Davis

Plaintiffs challenge the constitutionality of section 18243 of the California Revenue and Taxation Code, which denies to non-Californians the option of income averaging in computing their California income tax. They charge that the denial violates the privileges and immunities clause of article IV, section 2 of the federal Constitution. (“The citizens of each State shall be entitled to all privileges and immunities of citizens in the several States.”)

Plaintiffs were California residents for at least four years before moving to Nevada in September 1972. They filed resident state income tax returns for the years 1969 through 1972. For the tax year 1973 plaintiffs filed a nonresident return covering income received from California sources. They sought a refund of $1,760.42, that amount being the saving available to them had they been permitted to average their 1973 California income. The Franchise Tax Board and the State Board of Equalization denied their claim. The trial court sustained the taxing agencies and plaintiffs appeal.

Income averaging is described as an elective method of computing income tax by an individual who has an unusually large income in the current…