No.20IS-CA BRIEF OF AMICUS CURIAE, R.J. REYNOLDS TOBACCO COMPANY AND SYSCO CORPORATION, IN SUPPORT OF APPELLEE AT&T CORPORATION

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1 E-Filed Document Dec :49: CA SCT Pages: 20 IN THE SUPREME COURT OF MISSISSIPPI No.20IS-CA CA MISSISSIPPI DEPARTMENT OF REVENUE APPELLANT v. AT&T CORPORATION APPELLEE Appeal from the Chancery Court of Hinds County, Mississippi BRIEF OF AMICUS CURIAE, R.J. REYNOLDS TOBACCO COMPANY AND SYSCO CORPORATION, IN SUPPORT OF APPELLEE AT&T CORPORATION J J.. Paul Varner (Miss. Bar No. 6598) J. Stevenson Ray (Miss. Bar No. 4649) BUTLER SNOW LLP Post Office Box 6010 Ridgeland, Mississippi Craig B. Fields (pro hac vice admission pending) Mitchell A. Newmark (pro hac vice admission pending) MORRISON & FOERSTER LLP 250 West 55th 111 Street New York, New York ATTORNEYS FOR R.J. REYNOLDS TOBACCO COMPANY AND SYSCO CORPORATION

2 IN THE SUPREME COURT OF MISSISSIPPI No CA MISSISSIPPI DEPARTMENT OF REVENUE APPELLANT v. AT&T CORPORATION APPELLEE CERTIFICATE OF INTERESTED PERSONS Pursuant to Mississippi Rule of Appellate Procedure 28(a)(l), undersigned counsel of record certifies that the following listed persons and entities have an interest in the outcome of this case. These representations are made in order that the Justices of the Supreme Court and/or the Judges of the Court of Appeals may evaluate possible disqualification or recusal: 1. Mississippi Department of Revenue, Appellant; 2. AT&T Corporation, Appellee; 3. AT&T Inc., parent of Appellee AT&T Corporation; 4. Jones Walker LLP (John F. Fletcher, Adam Stone and Kaytie M. Pickett), Counsel for Appellee AT&T Corporation; 5. Mississippi Department of Revenue Legal Department (Laura H. Carter and Bridgette T. Thomas), Counsel for Appellant Mississippi Department of Revenue; 6. Honorable William H. Singletary, Hinds County Chancery Judge; 7. Honorable Jim Hood, Attorney General of the State of Mississippi; 8. R.J. Reynolds Tobacco Company and R.J. Reynolds Tobacco Company as successor in interest to Lorillard Tobacco Company, Amicus Curiae; 9. Sysco Corporation, Amicus Curiae; 10. Butler Snow LLP (J. Paul Varner and J. Stevenson Ray), Counsel for Amicus Curiae, R.J. Reynolds Tobacco Company and Sysco Corporation; and 11. Morrison & Foerster LLP (Craig B. Fields and Mitchell A. Newmark), Counsel for Amicus Curiae, R.J. Reynolds Tobacco Company and Sysco Corporation.

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4 TABLE OF CONTENTS Page CERTJFICA TE OF INTERESTED PERSONS... i TABLE OF AUTHORJTIES... iv ST A TEMENT OF tnterest OF AMlCUS CURIAE... 1 SUMMARY OF ARGUMENT... 1 LEGAL ARGUMENT... 2 A. State Laws that Discriminate Against Interstate Commerce on Their Face Are Presumptively Invalid Under the Commerce Clause... 2 B. The Dividend Received Exclusion Unconstitutionally Discriminates Against Interstate Commerce... 4 C. The Dividend Received Exclusion is Not a Compensatory Tax and, Therefore, is Unconstitutional D. Conclusion iii

