Petition for Writ of Mandamus - Filed - Supreme Court of Texas

twice the tax rate. There is no rational basis related to the value of the Privilege for
taxing these similarly-situated taxpayers differently.
The Margin Tax violates the Equal Protection Clause on multiple levels by
treating differently similarly-situated taxpayers in the calculation of the tax base and in
the application of the tax rate. These differences in treatment have no rational basis and
are not fairly and substantially related to the taxation of the value of the privilege of
doing business in Texas.
III.
The Margin Tax Violates the Due Process Clause of the United States
Constitution.
In the context of a state tax, the Due Process Clause of the U.S. Constitution
“requires some definite link, some minimum connection, between a state and the person,
property, or transaction it seeks to tax.” Quill Corp. v. North Dakota, 504 U.S. 298, 312
(1992) (quoting Miller Bros. v. Maryland, 347 U.S. 340, 344-45 (1954)); see U.S.
CONST. Amend XIV, § 1. In the case of a tax on an activity, there must be a connection
to the activity itself, rather than a connection only to the entity the State seeks to tax.
Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768 (1992). The test is whether
the taxing power exerted by a state bears fiscal relation to protection, opportunities, and
benefits given by the state. Wisconsin v. J.C. Penney Co., 311 U.S. 435, 444 (1940);
Norfolk & W. Ry. v. Mo. State Tax Comm’n, 390 U.S. 317, 326 n.5 (1968). The simple
but controlling question is whether the State has given anything for which it can ask a
return. J.C. Penney, 311 U.S. at 444.
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