dissenting.
The majority opinion today is one of the most disruptive decisions ever to emanate from this bench. It is an opinion totally unsupported by the most basic of legal and taxation principles. It is a decision founded upon no precedent from Idaho or any other jurisdiction in this nation. The majority, perhaps due to a knee-jerk reaction against the imposition of any tax whatsoever, has misinterpreted the law and hatched an unsound analysis leading to the establishment of an incorrect concept of the application of the term nexus to income tax cases.
This case presents a single simple issue, the positing of which suggests the answer to all who do not permit their reasoning processes to become clouded by complex legalese and other profundities:
May a state impose an income tax on nonresidents working within the boundaries of the state?
The answer:
(1) The power of Idaho to levy income taxes upon those who work in the state is permitted under both the United States Constitution and the Idaho Constitution.
(2) Not one single recognized case authority from any court in this nation holds this tax on the railroaders improper or unconstitutional.
The plaintiff railroaders work in three states as they make their daily run: Washington, Idaho, and Montana. Some earn as much as 36% of their income, that is more than $20,000 per year, while within the Idaho segment.
The Idaho statutory scheme imposes tax on the income of nonresidents derived from sources within Idaho. I.C. § 63-3002 provides: “Declaration of intent. — It is the intent of the legislature ... to impose a tax on ... the income of nonresidents which is the result of activity within or derived from sources within this state.” I.C. § 63-3024 mirrors I.C. § 63-3002 and requires a nonresident taxpayer earning income from Idaho sources to file a state tax return.1 “Sources” has been defined by this Court:
The word “sources” when used in statutes dealing with sources of income as compensation for personal services has reference not to the person or entity paying for the services, but to the location where the services are performed. It is generally held that if the income is compensation for labor or services, the place where the labor is performed or services rendered is decisive as being *953the source of income. (Citations omitted.) (Emphasis added.)
Barraclough v. State Tax Commission, 75 Idaho 4, 10, 266 P.2d 371, 374-375 (1954). For a similar interpretation of the Internal Revenue Code, see, Motors Insurance Corporation v. United States, 530 F.2d 864, 876, 208 Ct.Cl. 571 (1976).
The Barraclough holding was reinforced in Gee v. West, 90 Idaho 173, 409 P.2d 116 (1955), where we held the Idaho taxing scheme only allowed for the imposition of a state income tax on the income earned in Idaho by a nonresident. The taxpayer in Gee resided in Washington, and worked on a train which began and ended its daily run in Idaho, but for the greater part of the run traversed through Washington. The tax commission attempted to impose a tax on all of the taxpayer’s earnings arguing that he had a business situs in Idaho. We ruled that business situs was irrelevant because “the intent of the Legislature was to tax only the amount of income a nonresident received as compensation for labor or personal services performed in Idaho and derived from Idaho sources” Id. at 178, 409 P.2d at 118. A proper interpretation of the statutory scheme required an allocation of the taxpayer’s income between Idaho and Washington based upon the respective mileage and time spent in each state.
To impose an Idaho income tax on the Burlington Northern employees is not contrary to the taxing statutes. The word “sources” has been defined in a territorial sense, and as such, any income earned within the boundaries of the state of Idaho by a nonresident triggers the application of I.C. § 63-3024. See also, Futura v. State Tax Commission, 92 Idaho 288, 442 P.2d 174 (1968) (the word “sources” when used in statutes dealing with dividend income from nonqualifying corporation has reference not to the location of entities issuing or receiving the dividend, but rather to location of business activities wherein the earnings were derived.)
In a similar action brought in Montana, this same class of railroaders recently stipulated to a judgment that income earned while rolling over the tracks in Montana is subject to Montana income tax.2 Is a determination of the absence of “nexus” based upon the distinction that the trail “rolls and stops” in Montana while it only “rolls” in Idaho an exercise in judicial craftsmanship or resultsmanship?
As the majority notes, the power of a state legislature to tax the income of nonresidents was affirmed by the United States Supreme Court in 1920 in Shaffer v. Carter, 252 U.S. 37, 40 S.Ct. 221, and Travis v. Yale & Towne Manufacturing Co., 252 U.S. 60, 40 S.Ct. 228. Shaffer and Travis remain the law today and when one reads the majority opinion referring thereto, one would expect the case to be affirmed because it is conceded by all that the extent to which there will be any exemption to taxation is a matter of legislative, not judicial, policy. Not so — as the majority later proceeds to a strained and tortured definition of “nexus” to forge a different result.