5 TABLE OF AUTHORITIES CASES Page(s) Amerada Hess Corp. v. Director, Div. of Taxation, 490 U.S. 66 (1989)... 3 Am. Trucking Ass'ns, Inc. v. Scheiner, 483 U.S. 266 (1987)... 4, 10 Armco. Inc. v. Hardesty, 467 U.S. 638 (1984)... 4, 1 O AT&T Corp. v. Miss. Dept. of Revenue, Cause No. G (Miss. Ch. Ct. Mar. 20, 2015)....4, 6, 9 AT&T Corp. v. Surtees, 953 So. 2d 1240 (Ala. Civ. App. 2006)... 5 Boston Stock Exchange v. State Tax Comm'n, 429 U.S. 318 (1977)... 5 Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564 (1997)... 3 Complete Auto Transit, lnc. v. Brady, 430 U.S. 274 (1977)... 2 D.D.I., Inc. v. State, 657 N.W.2d 228 (N. D. 2003) , 9, 10 Farmer Bros. Co. v. Franchise Tax Bd., I 08 Cal. App. 4th 976 (Cal. Ct. App. 2003)... 6, 10, 11 Fulton Corp. v. Faulkner, 516 U.S. 325 (1996)... passim Gen. Elec. Co., Inc. v. Comm'r, New Hampshire Dep't of Revenue Admin., 914 A.2d 246 (N.H. 2006)... 7 Marx v. Truck Renting and Leasing Ass'n, Inc., 520 So. 2d 1333 (Miss. l 987)... 2 Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality of Oregon, 511 U.S. 93 (1994)... passim IV

6 Tenn. Gas Pipeline Co. v. Marx, 594 So. 2d 6 15 (Miss. 1992)... 4, 7 Tyler Pipe Indus., Inc. v. Wash. State Dep't of Revenue, 483 U.S. 232 (1987) Westinghouse Elec. Corp. v. Tully, 466 U.S. 388 (1984)... 3 STATUTES Miss. Code Ann (4)(i)... passim v

7 STATEMENT OF INTEREST OF AMICUS CURIAE This amicus curiae brief in support of Appellee AT&T Corporation ("AT&T") is filed on behalf of R.J. Reynolds Tobacco Company and R.J. Reynolds Tobacco Company as successor in interest to Lorillard Tobacco Company (collectively, "R.J. Reynolds") and Sysco Corporation ("Sysco"). R.J. Reynolds receives dividends from its subsidiaries, none of which are not subject to tax in Mississippi. Sysco receives dividends from its subsidiaries, some of which are subject to tax in Mississippi and some of which are not subject to tax in Mississippi. Therefore, R.J. Reynolds and Sysco are directly affected by Mississippi's tax statutes, in particular, the exclusion from gross income for dividends received from certain subsidiaries pursuant to Mississippi Code Annotated Section (4)(i) ("Dividend Received Exclusion"). In addition, R.J. Reynolds and Sysco currently have appeals pending before the Mississippi Department of Revenue ("Department") that are based, in part, on the constitutionality of the Dividend Received Exclusion. SUMMARY OF ARGUMENT The Department and AT&T acknowledge that Mississippi's Dividend Received Exclusion provides a benefit to corporate taxpayers in the form of an exclusion from their gross income for the djvidends received from other corporations that are subject to tax in the State ("Mississippi Taxpayers"). However, the statute denies the exclusion from gross income for those dividends received from corporations that are not subject to tax in the State ("Non-Mississippi Taxpayers"). The U.S. Supreme Court has determjned that such favoritism to in-state corporations is facially unconstitutional. Further, the alleged purpose of the statute to only impose one tax on the income is irrelevant for purposes of the discrimination analysis. Based upon the wealth of precedent from the U.S. Supreme Court and the Mississippi courts and the case law of other states, the Dividend Received Exclusion at issue here

