In re Nestle USA, Inc.

Summary

The Supreme Court of Texas considered Nestle USA, Inc.'s constitutional challenge to the Texas franchise tax in an original mandamus proceeding. Nestle argued that the tax violated the Texas Constitution's Equal and Uniform Clause, the Fourteenth Amendment, and the Commerce Clause because of its rate structure, deductions, exemptions, and combined-group reporting requirements. The court concluded that it had jurisdiction to consider the challenges and rejected Nestle's claims.

Holdings

1. The Supreme Court of Texas had jurisdiction to consider Nestle's facial and as-applied constitutional challenges because the claims presented issues of substantial public importance, did not depend on disputed facts, and challenged the foundations of a tax affecting the public fisc.
2. The Texas franchise tax does not violate the Equal and Uniform Clause. The Clause permits reasonable classifications, deductions, and exemptions in a franchise tax when they are related to differences in doing business that affect the value of the privilege of doing business in Texas.
3. The Texas franchise tax does not violate the Fourteenth Amendment's Equal Protection Clause.
4. The Texas franchise tax does not violate the Fourteenth Amendment's Due Process Clause because the tax bears a sufficient fiscal relation to the protection, opportunities, and benefits provided by Texas.
5. The higher franchise-tax rate for entities with manufacturing activities does not discriminate against interstate commerce and is fairly related to services provided by Texas.

Questions Presented

1. Whether the Texas franchise tax violates the Texas Constitution's Equal and Uniform Clause because its rates, classifications, deductions, exemptions, and combined-reporting requirements are not reasonably related to the value of the privilege of doing business in Texas.
2. Whether the franchise tax violates the Fourteenth Amendment's Equal Protection Clause.
3. Whether the franchise tax violates the Fourteenth Amendment's Due Process Clause because it is not fiscally related to the protection, opportunities, and benefits provided by Texas.
4. Whether the higher franchise-tax rate applicable to Nestle discriminates against interstate commerce or is not fairly related to services provided by Texas under the dormant Commerce Clause.
5. Whether the Supreme Court of Texas had original jurisdiction over Nestle's facial and as-applied constitutional challenges.

Disposition

writ_denied