The majority next cites to American Commuters Association v. Levitt, 405 F.2d 1148 (2nd Cir.1969) wherein state and city income taxes imposed by New York on New Jersey and Connecticut residents were upheld on the basis that New York provides general services such as fire and police protection to those residents. Since neither Montana nor Washington provide fire and police protection for our train as it proceeds through Idaho, one might think that Levitt, supra, decides the issue in favor of affirmance. Not so — as our majority tortures the concept of “nexus” to escape Shaffer, Travis and Levitt.
The majority next cites to J.C. Penney Co., 311 U.S. 435, 61 S.Ct. 246, 85 L.Ed. 267 (1940), to ascertain the meaning of nexus:
*954A state is free to pursue its own fiscal policies, unembarrassed by the Constitution, if by the practical operation of a tax the state has exerted its power in relation to opportunities which it has given, to protection which it has afforded, to benefits which it has conferred by the fact of being an orderly, civilized society.
Again, as our train traverses Idaho, are those benefits, protections, and opportunities being provided by Washington, Idaho, or Montana; or are the employees in no state at all for income tax purposes because wheels and tracks magically separate them from both terra firma and the Idaho Income Tax?
If one of the train crew were to be mugged by a passenger, would the “nexus” for criminal law purposes be in Washington, from whence the train was dispatched; or in Montana, where the wheels might later stop rolling; or in Idaho, where that act was committed? But was not the act of earning the money herein done in Idaho? Is nexus to be defined differently because we cherish law and order and disdain taxes?
The majority summarizes J.C. Penney Co., supra, in part with the following sentence:
In applying this formulation the Court upheld a Wisconsin general corporate income tax on earnings of corporations chartered by other states when the earnings were attrituable to the Wisconsin activities of the corporation. (Emphasis added).
Were not the earnings of our train crew attributable to activities in Idaho?
Now please reread the majority’s cogent discussion at page 949, 763 P.2d at 1057 of Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832 (1948) and wager a guess at which result that case would take us to if you didn’t know the majority’s ultimate conclusion?
Next, at page 949, 763 P.2d at 1057, the majority cogently discusses Northwestern Cement Co. v. Minnesota, 358 U.S. 450, 79 S.Ct. 357, 3 L.Ed.2d 421 (1959) in a way which would lead one to think they were about to affirm the tax commission herein — not so.
The majority next notes that in General Motors Corp. v. Washington, 377 U.S. 436, 84 S.Ct. 1564, 12 L.Ed.2d 430 (1964):
The Court pointed out that it had decided a long line of cases “holding that an in-state activity may be a sufficient local incident upon which a tax may be used.”
If the activity of our trainmen was not in Idaho when the train was in Idaho, where was it — in the great Sovereign State of Suspension?
Discussing General Motors further our majority states:
In formulating the standard to be used in determining the validity of the tax, the Court stated that it must determine whether there was “some definite line, some minimum connection, between a state and the person, property or transaction it seeks to tax.” Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-45, 74 S.Ct. 535, 539, 98 L.Ed. 744 (1954).
Why does the majority deny that at least “some minimum connection” exists between Idaho and our trainmen’s earning of income? Were the Idaho panhandle mileage not interposed between Washington and Montana, would not the hours of work and the monthly compensation be less for operating from Spokane to Missoula and back?
Since the General Motors court held that “some minimum connection was enough nexus to support the imposition of a tax, would the majority here have us believe that thé contact, of the trainmen is to be quantified as something even less than minimum. If so, what is the descriptive adjective?”
The majority next takes one paragraph each to discuss Complete Auto Transit Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977) and National Geographic Society v. California Board of Equalization, 430 U.S. 551, 97 S.Ct. 1386, 51 L.Ed.2d 631, both of which sustain the taxing powers, and reasons therefrom that by sustaining the power to tax, those cases stand for the proposition Idaho has *955no power to tax. I find the majority’s reasoning process unfathomable at best.
