Because the issue here presented can be best understood in its factual context, we begin with a statement of the essential facts from which the issue arises.

I. FACTS AND PROCEEDINGS

Caterpillar, Inc., is a Delaware-based corporation qualified under the laws of Michigan, with its principal place of business in Peoria, Illinois. It is a multinational company, which designs, manufactures, and markets earth-moving, construction, and materials-handling machinery and equipment, as well as engines for such products. Caterpillar conducts a portion of its business in Michigan, and pays taxes to the State of Michigan pursuant to the Single Business Tax Act (sbt), MCL 208.1 et seq.; MSA 7.558(1) et seq.

Caterpillar brought an action in the Court of Claims against the Department of Treasury, seeking a refund of all sbt taxes it paid in the years *4051981 through 1984.1 It challenges the constitutionality of the capital acquisition deduction (cad), MCL 208.23(a), (c); MSA 7.558(23)(a), (c) of the sbt,2 claiming that the cad burdens interstate commerce, and thereby violates the Commerce Clause of the United States Constitution3 by discriminating against non-Michigan-based companies and favoring Michigan-based companies.4

On July 13, 1989, the Court of Claims held that the cad was unconstitutional. The court stated *406that the cad discriminates against out-of-state corporations in a way that has been consistently ruled unconstitutional by the United States Supreme Court on the ground that it violates the Commerce Clause. The court cited the following cases in support of this contention: Halliburton Oil Well Cementing Co v Reily, 373 US 64; 83 S Ct 1201; 10 L Ed 2d 202 (1963), Nippert v Richmond, 327 US 416; 66 S Ct 586; 90 L Ed 760 (1946), American Trucking Ass’ns, Inc v Scheiner, 483 US 266; 107 S Ct 2829; 97 L Ed 2d 226 (1987), and Westinghouse Electric Corp v Tully, 466 US 388; 104 S Ct 1856; 80 L Ed 2d 388 (1984). The court further ruled that the discriminatory effect of the cad should be remedied by disallowing the application of the cad for any taxpayer, and thus the court acted to sever subsections 23(a) and (c) from the sbt.5 The court ruled, however, that its deci*407sion would apply only to taxable years beginning after September 30, 1989, thus granting prospective relief only.

Caterpillar appealed the Court of Claims decision to grant prospective relief only and to sever the cad in its entirety from the sbt. On February 5, 1991, the Court of Appeals entered its decision, 188 Mich App 621; 470 NW2d 80 (1991), noting first that it was not ruling on the issue whether the cad violates the Commerce Clause of the United States Constitution.6 In regard to the other issues, the Court affirmed the Court of Claims decision to grant prospective relief only, but modified its decision in regard to the specific relief granted. The Court of Appeals held that instead of severing the cad in its entirety, only that language that produces the discriminatory effect should be removed from the sbt.7

Caterpillar filed an application for leave to ap*408peal, and the Department of Treasury filed an application for leave to appeal as cross-appellant. On October 4, 1991, we granted both applications and limited the appeals to the following issues: (1) whether, before the passage of 1991 PA 77,8 the cad provisions violated US Const, art I, § 8, cl 3, if so, (2) whether the lower courts erred by limiting the effect of their rulings to tax years beginning after September 30, 1989, and (3) what relief, if any, plaintiff-appellant should receive. 439 Mich 860.

II. CAPITAL ACQUISITION DEDUCTION

To better understand the issues implicated in this case, we move next to a discussion of the cad. It is important to note that the cad is not an isolated tax statute, but is part of an overall tax scheme that represents a policy choice adopted by the state Legislature. This tax scheme is the sbt. The sbt, enacted by the Legislature in 1975,9 was "new and experimental legislation in this state.” Town & Country Dodge, Inc v Dep’t of Treasury, 420 Mich 226, 234; 362 NW2d 618 (1984).10 The sbt is a consumption-type value-added tax. See Mobil Oil v Dep’t of Treasury, 422 Mich 473, 496, and n 14; 373 NW2d 730 (1985). It is not, however, a pure value-added tax because it is subject to various exemptions, exclusions, and industry-specific ad*409justments.11 Under the sbt, the first step in determining a taxpayer’s tax liability is to determine its tax base. This tax base is defined as business income before apportionment subject to certain adjustments. MCL 208.9; MSA 7.558(9). The tax base is then apportioned between Michigan and other states in which the taxpayer conducts business activities. MCL 208.40, 208.41, 208.45; MSA 7.558(40), 7.558(41), 7.558(45). This is done by using a three-factor apportionment formula.12 After apportionment, the tax base is subject to several additional adjustments.13 One such adjustment is the cad.