8 discriminates against interstate commerce (i.e., it djscriminates against corporations that invest in Non-Mississippi Taxpayers). The Department has provided no evidence - nor can it- that the Dividend Received Exclusion is a compensatory tax. Therefore, the statute is facially unconstitutional and the decision of the Chancery Court should be upheld. LEGAL ARGUMENT The Dividend Received Exclusion has been in controversy in Mississippi since at least as far back as I 999. This amicus curiae brief addresses whether the Dividend Received Exclusion discriminates against interstate commerce and, therefore, is unconstitutional. As explained in more detail below, the Dividend Received Exclusion provides differential treatment to corporations that invest in Mississippi Taxpayers as compared to corporations that invest in Non-Mississippi Taxpayers, which benefits the former and burdens the latter. Therefore, the Dividend Received Exclusion is unconstitutionally discriminatory. Accordingly, the Court should affirm the decision of the Chancery Court. A. State Laws that Discriminate Against Interstate Commerce on Their Face Are Presumptively Invalid Under the Commerce Clause To survive scrutiny under the Commerce Clause of the U.S. Constitution, a challenged tax must: (1) be applied to an activity with a substantial nexus with the taxing state; (2) be fairly apportioned; (3) not discriminate against interstate commerce; and (4) be fairly related to the services provided by the state. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 ( 1977); see also Marx v. Truck Renting and Leasing Ass 'n, Inc., 520 So. 2d 1333, 1342 (Miss. 1987) (adopting the same four prong test to determine if the State can tax income generated in interstate commerce). This brief focuses on whether the third prong of that test has been satisfied. 1 I R.J. Reynolds and Sysco do not concede that the Dividend Received Exclusion meets the other three prongs of Complete Auto and focus on the discrimination prong in the interests of judicial economy and brevity. 2

9 A tax can be found invalid under the thfrd prong "if it is facially discriminatory, has a discriminatory intent, or has the effect of unduly burdening interstate commerce." Amerada Hess Corp. v. Director. Div. of Taxation, 490 U.S. 66, 75 (1989). '"[D]iscrimination' simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter." Oregon Waste Sys. rnc. v. Dep't of Envtl. Quality of Oregon, 51 l U.S. 93, 99 (1994). 2 The U.S. Supreme Court explains the discrimination issue as fo llows: The constitutional provision of power ''to regulate Commerce... among the several States," U.S. Const., Art. I, 8, cl. 3, has long been seen as a limitation on state regulatory powers, as well as an affirmative grant of congressional authority. In its negative aspect, the Commerce Clause prohibits economic protectionism -- that is, regulatory measures designed to benefit instate economic interests by burdening out-of-state competitors. This reading effectuates the Framers' purpose to prevent a State from retreating into economic isolation or jeopardizing the welfare of the Nation as a whole, as it would do if it were free to place burdens on the flow of commerce across its borders that commerce wholly within those borders would not bear. In evaluating state regulatory measures under the dormant Commerce Clause, we have held that the first step... is to determine whether it regulates evenhandedly with only incidental effects on interstate commerce, or discriminates against interstate commerce. With respect to state taxation, one element of the protocol summarized in Complete Auto Transit. Inc. v. Brady, 430 U.S. 274, 51 L. Ed. 2d 326, 97 S. Ct (1977), treats a law as discriminatory if it tax[ es] a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the State. [S]ee also Boston Stock Exchange v. State Tax Comm'n, 429 U.S. 318, 332, n. 12, 50 L. Ed. 2d 514, 97 S. Ct. 599 (1977) (noting that a State "may not discriminate between transactions on the basis of some 2 The djscrimination prong applies to all taxes and includes additions to income and exclusions from income, such as the Dividend Received Exclusion. See Camps Newfound/Owatonna. Inc. v. Town of Harrison; 520 U.S. 564, (1997) (stating whether "the tax discrimination comes in the form of a deprivation of a generally available tax benefit, rather than a specific penalty on the activity itself, is of no moment" under the Commerce Clause}; Westinghouse Elec. Corp. v. Tully, 466 U.S. 388, 404 (1984) (stating "[n]or is it relevant that New York discriminates against business carried on outside the State by disallowing a tax credit rather than by imposing a higher tax. The discriminatory economic effect of these two measures would be identical"). 3