The majority also notes that the U.S. Supreme Court, while finding that the slightest presence in the state was not enough to support taxing power, nevertheless held National Geographic had a “more substantial presence [in California] than the expression ‘slightest presence’ connotes.” The Court did not define or describe what a “slightest presence” resembles. However, it is doubtful from reading the text of National Geographic that the Supreme Court would hold that total, complete, absolute physical presence of a train crew within Idaho is “less than ‘more substantial than slightest.’ ” In fact, a person schooled neither in law nor logic might observe that a human being is either in Idaho or out of Idaho while working, leaving the term “slightest presence” to only describe that condition where only one’s big toe is inside the boundary.
The next to final case cited by the majority is Tyler Pipe Industries, Inc. v. Washington Department of Revenue, 483 U.S. 232, 107 S.Ct. 2810, 97 L.Ed.2d 199 (1987), which sustained the tax on an out-of-state manufacturer because it had a sales representative in the state. How is Tyler authority for the majority’s result? One might suggest that if Tyler imposes the tax on the non-present corporation because of the agent being within the state, one should reason that if the person’s presence provides nexus over the corporation, the person’s presence also provides nexus over the person which provides the nexus for the corporation.
This dissent, to this point, has discussed most of the cases cited through page 951, 763 P.2d at 1059 of the fourteen and one-half page majority opinion. The majority has cited eleven cases, all of which sustain taxing power under various degrees and types of contact, and none of which hold against the finding of nexus; the majority then concludes that there is no nexus here to require a wage-earner to pay taxes on income earned while physically working in Idaho. Some judicial magic!!
One might wonder why neither the appellants nor the majority have been able to find a single case on point which holds against the presence of nexus in a case like this, despite all the history of income taxation throughout this nation. Perhaps it is because most lawyers and all other courts have read Webster’s definition of nexus: “Connection; interconnection; tie; link.” While these trainmen are working in Idaho, are they not more physically connected to this state than any other?
Finally, the majority cites State of Alaska v. Petronia, 69 Wash.2d 460, 418 P.2d 755 (1966), another case sustaining (not rejecting) the taxing power. In Petronia, the Washington Supreme Court was faced with a case involving circumstances similar to those in the present case. At issue was whether the State of Alaska could constitutionally levy a tax on the net income of seamen engaged in interstate and foreign commerce, where the tax was levied only on that portion of their net income which was attributable to their activity within the boundaries of Alaska. (418 P.2d 757). Like the trainmen, the seamen in Petronia argued that virtually all the benefits afforded them by Alaska were de minimus, and that virtually all the protection normally afforded by a state to a nonresident employee was afforded to them exclusively by the federal government. The seamen went on to argue that virtually the only benefits available to them from the State of Alaska were the protections and benefits they were afforded by the state when they were on shore in a strictly tourist or recreational capacity.
The Washington court was not persuaded by the arguments of its own residents. Ruling in favor of the State of Alaska, the Court held:
We find no distinction between the business generated by the economic activities of Alaska accountable for the employment of nonresidents, whether it be on land or on the water within Alaskan boundaries. We are satisfied that the benefits of employment afforded by this economic activity of the state of Alaska constituted minimum connections within the rule to avoid a denial of due process *956under the 14th amendment to the United States Constitution.
418 P.2d at 759. Similar constitutional claims were rejected in Alaska Steamship Co. v. Mullaney, 180 F.2d 805 (9th Cir.1950), and Sjong v. State of Alaska, 622 P.2d 967 (Alaska 1981).
In its Memorandum Opinion, the trial court herein noted that while working in Idaho, the trainmen are provided many benefits and protections by Idaho’s state arid local governmental structures. It is these protections which provide the trainmen the opportunity to exercise their intelligence, skill and labor while performing work for their employer within Idaho. In addition, it is these same protections, i.e., the “fruits of civilization,” which make it possible for Burlington Northern to operate its trains in Idaho, thus giving rise to the employment of Burlington Northern employees.
Burlington Northern employees attempt to dismiss the value of these services by asserting simply that they receive no more benefits than tourists who visit the state in a recreational capacity. The flawed reasoning underlying this argument becomes obvious when it is carried out to its logical conclusion. If the state must show that it provides the nonresident worker with benefits greater than those it provides tourists, it is unlikely that any nonresident employees within Idaho would be subject to income tax. It is the notion that the benefits afforded to the taxpayer by the state are related to the generation of income which provides the basis for the income tax. See, Sjong v. State Department of Revenue, 622 P.2d at 970-971. There is no requirement that the state must provide nonresident taxpayers exactly the same benefits and opportunities provided to its residents. American Commuters Association v. Levitt, 279 F.Supp. 40 (S.D.N.Y.1967), aff’d, 405 F.2d 1148, 1153 (2nd Cir.1969).