The cad does just what its name suggests. It provides a deduction for the acquisition of capital assets. Following the general principles of consumption-type value-added tax treatment, the cad allows the taxpayer’s tax base to be reduced by the amount expended during the tax year to acquire capital assets. See Kasischke, Computation of the *410Michigan single business tax: Theory and mechanics, 22 Wayne L R 1069 (1976). This consumption-type element of the cad and sbt thereby provides a cash-flow advantage to the purchaser/user of capital assets. The cad allows the purchaser/user to increase its cash flow by reducing its tax liability through the deduction. Such a tax policy may help to encourage Michigan-related investments and may provide an economic stimulus to certain parts of the business sector due to the increase in cash flow.14

The deduction provided by the cad is not applied to the tax base until after the tax base has been allocated or apportioned. MCL 208.23; MSA 7.558(23). Since the tax base after apportionment represents only Michigan business activity, only capital acquisitions related to Michigan business activity should qualify for -treatment pursuant to the cad. The cad (subsections 23[a] and 23[c]) is designed to accomplish this result. Subsections 23(a) and 23(c) provide methods of apportioning a taxpayer’s capital acquisitions so that only those acquisitions that relate to Michigan business activity are included in the cad. Apportioning the cad for tangible personal property15 is accomplished in subsection 23(a). Apportioning the cad for real property16 is accomplished in subsection 23(c).17

Under subsection 23(a), the deduction for tangible personal property is available for any tax*411payer, whether a multistate company18 or a company whose business activity is allocated entirely to Michigan19 — an in-state company. Furthermore, subsection 23(a) does not limit the cad for tangible personal property to only those assets located in Michigan. Because tangible personal property is readily transportable, it is not that easy to determine where tangible personal property is actually located, or how or if such location should be or is solely determinative of its proper use in the cad. The Legislature recognized that it could not reach such a determination without imposing burdensome accounting problems upon the taxpayers and upon the Michigan taxing system itself. In response to these problems, the Legislature, following traditional taxing policy and practice of state legislatures, adopted an apportionment formula to calculate the cad for tangible personal property related to Michigan business activities. The apportionment formula adopted was a two-factor formula. To figure out the cad for tangible personal property, the total cost of the tangible personal property acquired during the tax year (regardless of whether it is purchased in Michigan) is multiplied by the average of the property factor and the payroll factor.20

The two-factor formula used in subsection 23(a) *412is obviously not the same as the three-factor formula used in computing a taxpayer’s tax base attributable to Michigan.21 The theory behind the use of the two-factor apportionment formula in subsection 23(a) is that the acquisition of the capital is most likely to be located where a company’s property and payroll (employees) are located. The sales factor used in the three-factor formula is excluded on the premise that while a taxpayer’s investment in productive capacity (capital assets) follows the taxpayer’s existing investment in property and labor, it does not necessarily follow the location of its sales.22

As with subsection 23(a), under subsection 23(c) the deduction for real property is available for any taxpayer, whether a multistate company or a company whose business activity is allocated entirely to Michigan — an in-state company. The method of apportionment, however, is much more simple. Location of real property is obvious and does not involve accounting problems. Moreover, investment in real property is considered to be directly related to productive capacity. Therefore, subsection 23(c) provides a one hundred percent deduction for the cost of real property "provided that the assets are physically located in Michigan.”