10 interstate element"). State laws discriminating against interstate commerce on their face are virtuall y per se inva lid. Fulton Corp. v. Faulkner, 516 U.S. 325, (1996) (quotation marks omitted; citations omitted). Moreover, as th is Court has provided, "[aj state tax that favors an in-state busi ness over an out-of-state business for the sale reason of location is prohibited." Tenn. Gas Pipeline Co. v. Marx, 594 So. 2d 6 15, 6 18 (Miss. 1992) (citing Am. Trucking Ass'ns, Inc. v. Scheiner, 483 U.S. 266, 286 ( 1987)). Whenever such facial discrimination exists in a taxing statute, no proof of an actual discriminatory effect or impact is required. Armco. Inc. v. Hardesty, 467 U.S. 638, 644 (1984). This is because state laws whi ch discriminate against interstate commerce on their face are "virtually ~ se invalid." Oregon Waste, 5 11 U.S. at 99. B. The Dividend Received Exclusion Unconstitutionally Discriminates Against Interstate Commerce The Dividend Received Exc lusion excludes from a corporation's income all of the dividends it received from Mississippi Taxpayers. Miss. Code Ann (4)(i). The Dividend Received Exclusion does not, however, exclu~e from a corporation's income any dividends it received from Non-M ississipp i Taxpayers The Chancery Court correctly determined that the Dividend Received Exclusion is facially discriminatory because the "statute clearly favors domestic corporations over foreign competitors and discourages corporations from choosing to locate their operations outside Mississippi." AT&T Corp. v. Miss. Dept. of Revenue, Cause No. G , pp. 6, 9 (Miss. Ch. C1. Mar. 20, 20 \5). Consider the choice before a corporation like AT&T, which is subject to tax in Mississippi, and is considering whether to invest in the stock of Corporation A, which is subject to tax in Mississippi, or that of Corporation B, which is not subject to tax in Mississippi. If AT&T invests in Corporation A, then it will receive a Dividend Received Excl usion for all 4

11 dividends received from Corporation A. However, ifit invests in Corporation B, it will not receive a Dividend Received Exclusion for any dividends received from Corporation B. The on ly difference in the examples is the lack of Mississippi activities for Corporation B. Therefore, the Dividend Recei ved Exclusion directly favors investments in dividend-paying corporations that are subject to tax in Mississippi (i.e., Mississippi Taxpayers). Furthennore, any claims that the Dividend Received Exclusion do not provide a direct commercial advantage to in-state busi nesses are without merit. The Dividend Recei ved Exclusion directly favors investments in Mississippi Taxpayers over Non-M ississippi Taxpayers. Such favoritism is a direct commercial advantage to Mississippi Taxpayers that is unconstitutional. Boston Stock Exch. v. State Tax Comm ' n, 429 U.S. 318, 329 (1977) (stating that "[n]o State, consistent with the Commerce Clause, may impose a tax which discriminates against interstate commerce... by providing a direct commercial advantage to local business") (i nternal quotations and citations omitted). Under U.S. Supreme Court precedent, a statute is discriminatory on its face jfthe statute treats in-state economic interests differently from out-of-state economi c interests in such a way as to benefit the in-state interests and burden the out-of-state interests. Oregon Waste, 5 11 U.S. at 99. The Dividend Received Exc lusion does just that ~ dividends received from Mississippi Taxpayers (i.e., the in-state economic interests) are not subject to tax but dividends recei ved from Non-Mississippi Taxpayers (i.e., the out-of-state economic interests) are subj ect to tax. Therefore, the Di vidend Recei ved Exc lusion is faciall y disc riminatory. See AT&T Corp. v. Surtees, 953 So. 2d 1240, 1245 (A la. e iv. App. 2006) (holding that statutes that encourage corporations to invest in entities that do business in Alabama at the expense of entities that do not do business in Alabama are fac ially discriminatory). 5