The only distinction between the employees in Petronia and the Burlington Northern employees here is that in Petronia, the ship stopped in Alaskan ports, whereas here, the trains make no stops in Idaho. However, the seamen performed no work related tasks while on shore. Their duties were limited to operating the vessels while at sea. The distinction is really one without a purpose. Both groups of employees are compensated for work performed while aboard a moving object. The real benefit received by both groups is the opportunity to earn income within the respective states’ borders. Perhaps Petronia and the instant case can be distinguished because ocean waters and railroad roadbeds have different specific gravities.
In short, the majority opinion proposes that total and complete physical presence within a state constitutes zero nexus. I have troubled to write because of the serious implications which will follow as to other cases if the rule of this case is taken seriously in the future.
Bearing in mind that income tax is levied, not upon where one sleeps or goes to church, but rather upon the taxable event of earning income within a jurisdiction, does the distinction that Wyoming trainmen who roll on Union Pacific tracks and wheels in southern Idaho make one Idaho stop, justify taxing them while Burlington Northern trainmen go tax free?
The majority opinion closes with the following inaccurate assessment of the state of affairs:
If the due process clause allows Idaho to tax the income earned by the train crews while in Idaho, then we must be prepared to sustain taxes on the income earned by any person who crosses Idaho by any means without stopping or transacting business here, but who is being compensated while in transit. We are not prepared to say that the constitution permits taxation by the state in this fashion. There is not sufficient nexus to allow such a tax under either the due process clause or the commerce clause.
The silliness and conflict which would arise from such attempt to tax de minimus *957earnings has been obviated by (1) Idaho Code Section 63-3027A;3 (2) the multistate compact4 to which Idaho is a party; and (3) House Bill 6555 which provides that no tax will be levied at all until earnings within the state reach a certain minimum level.
I regret my analysis lacks the persuasive power to deter my brothers from this dangerous and precedentless course — hopefully a comprehensive and artful petition for rehearing will cause a thoughtful revisitation of this case and its implications.
There is one thing to commend the majority opinion — it makes Idaho unique as the only state in the nation with no nexus over trainmen who labor within its borders and sleep elsewhere.
Idaho is already similar to a third-world nation in that outsiders extract its timber and minerals for manufacturing and processing elsewhere without paying a severance tax. The vision and perspective of this Court, ignoring the principle that the making of tax policy is for the legislature, furthers Idaho’s status as a third-world nation.
BISTLINE, J., concurs.APPENDIX A
In the District Court of the Thirteenth Judicial District of the State of Montana, in and for the County of Yellowstone.
Glen McNerney, et al., Non-Montana Resident, Burlington Northern Railroad Employees Performing Services in Montana, Plaintiffs,
v
The State of Montana Department of Revenue, Defendant.
No. DV-81-2195
ORDER
The Parties herein having stipulated and agreed to a settlement in this matter and good cause appearing:
It is hereby ordered that the above-entitled action is dismissed with prejudice.
DATED this 24 day of August, 1982.
(s) ROBERT H. WILSON
DISTRICT JUDGE
CLOSING AGREEMENT AND SETTLEMENT COMPROMISE
THIS AGREEMENT made and entered into on the date below stated between Glen McNerney, et al., Burlington Northern Railroad Employees listed on Exhibit “A”, who are residents of Washington and provide services in Montana (hereinafter referred to as “Employees”) and Montana Department of Revenue (hereinafter referred to as “Department”);
WITNESSETH:
From January, 1978, up and through December of 1981, Employees performed services for their employer within the State of Montana. At various times during this pe*958riod, the Department notified the Employees that state taxes due Montana were unpaid and owing. Some or all of the Employees had not filed tax returns for 1978, 1979, 1980 and 1981, as required under the statutes of the State of Montana.
In October, 1981, a lawsuit was initiated by the Employees in the District Court, Yellowstone County, Montana, under Cause No. DV-81-2195.
The parties are entering into this Agreement in lieu of additional court proceedings under Cause No. DV-81-2195 based upon the following representations and understandings:
The parties (“Employees” and “Department”) hereby stipulate and agree:
1. The Employees in the cause number mentioned above will pay Montana taxes for years 1978, 1979, 1980 and 1981.
2. Department will agree not to proceed now or in the future against Employees for any Montana taxes owing prior to 1978.