The lack of symmetry between the three-factor apportionment formula used for calculating the sbt tax base and the two-factor apportionment formula used under subsection 23(a) of the cad is ultimately the basis for Caterpillar’s constitutional challenge23 of the cad.24_

*413III. ANALYSIS

When considering the constitutional challenge presented by Caterpillar and reviewing the decisions of the lower courts in this case, we begin our analysis by recognizing that, in regard to such issues, we are guided by several well-established principles of law that frame our inquiry. Johnson v Harnischfeger Corp, 414 Mich 102, 112; 323 NW2d 912 (1982). Legislation that is challenged on constitutional grounds is_ "clothed in a presumption of constitutionality.” Cruz v Chevrolet Grey Iron Div of General Motors Corp, 398 Mich 117, 127; 247 NW2d 764 (1976). A statute is presumed constitutional absent a clear showing to the contrary. Lehnhausen v Lake Shore Auto Parts, 410 US 356; 93 S Ct 1001; 35 L Ed 2d 351 (1973). "[I]t is the duty of the Court to give the presumption of constitutionality to a statute and construe it as constitutional unless the contrary clearly appears.” People v McQuillan, 392 Mich 511, 536; 221 NW2d 569 (1974). The presumption of constitutionality is especially strong with respect to taxing statutes. Ludka v Dep’t of Treasury, 155 Mich App 250, 264; 399 NW2d 490 (1986), citing O’Reilly v Wayne Co, 116 Mich App 582, 591; 323 NW2d 493 (1982). State legislatures have great discretionary latitude in formulating taxes. Wisconsin v J C Penney Co, 311 US 435, 444-445; 61 S *414Ct 246; 85 L Ed 267 (1940).25 "The legislature must determine all questions of State necessity, discretion or policy in ordering a tax and in apportioning it. 1 Cooley, Taxation (4th ed), § 67. And the judicial tribunals of the State have no concern with the policy of State taxation determined by the legislature. 1 Cooley, Taxation (4th ed), § 67.” C F Smith Co v Fitzgerald, 270 Mich 659, 670; 259 NW 352 (1935) (cited for support in Stockler v Dep’t of Treasury, 75 Mich App 640, 644; 255 NW2d 718 [1977]). See also Bowerman v Sheehan, 242 Mich 95, 97-98; 219 NW 69 (1928). A taxpayer challenging a tax on constitutional grounds must overcome a strong presumption in favor of the *415taxing statute’s validity and point out with specificity the constitutional provision that is violated. Penn Mut Life Ins Co v Dep’t of Licensing & Regulation, 162 Mich App 123; 412 NW2d 668 (1987); Huron-Clinton Metropolitan Auth’y v Bd of Supervisors of Five Counties, 300 Mich 1, 12; 1 NW2d 430 (1942); Young v Ann Arbor, 267 Mich 241, 243; 255 NW 579 (1934). A taxing statute must be shown to " 'clearly and palpably violate[ ] the fundamental law’ ” before it will be declared unconstitutional. O’Reilly, supra at 592, citing Thoman v Lansing, 315 Mich 566, 576; 24 NW2d 213 (1946). With these essential principles in mind, we address the constitutional challenge presented in this case.

The United States Supreme Court, cognizant of these essential principles and equally mindful of and responsive to Commerce Clause dictates, has established a four-pronged test to determine whether a state tax violates the Commerce Clause. Complete Auto Transit, Inc v Brady, 430 US 274, 279; 97 S Ct 1076; 51 L Ed 2d 326 (1977). A state tax will withstand scrutiny under a Commerce Clause challenge and will be held to be constitutionally valid under the four-pronged test articulated in Complete Auto provided that the tax: (1) is applied to an activity having a substantial nexus with the taxing state, (2) is fairly apportioned, (3) does not discriminate against interstate commerce, and (4) is fairly related to the services provided by the state.26 We now apply this four-pronged test to the cad.

