Harley-Davidson, Inc. v. Franchise Tax Bd.

*249 Plaintiff Harley Davidson and its subsidiaries (Harley-Davidson) form a multistate enterprise with numerous functionally integrated subsidiary corporations. It contends that defendant California Franchise Tax Board's (Board) tax scheme violates the commerce clause of the federal Constitution ( U.S. Const., art. I, § 8, cl. 3 ), claiming that it burdens interstate enterprises by providing a benefit to intrastate enterprises not available to interstate enterprises. An intrastate unitary business may use either combined or separate accounting to report its income to the Board, whereas Harley-Davidson and other interstate unitary businesses must use the combined reporting method, without the option of separate accounting for each related entity. The trial court granted summary judgment for Harley-Davidson. It found that whether or not the state's tax law unduly burdened interstate commerce, the state had a legitimate reason for treating in-state *886 and out-of-state unitary businesses differently that could not be served by reasonable nondiscriminatory alternatives - to accurately measure, apportion and tax all revenue acquired in California by an interstate unitary…