3. Travel and expense deductions incurred by the Employees will not be allowed as a deduction for tax years 1978,
1979, 1980 and 1981.
4. The Department will agree to review and recommend change of its rule of administrative procedure 42.16.1112, ARM, relating to travel and expense deductions applicable to nonresidents who file tax returns in Montana beginning with tax year 1982.
5. The tax returns for the four years mentioned above will be due October 15, 1982. No interest shall accrue for tax years 1978, 1979, 1980 and 1981. Beginning October 15, 1982, interest shall accrue at the statutory rate on unpaid balance of taxes. The Employees agree to pay one-third of the taxes for the four years mentioned above on October 15, 1982. There may be exceptions on a case-by-case basis for taxpayers who cannot afford such payment and who properly correspond with the Department. The first $100.00 of interest accruing from October 15, 1982, for each year per taxpayer shall be exempt.
6. The Employees shall pay the balance of tax owing (two-thirds) over a two-year period to be paid in quarterly installments. The first quarterly installment will be due December 31, 1982. These payments shall have a minimum balance of $100.00 unless the balance owing is less than $100.00 which amount shall then be due in full. Taxes paid shall first apply to oldest taxes owing.
7. Attached as Exhibit “B” and by reference incorporated herein is a list of individuals or groups the Department is currently actively pursuing to collect nonresident taxes owing.
8. Department will waive all penalties and late filing charges for the Employees for tax years 1978,1979,1980 and 1981. If any Employee should be delinquent in the quarterly installment owing, Department has the option, on a case-by-case basis, to institute penalties and late filing charges for 1978, 1979, 1980 and 1981. Date of payment of taxes will be deemed to be the date said payment is mailed.
9. Extensions may be granted by the Department on a case-by-case basis for good cause shown.
10. The pending litigation, being Cause No. DV-81-2195 in the District Court, Yellowstone County, Montana, shall be forthwith dismissed with prejudice and without costs.
DATED this 26 day of July, 1982.
DEPARTMENT OF REVENUE
Mitchell Building
Helena, Montana 59620
(s) Ellen Feaver
ELLEN FEAVER, Director
(s) R. Bruce McGinnis
R. BRUCE McGINNIS Tax Counsel
(s) Glen McNerney
GLEN McNERNEY
RICHTER, WIMBERLEY and ERICSON, P.S.
By (s) Gary D. Brajcich
GARY D. BRAJCICH
By (s) Thomas L. Doran
THOMAS L. DORAN
Attorneys for Plaintiffs
. I.C. § 63-3024 states in pertinent part:
63-3024. Individuals’ tax and tax on estates and trusts. — A tax is hereby imposed for each taxable year commencing on and after January 1, 1987, upon every resident individual, trust or estate which shall be measured by his or its taxable income, and upon that part of the taxable income of any nonresident individual, trust or estate derived from sources within the state of Idaho computed as required by section 63-3027A, Idaho Code.
. A copy of the Montana Court order is attached hereto as Appendix A. Unfortunately, the Attorney General did not bring this case to our attention and the railroad attorney professed no knowledge of it at our initial oral argument. The lack of forceful advocacy by the attorneys for the State in failing to present and argue the implications of the Montana stipulation, and in failing to present to this Court the broader ramifications of the result reached by the majority herein, is most disturbing.
. Computing tax of part-year or nonresident individuals, trusts and estates. — In computing the tax of a part-year or nonresident individual, trust or estate, the tax imposed by section 63-3024, Idaho Code, shall be reduced to the proportion that the adjusted gross income of the taxpayer from Idaho sources bears to the total adjusted gross income from all sources.
. The “multi-state tax compact” is codified in I.C. § 63-3701, to which twenty-two states are signatory.
.House Bill 655 of the 1988 Legislature enacted I.C. § 63-3023B, which provides that transportation employees earning less than one-half of their income from activities within the state will be exempted from income taxation. The fiscal note to that bill lists a fiscal impact of “approximately $250,000 to $500,000 per year.” Since our judicial legislation herein is of even broader scope, it will have an immeasurably larger fiscal impact, when applied to not only transportation employees, but others similarly situated.