*416A. SUBSTANTIAL NEXUS

The first prong of the Complete Auto test requires us to determine whether the sbt through the cad provisions is applied to an activity having a substantial nexus with Michigan. "The requisite 'nexus’ is supplied if [Caterpillar] avails itself of the 'substantial privilege of carrying on business’ within the State . . . .” Mobil Oil Corp v Comm’r of Taxes of Vermont, 445 US 425, 437; 100 S Ct 1223; 63 L Ed 2d 510 (1980). See also Exxon Corp v Wisconsin Dep’t of Revenue, 447 US 207, 220; 100 S Ct 2109; 65 L Ed 2d 66 (1980). Furthermore, "[t]he fact that a tax is contingent upon events brought to pass without a state does not destroy the nexus between such a tax” and business activities with the state. J C Penney, supra at 445. "[Visible territorial boundaries do not always establish the limits of a state’s taxing power or jurisdiction. ... If there is some jurisdictional fact or event to serve as a conductor, the reach of the state’s taxing power may be carried to objects of taxation beyond its borders.” Miller Bros Co v Maryland, 347 US 340, 342-343; 74 S Ct 535; 98 L Ed 744 (1954). Thus, to allow a state to impose a tax on interstate activities, there must be some minimal connection between those activities and the taxing state. See Moorman Mfg Co v Bair, 437 US 267, 273; 98 S Ct 2340; 57 L Ed 2d 197 (1978); Container Corp v Franchise Tax Bd, 463 US 159, 165-166; 103 S Ct 2933; 77 L Ed 2d 545 (1983); Mobil Oil, supra, 445 US 436-437. To establish the requisite nexus under the constitution, it must simply be determined whether there exists "some definite link, some minimum connection, between [the state and the business activities] it seeks to tax.” Miller Bros, supra at 344-345. See also Nat’l Bellas Hess, Inc v Illinois Dep’t of Revenue, 386 *417US 753, 756; 87 S Ct 1389; 18 L Ed 2d 505 (1967); Nat’l Geographic Society v California Bd of Equalization, 430 US 551, 561; 97 S Ct 1386; 51 L Ed 2d 631 (1977). It is clear from the facts as set forth in this case that Caterpillar conducts a portion of its business in Michigan.27 Thus, we are persuaded that there exists some definite link, some minimum connection, between Michigan and Caterpillar’s business activities that it seeks to tax. Therefore, we find that the sbt through the cad provisions is applied to an activity having a substantial nexus with Michigan. Having concluded that a sufficient Michigan connection exists, the first prong of the Complete Auto test is plainly satisfied.

B. FAIR APPORTIONMENT

We turn next to the second prong of the Complete Auto test to determine whether the cad provisions of the sbt are fairly apportioned. Fair apportionment requires that each state- tax only its fair share of interstate business activity. Goldberg v Sweet, 488 US 252, 260-261; 109 S Ct 582; 102 L Ed 2d 607 (1989). The function of apportionment is to determine what portion of a multistate company’s business activity can be fairly attributed to the taxing state. Trinova v Dep’t of Treasury, 433 Mich 141, 157; 445 NW2d 428 (1989). See also Shell Oil Co v Iowa Dep’t of Revenue, 488 US 19; 109 S Ct 278; 102 L Ed 2d 186 (1988). This determination "is often an elusive goal, both in theory and in practice.” Container Corp, supra at *418164. However, while formula apportionment cannot guarantee a perfect result, "the constitution requires neither a perfect formula nor a perfect apportionment.” Trinova, supra, 433 Mich 162. Moreover, separate geographical accounting has been held to offer no better solution to computation of taxation of interstate activity. See Container Corp, supra at 181. Therefore, state legislatures have been allowed wide latitude in determining whether formula apportionment provides the best method available to their respective states in deciding how to tax the state’s fair share of interstate business activity. Moorman, supra at 272-273.

The United States Supreme Court has long upheld the constitutionality of formula apportionment. See, e.g., Moorman, supra; Butler Bros v McColgan, 315 US 501; 62 S Ct 701; 86 L Ed 991 (1942); Hans Rees’ Sons, Inc v North Carolina, 283 US 123; 51 S Ct 385; 78 L Ed 879 (1931); Bass, Ratcliff & Gretton, Ltd v State Tax Comm, 266 US 271; 45 S Ct 82; 69 L Ed 282 (1924); Underwood Typewriter Co v Chamberlain, 254 US 113; 41 S Ct 45; 65 L Ed 165 (1920). In upholding the constitutionality of formulary apportionment, "the United States Supreme Court has refused to require the use of one formula to the exclusion of all others.” Trinova, supra, 433 Mich 157. Furthermore, the Court has "declined to undertake the essentially legislative task of establishing a 'single constitutionally mandated method of taxation.’ ” Goldberg, supra at 261. See also Trinova v Michigan Dep’t of Treasury, 498 US 358, —; 111 S Ct 818, 836; 112 L Ed 2d 884 (1991). The only constitutional requirement for apportionment is that it be fair. Container Corp, supra.

