Gillette v. California Franchise Tax Board (U.S. Supreme Court)

This case presents the question whether the Multistate Tax Compact (“the Compact”) is a contract that binds the signatory States and therefore is subject to the Constitution’s Contract Clause. Those States, including California, entered into the Compact specifically to forestall the enactment of congressional legislation that would have preempted significant aspects of the state taxation of multistate businesses. Having succeeded in deflecting congressional action, however, California now insists that the Compact has no legal significance at all, maintaining that signatory States may depart from the Compact’s requirements without complying with its withdrawal provision. In the decision below, the California Supreme Court agreed, holding that the Compact, notwithstanding its contractual language, actually has no binding effect on the signatories. The question presented in this certiorari petition is whether the Multistate Tax Compact has the status of a contract that binds its signatory States.