However, it did involve a computation of net income of the corporation since the tax was based on the net income of the corporation. Hoosier Engineering Co. v. Commissioner of Taxes, 124 Vt. 341, 342-43, 205 A.2d 821 (1964); Gulf Oil Corporation v. Morrison, 120 Vt. 324, 327-28, 141 A.2d 671 (1958). Although as originally enacted, the allocation formula used in the computation of the franchise tax did not utilize all the factors found in the present allocation formula, 32 V.S.A. § 5833, an additional factor was later added to better reflect the corporation's business activities in Vermont.
Woolworth supplements this argument with the allegation that its foreign dividends represent income from its foreign stores, thus necessitating the inclusion of the foreign apportionment factors in the apportionment formula to allocate a fair and equitable portion of its dividend income to Vermont. Similar arguments as these were heard by this Court in Gulf Oil Corp. v. Morrison, 120 Vt. 324, 141 A.2d 671 (1958). Although that case was decided when the taxation of corporations was accomplished under a franchise tax, the apportionment formula there utilized to allocate a fair and equitable portion of net income of the corporation to Vermont was identical to the one now contained in 32 V.S.A. § 5833(a).
Vermont's corporate income tax does not seek to tax the profits realized from the business activities of Goodyear's subsidiaries conducted without the borders of Vermont. It is taxing only the dividend income realized by Goodyear itself. F. W. Woolworth Co. v. Commissioner of Taxes, supra, 328 A.2d at 405; Gulf Oil Corp. v. Morrison, 120 Vt. 324, 328, 141 A.2d 671 (1958). Moreover, for this Court to relieve Goodyear from the taxation of its dividend income would run afoul of 32 V.S.A. § 5811(18), which defines "Vermont net income" as the taxable income of the taxpayer for the taxable year under the laws of the United States", when 26 U.S.C.A. § 61(a)(7) specifically provides for the taxation of dividend income under the laws of the United States. See F. W. Woolworth Co. v. Commissioner of Taxes, supra, 130 Vt. at 550.
The Commissioner held that inclusion of dividend income in the tax base was required by the Vermont statute, and he rejected appellant's Due Process Clause and Commerce Clause arguments.In reaching this decision, the Commissioner followed F.W. Woolworth Co. v. Commissioner of Taxes, 130 Vt. 544, 298 A.2d 839 (1972), and Gulf Oil Corp. v. Morrison, 120 Vt. 324, 141 A.2d 671 (1958). App. to Juris. Statement 6a-7a, 9a-11a.
335 A.2d at 311-12. F.W. Woolworth Co. v. Commissioner of Taxes, 133 Vt. 93, 328 A.2d 402 (1974); Gulf Oil Corp. v. Morrison, 120 Vt. 324, 141 A.2d 671 (1958). The commission did not levy a tax upon the income of the dividend-paying corporations; rather, it levied a tax upon ASARCO's income.
As the superior court correctly noted in its order, the legal questions concerning apportionment and due process had already been answered adversely to Mobil's contentions by recent decisions of this Court. In re Goodyear Tire and Rubber Co., 133 Vt. 132, 335 A.2d 310 (1975); F. W. Woolworth Co. v. Commissioner of Taxes, 133 Vt. 93, 328 A.2d 402 (1974); F. W. Woolworth Co. v. Commissioner of Taxes, 130 Vt. 544, 298 A.2d 839 (1972); Gulf Oil Corp. v. Morrison, 120 Vt. 324, 141 A.2d 671 (1958). The single question presented here is: Does Vermont's application of its apportioned net income tax to the investment income in issue constitute multiple taxation prohibited by the Commerce Clause?
Maxwell v. Bugbee, supra, 250 U.S. 525, 539, 40 S.Ct. 2; Great Atlantic Pacific Tea Co. v. Grosjean, 301 U.S. 412, 425, 57 S.Ct. 772, 81 L.Ed. 1193. A similar principle was recognized and accepted in our own case of Gulf Oil Corp. v. Morrison, 120 Vt. 324, 330, 141 A.2d 671, which states the necessity of establishing by appropriate evidence any claim that extraterritorial values are being taxed. It was for the plaintiff to show that the Vermont taxing system was arbitrary and unreasonable in its classification to sustain a violation of the Equal Protection Clause.
The court upheld their inclusion, among other reasons, on the basis that the taxpayer's entire enterprise was unitary and that a net worth base incorporating all of its assets apportioned on the three-part formula was an appropriate method of ascertaining the tax it should pay for the exercise of its corporate franchise in Michigan. See also, with probably the same general approach, In re Morton SaltCo., 150 Kan. 650, 95 P.2d 335 ( Sup. Ct. 1939); EdisonCalifornia Stores v. McColgan, 176 P.2d 697 ( Sup. Ct. 1947), on rehearing 30 Cal.2d 472, 183 P.2d 16 ( Sup.Ct. 1947); Gulf Oil Corp. v. Morrison, 120 Vt. 324, 141 A.2d 671 ( Sup. Ct. 1958). It may be noted that the Michigan Corporation Tax Appeal Board sustained the inclusion of Woolworth's investment in its foreign subsidiaries for Michigan franchise tax purposes.
The tax involved here is an annual tax on the privilege of doing business in Vermont and is not a direct tax on income. Gulf Oil Company v. Morrison, 120 Vt. 324, 330, 141 A.2d 671, 675. However, it does involve a computation of the net income of the corporation since the tax is measured by the net income of the corporation.
" Butler Bros. v. McColgan, 315 U.S. 501, 62 S.Ct. 701, 86 L.ed. 991; Edison California Stores, Inc. v. McColgan, 30 Cal.2d 472, 183 P.2d 16; El Dorado Oil Works v. McColgan, 34 Cal.2d 731, 215 P.2d 4; Crane Co. v. Carson, 191 Tenn. 353, 234 S.W.2d 644, certiorari denied, 340 U.S. 906, 71 S.Ct. 282, 95 L. ed. 655; John Deere Plow Co. v. Franchise Tax Board, 38 Cal.2d 214, 238 P.2d 569, appeal dismissed, 343 U.S. 939, 72 S.Ct. 1036, 96 L. ed. 1345; State Tax Comm. v. John H. Breck, Inc. 336 Mass. 277, 144 N.E.2d 87; Matter of Teague v. Goodrich, 4 A.D.2d 984, 167 N.Y. So.2d 820; Gulf Oil Corp. v. Morrison, 120 Vt. 324, 141 A.2d 671; Western Auto Supply Co. v. Oklahoma Tax Comm. (Okla.) 328 P.2d 414; Western Auto Supply Co. v. Commr. of Taxation, 245 Minn. 346, 71 N.W.2d 797.