A determination whether apportionment is fair in a given case has most recently required analyzing two components of fairness. The first compo*419nent of fairness focuses on the structure of the tax. This component requires that the tax structure be internally consistent. "To be internally consistent, a tax must be structured so that if every State were to impose an identical tax, no multiple taxation would result,” Goldberg, supra at 261, or, in other words, no more than one hundred percent of the taxpayer’s business activity would be taxed. Under subsection 23(a) of the cad, Caterpillar would receive a cad for one hundred percent of its acquired tangible personal property, divided among the states in which it has property and payroll.28 Similarly, under subsection 23(c) of the cad, Caterpillar would receive a cad for one hundred percent of its acquired real property. Under subsection 23(c), Caterpillar would receive a cad in each state for all of the real property it acquired in that state.29 We conclude, therefore, that the internal consistency component of fairness is satisfied.

The second component of fairness for apportionment focuses on the relationship between the factors used to determine apportionment and the activity that is being apportioned. This component requires that the apportionment be externally consistent. External consistency requires that the choice of factors used in apportionment "reasonably reflects the in-state component of the activity being [apportioned].” Goldberg, supra at 262. Subsection 23(a) of the cad uses a two-factored apportionment formula. The two factors used are the property factor and the payroll factor. The theory behind the decision to use these specific factors, as opposed to other factors, is that the acquisition of the capital is most likely to be located where a company’s property and payroll (employees) are *420located. The sales factor used in the three-factor formula is excluded on the premise that while a taxpayer’s investment in productive capacity (capital assets) follows the taxpayer’s existing investment in property and labor, it does not necessarily follow the location of its sales. See ante, pp 411-412. We are persuaded that the reasoning provided by this theory makes it clear that the choice of factors used in subsection 23(a) of the cad reasonably reflects capital acquisitions related to Michigan business activity.

In so concluding, we are not deciding that the two-factor apportionment formula best reflects the in-state component of capital acquisitions of tangible personal property, nor are we obliged to make such a determination. See Trinova, supra, 111 S Ct 834. We need only find that the two-factor apportionment formula reasonably reflects the in-state component of capital acquisitions of tangible personal property. To make this determination we are not required to find that the formula results in the precise or actual in-state component of capital acquisitions of tangible personal property. Formulas that have been found to provide only a rough approximation have been upheld. Moorman, supra at 272. See also Trinova, supra, 111 S Ct 833; Amerada Hess Corp v New Jersey Dep’t of Treasury, 490 US 66, 75; 109 S Ct 1617; 104 L Ed 2d 58 (1989). Indeed, apportionment formulas inherently overreflect or underreflect the in-state component of the interstate business activity being taxed. Despite this imprecision, the United States Supreme Court has consistently held that such formulas reasonably reflect the in-state component of the interstate business activity being taxed. See Moorman, supra at 272-273.

Therefore, because we have found that the two-factor apportionment formula reasonably reflects *421the Michigan component of the capital acquisitions of tangible personal property made by Caterpillar, we need not determine whether the use of a three-factor apportionment formula would produce a more fair or precise result. Such a determination is better and more appropriately left to the Michigan Legislature.30 See Trinova, supra, 111 S Ct 818; Moorman, supra.

Under subsection 23(c), the sole factor considered in apportioning the cad is the physical location of the real property acquired. As stated previously in this opinion, ante, p 412, this was done because the location of real property is obvious, and because investment in real property is directly related to productive capacity. We find, on the basis of this reasoning, that the choice of factors used in subsection 23(c) of the cad reasonably reflects capital acquisitions related to Michigan business activity. Thus, the external consistency component of fairness is satisfied.

In Trinova, supra, 433 Mich 160, this Court stated:

[T]he test for fair apportionment is not whether a formula results in inadequate or even inaccurate apportionment. The test is whether the use of a particular method of apportionment results in business activity being attributed to this state which is "out of all appropriate proportions” to the taxpayer’s intrastate business activity, or has "led to a grossly distorted result.”

The burden of showing that a tax is not fairly apportioned is on the taxpayer. See Trinova, supra, 433 Mich 158. See also Trinova, 111 S Ct 832, Container Corp, and Moorman, supra. No facts presented in this case evidence any substantial *422misappropriation or any such distorted result. Therefore, we find that the methods of apportionment under the cad, satisfying the requirements of both internal consistency and external consistency, meet the test for fair apportionment. Thus, we conclude that the second prong of the Complete Auto test is satisfied.

