against which the Court has warned in various decisions. See, e. g., Western Live Stock v. Bureau of Revenue, 303 U. S. 250, 255-256 (1938); J. D. Adams Mfg. Co. v. Storen, 304 U. S. 307, 311-312 (1938); Gwin, White & Prince, Inc. v. Henneford, 305 U. S. 434, 439 (1939); Northwestern States Portland Cement Co. v. Minnesota, 358 U. S. 450, 458 (1959). Compare Evco v. Jones, 409 U. S. 91 (1972), with General Motors Corp. v. Washington, 377 U. S. 436 (1964). In this case, Iowa corporations will not risk additional burdens when they make out-of-state sales. Cf. Hunt v. Washington Apple Advertising Comm'n, 432 U. S. 333, 351 (1977). Indeed, to the extent that they shift sales out of Iowa, their overall state tax liability will decrease. Out-of-state corporations selling in Iowa, however, do face the prospect of multiple burdens. Hence, there is clear discrimination against out-of-state corporations, which is the consequence of the particular multiple burden imposed. Iowa's interest in any particular level of tax revenues is not affected by the use of the single-factor sales formula. It cannot be predicted with certainty that its application will result in higher revenues than any other formula. If Iowa needs more revenue, it can adjust its tax rates. That adjustment would not have the discriminatory impact necessarily flowing from the choice of the single-factor sales formula. Hence, if Iowa's choice is to be sustained, it cannot be by virtue of the State's interest in protecting its fisc or its power to tax. No other justification is offered. If we are to uphold Iowa's apportionment formula, it must be because no consistent principle can be developed that could account for the invalidation of the Iowa formula, yet support application of other States' imprecise formulae. "For example, if Iowa switched to a three-factor formula and retained the same rates, revenues from out-of-state corporations would decrease, since Iowa would no longer be attributing to itself all of the income earned by Iowa sales of such corporations. Revenues from corporations located in Iowa, however, would increase, since Iowa would now be attributing to itself some portion of the income earned by those corporations' out-of-state sales. See also n. 2, supra. Given the nearly infinite variety of taxes, rates, and apportionment formulae, it might be possible for Iowa to alter its entire tax structure to effect a similar discrimination, and perhaps to do it in a way that avoids Commerce Clause scrutiny. See Barrett, "Substance" vs. "Form" in the Application of the Commerce Clause to State Taxation, 101 U. Pa. L. Rev. 740, 748 (1953). That speculative possibility cannot deter us from striking down an obvious discrimination against interstate commerce when one is presented. The Court has never shrunk from that duty in the past. To do so would be to abandon any effort of applying Commerce Clause principles to state tax measures. This is not to say that States are always forbidden to offer tax incentives to encourage local industry or to achieve other valid state goals. See, e. g., Hughes v. Alexandria Scrap Corp., 426 U. S. 794 (1976). Such programs, and the interests being served, must be considered on a case-by-case basis. 267 POWELL, J., dissenting C It is argued that since this Court on several occasions has upheld the use of single-factor formulae, Iowa's scheme cannot be regarded as suspect simply because it does not embody the prevalent three-factor theory. Consideration of the decisions dealing with single-factor formulae, however, reveals that each is distinguishable. In Underwood Typewriter Co. v. Chamberlain, 254 U. S. 113 (1920), this Court upheld Connecticut's use of a singlefactor property formula to apportion the net profits of a foreign corporation. Such a formula is not clearly discriminatory in Commerce Clause terms. The only competitive disadvantage inevitably resulting from it would attend a decision to locate a plant or office in the taxing State. The Commerce Clause does not concern itself with a State's decision to place local business at a disadvantage. Cf. Allied Stores of Ohio, Inc. v. Bowers, 358 U. S. 522, 528 (1959). Bass, Ratcliff & Gretton, Ltd. v. State Tax Comm'n, 266 U. S. 271 (1924), is similarly distinguishable. In Bass, New York apportioned the net income of foreign corporations using a single-factor property formula that comprised real and tangible personal property, bills and accounts receivable, and stock in other corporations. This Court upheld that formula, observing that plaintiff in error had not shown that "application of the statutory method of apportionment has produced an unreasonable result." Id., at 283. As in Underwood Typewriter, however, the single-factor property formula did not necessarily discriminate against businesses carried on out of State; indeed, its impact would tend to increase to the extent that corporate business was carried on within the State. Cf. National Leather Co. v. Massachusetts, 277 U. S. 413 (1928); accord, e. g., International Shoe Co. v. Shartel, 279 U. S. 429 (1929); New York v. Latrobe, 279 U. S. 421 (1929); Hump Hairpin Co. v. Emmerson, 258 U. S. 290 (1922); United States Glue Co. v. Oak Creek, 247 U. S. 321 (1918). |