12 The California Court of Appeal found a statute substantially similar to the one at issue in these proceedings to be facially discriminatory and, therefore, unconstitutional. Farmer Bros. Co. v. Franchise Tax Bd., 108 Cal. App. 4th 976 (Cal. Ct. App. 2003). In Farmer Bros., the statute at issue allowed a deduction for dividends to the extent that the dividend-paying corporation paid tax in California but allowed no deduction if the dividend-paying corporation did not pay tax in California. Id. at 980. The court held that California's dividends received deduction "favors dividend-paying corporations doing business in California and paying California taxes over dividend-paying corporations which do not do business in California and pay no taxes in California." Id. at The court held that the statute "discriminates between transactions on the basis of an interstate element, which is facially discriminatory under the commerce clause." Id. at 987. Just as the California statute was facially discriminatory, the Dividend Received Exclusion similarly discriminates against interstate commerce in that it favors dividends from Mississippi Taxpayers over djvidends from Non-Mississippi Taxpayers. Therefore, the Dividend Received Exclusion is facially discriminatory. Moreover, the purpose of the Dividend Received Exclusion is not an avoidance of double taxation. As correctly found that by the Chancery Court, "the statute is not linked to the amount of tax the distributing corporation paid and actually results in double taxation to certain distributing corporations." AT&T Corp., Cause No. G , p. 7. This is because the Non-Mississippi Taxpayers are taxed on their income in the states in which they do business and their dividends are being taxed again in Mississippi. Further, the alleged purpose of a statute "has no bearing on whether it is facially discriminatory." Oregon Waste, 511 U.S. at 100; see also D.D.I., Inc. v. State. 657 N.W.2d 228, 6

13 235 (N.D. 2003) (stating that "although avoidjng double taxation of North Dakota income is a legitimate legislative goal, the purpose of, or justification for, a law has no bearing on whether it is facially discriminatory") (internal citations omitted). In addition, the New Hampshire Supreme Court's decision in General Electric Company, Inc. v. Commissioner. New Hampshire Department of Revenue Administration, 914 A.2d 246 (N.H. 2006), does not require a different result here. In that case, the court upheld a dividend received deduction. In order to justify the statute, the court created a "taxing symmetry" concept, which analyzed New Hampshire's taxing scheme as a whole and looked at the aggregate tax imposed upon a unitary business. Id. at The court found "tax symmetry" in New Hampshire's unitary combined reporting scheme and, therefore, upheld the statute. However, Mississippi does not employ a unitary combined reporting scheme. Furthermore, the U.S. Supreme Court has not adopted a "taxing symmetry" concept in reviewing whether taxes are discriminatory. Therefore, under the controlling precedent of the U.S. Supreme Court and this Court, the proper analysis is whether the statute treats in-state interests more favorably than out-of-state interests. Oregon Waste, 511 U.S. at 99; Tenn. Gas Pipeline, 594 So. 2d at 618. Furthermore, the decision in Fulton Corp. v. Faulkner, 516 U.S. 325 (1996), compels a conclusion that the Dividend Received Exclusion unconstitutionally discriminates on its face. In Fulton, the U.S. Supreme Court considered a North Carolina intangible property tax that applied to taxpayers who owned corporate stock. The tax was imposed at the rate of 0.25 percent of the fair market value of the stock. However, the taxable value of the stock was reduced by a percentage equal to the percentage of the corporation's income subject to tax in North Carolina. Under this regime, if the stock was issued by a corporation doing all of its business in North Carolina, a 100 percent reduction of the value of the stock would be allowed; if the stock was 7