C. DISCRIMINATION

We turn next to the third prong of the Complete Auto test to determine whether the cad provisions of the sbt discriminate against interstate commerce. Interstate commerce is not immune from state taxation and may constitutionally be made to pay its way. See Complete Auto, supra. However, "the Commerce Clause prohibits economic protectionism — that is, regulatory measures designed to benefit in-state economic interests by [unduly] burdening out-of-state competitors.” New Energy Co of Indiana v Limbach, 486 US 269, 273-274; 108 S Ct 1803; 100 L Ed 2d 302 (1988). See also Boston Stock Exchange v State Tax Comm, 429 US 318, 329; 97 S Ct 599; 50 L Ed 2d 514 (1977). A tax violates the third prong of the Complete Auto test if it is facially discriminatory, has a discriminatory purpose, or has the effect of unduly burdening interstate commerce. See Amerada Hess, supra at 75.

1. FACIAL DISCRIMINATION

The cad is available for any taxpayer, whether a multistate company or a company whose business activity is allocated entirely to Michigan — an instate company. This is true under both subsections 23(a) and 23(c). Therefore, Caterpillar cannot point to any treatment of in-state and out-of-state com*423panies that is discriminatory on its face. See Trinova, supra, 111 S Ct 835.31

2. DISCRIMINATORY PURPOSE

Caterpillar claims that the cad provided in subsection 23(a) is discriminatory because the two-factor apportionment formula excludes consideration of the sales factor used in the three-factor apportionment formula used to calculate the taxpayer’s apportioned tax base under the sbt. When the reasons for using the two-factor formula and the three-factor formula in the various parts of the sbt are reviewed, it is clear that a finding of a discriminatory purpose for enacting subsection 23(a) is not required. The three factors used in apportioning the tax base under the sbt — payroll factor, property factor, and sales factor — " 'appear in combination to reflect a very large share of the activities by which value is generated.’ ” Trinova, supra, 111 S Ct 833 (emphasis in original). Likewise, the two factors used in apportioning the capital acquisitions of tangible personal property under subsection 23(a) — payroll factor, property factor — appear to reasonably reflect the in-state component of capital acquisitions of tangible personal property. See part iii(b) of our opinion, ante, pp 417-422. Formulas used in apportioning a value-added tax base and a deduction provided for acquisitions of capital are not constitutionally required to be identical. There is no constitutional requirement that different provisions of a taxing statute be in any way symmetrical. Therefore, we cannot conclude that the use of two different *424apportionment formulas in the sbt evidences any discriminatory purpose.

Caterpillar also urges that subsection 23(c) is discriminatory because it was enacted to promote investment in Michigan. In Trinova, supra, 111 S Ct 835, the United States Supreme Court held that the promotion of development and investment of business in Michigan does not violate the Commerce Clause.

It is a laudatory goal in the design of a tax system to promote investment that will provide jobs and prosperity to the citizens of the taxing state.- States are free to "structure] their tax systems to encourage the growth and development of intrastate commerce and industry.” Boston Stock Exchange, supra, 429 US 336-337.

Therefore, we do not find discriminatory purpose in the enactment of subsection 23(c).

We conclude, as did the Trinova Court, that "all the contemporaneous evidence concerning passage of the sbt suggests a benign motivation, combined with a practical need to increase revenues.” Trinova, supra, 111 S Ct 835. Furthermore, we do not find "any evidence that the sbt was inspired as a way to export tax burdens or import tax revenues.” Id., 111 S Ct 836. Thus, we conclude and more specifically find no discriminatory purpose in the enactment of the cad.

3. DISCRIMINATORY EFFECT

Even if a tax statute is not discriminatory on its face and was not enacted with the intent to discriminate against interstate commerce, it can still be held to violate the Commerce Clause if it is found to have a discriminatory effect on interstate commerce. Caterpillar claims that subsection 23(a) *425has the discriminatory effect of favoring Michigan-based companies at the expense of non-Michigan-based companies. Caterpillar claims this discrimination is directly related to the unfair design of the two-factor apportionment formula. In support of its claim, Caterpillar argues that the two-factor apportionment formula discriminates against certain multistate companies like itself who do not have a predominant part of their facilities and employees in Michigan in comparison to their sales, and who therefore receive a smaller cad than if the sales factor was included in the apportionment formula.