14 issued by a corporation doing 50 percent of its business in North Carolina, a 50 percent reduction of the value of the stock would be allowed; and if the stock was issued by a corporation doing none of its business in North Carolina, no reduction of the value of the stock would be allowed. The Court had no hesitation in branding North Carolina's taxing regime as facially discriminatory: Id, at 333. A regime that taxes stock only to the degree that its issuing corporation participates in interstate commerce favors domestic corporations over their foreign competitors in raising capital among North Carolina residents and tends, at least, to discourage domestic corporations from plying their trades in interstate commerce. Mississippi's Dividend Received Exclusion suffers from precisely the same constitutional infirmity. It permits a taxpayer to exclude from its gross income only those dividends that it receives from Mississippi Taxpayers. Thus, just as the statute in Fulton provided an impermissible benefit to taxpayers for investing in corporations subject to tax in North Carolina, the Dividend Received Exclusion provides taxpayers a benefit only if they invest in corporations that are subject to tax in Mississippi. Even though the North Carolina tax was on intangible property, the U.S. Supreme Court's conclusion with regard to the North Carolina regime applies equally to the Mississippi tax regime. Accordingly, Mississippi's Dividend Received Exclusion "facially discriminates against interstate commerce." Id. U.S. Supreme Court and Mississippi precedent and the case law of other states establish that the Dividend Received Exclusion is facially discriminatory. Therefore, the decision of the Chancery Court should be affirmed. 8

15 C. The Dividend Received Exclusion is Not a Compensatory Tax and, Therefore, is Unconstitutional In order for a facially discriminatory statute like the Dividend Received Exclusion to nonetheless be constitutional, it must satisfy three requirements. First, the State must identify a valid interstate burden for which the challenged tax on interstate commerce is attempting to compensate. Second, the amount of tax on interstate commerce must be shown to roughly approximate, but not exceed, the amount of tax on intrastate commerce. Third, the events on which the interstate and intrastate taxes are imposed must be substantially equivalent, i.e., sufficiently similar in substance to serve as mutually exclusive proxies for each other. Oregon Waste, 511 U.S. at 103. To successfully invoke the compensatory tax defense, the burden is on the State to demonstrate that all three requirements are met. See Fulton, 516 U.S. at 332, 344; Oregon Waste, 511 U.S. at 103. The U.S. Supreme Court has stated that "we doubt that such a showing (of the requirements of this defense] can ever be made outside the limited confines of sales and use taxes." Fulton, 516 U.S. at 344. In these proceedings, "[t]he Department has provided no evidence or even assertions that the dividend exclusion statute is a compensatory tax." AT&T Corp. v. Miss. Dep't of Revenue, Cause No. G , p. 7. For the reasons discussed below, the decisions in D.D.l., Inc. v. State, 657 N.W.2d 228 (N.D. 2003), and Fulton confirm that the Dividend Received Exclusion is not a compensatory tax. In D.D.I., the North Dakota Supreme Court considered a dividend received deduction that was in all practical respects identical to the Dividend Received Exclusion here as dividends received from corporations subject to tax in North Dakota were not included in the parent corporation's tax base, but dividends received from corporations not subject to tax in North 9

16 Dakota were included in the parent corporation's tax base. Acknowledging the problem with such a statute, the State Tax Commissioner conceded that the dividend received deduction "facially d.iscriminate[d] against jnterstate commerce." Id. at 23 l. The Tax Commissioner argued, however, that the dividend received deduction was saved by the compensatory tax defense and should not be treated as discriminatory because its purpose was to prevent double taxation. Id. The North Dakota Supreme Court rejected that argument, finding that the Tax Commissioner had failed to meet at least two of the three prongs required to establish the compensatory tax defense. First, like the Chancery Court here, the North Dakota Supreme Court found that the State had failed to identify "any specific in-state activity or benefit received by the taxpayers to justify the compensatory levy on their dividends received from out-of-state corporations." Id. at 234. In doing so, the North Dakota Supreme Court rejected the State's attempt to rely upon the income tax imposed upon in-state subsidiaries as a compensatory twin for the income tax imposed upon companies receiving the dividends. Second, the North Dakota Supreme Court found that when the effects of other state taxes on the dividend-paying company were considered, the State's dividend received deduction did not result in a tax on interstate commerce that roughly approximates the tax on intrastate commerce. lfh The court's analysis rested upon the framework developed in the U.S. Supreme Court' s internal consistency cases. See.~ Armco lnc. v. Hardesty, 467 U.S. 638 (1984); Tyler Pipe Indus. Inc. v. Wash. State Dep't of Revenue, 483 U.S. 232 (1987); Am. Trucking Ass'ns, Inc. v. Scheiner, 483 U.S. 266 (1987). Finally, because the Tax Commissioner had failed to meet the first two prongs, the North Dakota Supreme Court concluded it need not address whether the dividend received deduction 10