The United States Supreme Court has held that when the different effects of a tax provision on different companies result solely from the differences between the nature of these companies’ businesses and not from the location of their activities (i.e., in state or out of state), there exists no discriminatory effect on interstate commerce. See Amerada Hess, supra at 78. See also White v Reynolds Metals Co, 558 So 2d 373, 389-390 (Ala, 1989). Similarly, a discriminatory effect does not result from fair encouragement of in-state business like that provided by subsection 23(c). See Armco, Inc v Hardesty, 467 US 638, 645-646; 104 S Ct 2620; 81 L Ed 2d 540 (1984), and Boston Stock Exchange, supra at 336-337. *426We agree with this analysis. Thus, we are persuaded that no discriminatory effect on interstate commerce was imposed on Caterpillar by virtue of the cad.

*425The [sbt] does not contain provisions aimed at imposing adverse tax consequences upon multistate taxpayers as a class. Generally speaking, the overall tax consequences to a multistate taxpayer will be dependent upon the nature of its business activities and whether it is eligible and. elects to avail itself of the tax reduction incentives afforded by the [sbt], [Pollock, Multistate taxpayers under the Single Business Tax Act, 22 Wayne L R 1101, 1113 (1976).]

*426The Court of Claims ruled that the cad has a discriminatory effect on interstate commerce. The court stated that the discriminatory effect of the cad has been consistently held to be unconstitutional by the United States Supreme Court as violative of the Commerce Clause. We observe, however, that the Court of Claims arrived at its decision without a full and thorough analysis of all four prongs of the Complete Auto test. The court, therefore, rendered its decision without any reference to whether the cad was fairly apportioned. Furthermore, we observe that the decision of the Court of Claims was announced before the decision of the United States Supreme Court in Trinova and therefore did not have the benefit of the Trinova analysis.

The Trinova Court fouñd that the sbt32 did not discriminate against interstate commerce in violation of the Commerce Clause, distinguishing the sbt from other taxing statutes that it has held to be unconstitutional. The Court stated that under the Michigan tax, there is no treatment of in-state and out-of-state companies that is discriminatory on its face, noting that such facial discrimination was found, however, in Westinghouse Electric Corp v Tully, Boston Stock Exchange, and Halliburton Oil Well Cementing Co v Reily, supra. Trinova, supra, 111 S Ct 835. Moreover, the Court in Trinova stated that while it recognizes that the "Commerce Clause requires more than mere facial neutrality,” id., and that " 'the Commerce Clause has a deeper meaning that may be implicated even though state provisions ... do not allocate tax *427burdens between insiders and outsiders in a manner that is facially discriminatory,’ ” id., citing American Trucking Ass’ns v Scheiner, supra at 281, "[t]he content of that requirement is fair apportionment” and "[t]he 'deeper meaning’ to which American Trucking refers is embodied in the requirement of fair apportionment, as expressed in the tests of internal and external consistency.” 111 S Ct 835. See also Container Corp, supra at 171 ("in the interstate commerce context . . . the antidiscrimination principle has not in practice required much in addition to the requirement of fair apportionment”).

Having found that the cad was fairly apportioned and having reviewed, the United States Supreme Court’s own interpretation of its prior decisions in Westinghouse, Boston Stock Exchange, Halliburton, and American Trucking, we find our decision, holding that there is no discriminatory effect on interstate commerce imposed on Caterpillar by virtue of the cad, to be consistent with prior case law on this issue and warranted in this case.

In sum, the cad is not facially discriminatory, nor does the cad have a discriminatory purpose or effect. Therefore, the third prong of the Complete Auto test is satisfied.

D. FAIR RELATION TO SERVICES PROVIDED

The fourth prong of the Complete Auto test raises the issue whether the sbt through the cad provisions is fairly related to the services provided by Michigan. In Goldberg, supra at 266-267, the United States Supreme Court provided an explanation of what the fourth prong requires. The Court stated:

The purpose of this test is to ensure that a *428State’s tax burden is not placed upon [companies] who do not benefit from services provided by the State. Commonwealth Edison [Co v Montana, 453 US 609, 627; 101 S Ct 2946; 69 L Ed 2d 884 (1981)].