17 satisfied the third prong. See also Farmer Bros., 108 Cal. App. 4th at (holding that the State failed to justify California's dividend received deduction under all three prongs of the compensatory tax defense). Furthermore, in Fulton. North Carolina maintained that the intangibles tax should be sustained because it satisfied the three conditions of the compensatory tax doctrine. 516 U.S. at For reasons that are controlling here, the U.S. Supreme Court found that, in fact, none of the three required conditions had been satisfied. First, the Court observed that where a State identifies an intrastate tax as the basis for a proposed compensatory tax defense, "it should go without saying that this intrastate tax must serve some purpose for wh ich the State may otherwise impose a burden on interstate commerce." Jd. at 334. This requirement defeated North Carolina's attempt to offer its general corporate income tax as a compensatory burden for its intangibles tax because "North Carolina ha[d] no general sovereign interest in taxing income earned out of state." Id. Mississippi likewise has "no general sovereign interest in taxing income earned out of state" and it cannot justify a tax on dividends received from Non-Mississippi Taxpayers by its inability to tax the out-of-state earnings from which those dividends are derived. Second, the Court found that the State also failed to meet the second prong of the compensatory tax defense (i.e., that the tax on interstate commerce approximate, but not exceed, the amount of the tax on intrastate commerce) because the State could not justify the amount of the tax at issue. Jn reaching its decision, the Court observed that "(w]here general forms of taxation are involved, we ordinarily cannot even begin to make the sorts of quantitative assessments that the compensatory tax doctrine requires." Id. at

18 Finally, the Court concluded that the State had failed to demonstrate that the two taxes fell upon substantially equivalent events, because the levies fell upon two different parties (i.e., the payee-owner and the payor corporation). Precisely the same lack of "equivalence" exists here because the two allegedly complementary taxes - the tax on the dividend-paying corporation's income and the tax on the dividend-recipient's income - fall on different taxpayers, namely, the payor corporation and the payee-owner. Id. at As conceded by the Department's failure to provide any evidence in support of a compensatory tax defense, the Dividend Received Exclusion is not a compensatory tax and the Chancery Court's decision should be affirmed. D. Conclusion The Dividend Received Exdusion provides differential treatment to in-state companies and out-of-state companies, which benefits the former and burdens the latter, and is not a defensible compensatory tax. Therefore, the Dividend Received Exclusion unconstitutionally discriminates against interstate commerce. Accordingly, the Court should affirm the decision of the Chancery Court. 12

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20 CERTIFICATE OF SERVICE I hereby certify that I have this day caused to be filed the foregoing Amicus Curiae Brief of R.J. Reynolds Tobacco Company and Sysco Corporation In Support of Appellee AT&T Corporation electronically via the Mississippi Electronic Court' s ("MEC' s") fi ling system, which sent notification of such filing to all registered participants, including the following: John F. Fletcher Adam Stone Kaytie M. Pickett Jones Walker LLP Post Office Box 427 Jackson, MS JFletcher@.joneswalker.com AStonef@joneswalker.com KPickett@joneswalker.com Counsel for Appellee Laura H. Carter Bridgette T. Thomas Mississippi Department of Revenue Post Office Box Jackson, MS Laura.Carter@dor.ms.gov Bridgette.Thomas(@dor.ms.gov Counsel for Appellant And by U.S. mail, postage prepaid, to the following non-mec participant: Honorable William Singletary Chancellor, Hinds County Chancery Judge P. 0. Box 686 Jackson, MS SO CERTIFIED, this thelid.l day of December,