. . . The tax which may be imposed on a particular interstate transaction need not be limited to the cost of the services incurred by the State on account of that particular activity. Id. at 627, n 16. On the contrary, "interstate commerce may be required to contribute to the cost of providing all governmental services, including those services from which it- arguably receives no direct 'benefit.’ ” Ibid, (emphasis in original). The fourth prong of the Complete Auto test thus focuses on the wide range of benefits provided to the taxpayer, not just the precise activity connected to the interstate activity at issue. Indeed, last Term, in DH Holmes [Co, Ltd v McNamara, 486 US 24, 32; 108 S Ct 1619; 100 L Ed 2d 21 (1988)], we noted that a taxpayer’s receipt of police and fire protection, the use of public roads and mass transit, and the other advantages of civilized society satisfied the requirement that the tax be fairly related to benefits provided by the State to the taxpayer.

Caterpillar’s business activities in Michigan during the years 1981 through 1984 consisted of the following: the employment of from two to five sales representatives who were residents of Michigan, the ownership interest in patterns and tooling used by unrelated third-party Michigan suppliers in the manufacture and production of parts purchased by Caterpillar, the leasing of a forklift truck, and the sales of products shipped into Michigan. In light of Caterpillar’s business activity in Michigan, we find that Caterpillar has received the benefits of a "civilized society” that Michigan provides, as characterized by the Court in Goldberg, supra. Therefore, we find that the sbt through the *429cad provisions is fairly related to the services provided by Michigan. Thus, the fourth prong of the Complete Auto test is satisfied.

IV. CONCLUSION

In summary, we find that the capital acquisition deduction, MCL 208.23(a), (c); MSA 7.558(23)(a), (c) of the Single Business Tax Act, as it was in effect in relation to the challenge before us,33 satisfies all four prongs of the Complete Auto test. Therefore, we hold that the cad does not violate the Commerce Clause, US Const, art I, § 8, cl 3.34 Thus, we reverse the decisions of the Court of Claims and the Court of Appeals. We need not address the remaining issues because our decision on the Commerce Clause issue is dispositive.

(dissenting). In Trinova Corp v Dep’t of Treasury, 433 Mich 141; 445 NW2d 428 (1989), aff’d 498 US 358; 111 S Ct 818; 112 L Ed 2d 884 (1991), this Court and the United States Supreme Court upheld the three-factor apportionment formula of Michigan’s Single Business Tax *430Act (sbt).1 This case presents the distinct question whether, in light of the underlying sbt apportionment, the different apportionment formulas formerly applied to the capital acquisition deduction (cad) provision of the sbt2 discriminate against interstate commerce in violation of the Commerce Clause, US Const, art I, § 8, cl 3.3

The majority concludes that the cad apportionment does not discriminate against interstate commerce. My Brother Brickley concludes that the apportionment of the personal property component of the cad does discriminate, but that the apportionment of the real property component does not. I agree with Justice Brickley’s result with regard to the apportionment of the personal property cad, although on the basis of significantly different analysis. I also believe, contrary to the results of both Justice Brickley and the majority, that the proper analysis requires the conclusion that the real property cad apportionment is equally unconstitutional.

In my view, the apportionment formulas applied both to the personal property and real property *431components of the cad discriminate against interstate commerce on their face and in their inevitable effect. Indeed, the cad apportionment scheme, when analyzed carefully in light of the underlying apportionment formula applied to the sbt itself, is revealed to be a subtle but classic example of interstate economic protectionism forbidden by the Commerce Clause. I therefore respectfully dissent.

I. COMMERCE CLAUSE ANALYSIS

A. GENERAL PRINCIPLES

The United States Supreme Court recently summarized its Commerce Clause jurisprudence as follows:

The Commerce Clause of the United States Constitution provides that "[t]he Congress shall have Power . . . [t]o regulate Commerce . . . among the several States . . . .” Art I, § 8, cl 3. It is long-established that, while a literal reading evinces a grant of power to Congress, the Commerce Clause also directly limits the power of the States to discriminate against interstate commerce. "This 'negative’ aspect of the Commerce Clause prohibits economic protectionism — that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” When a state statute clearly discriminates against interstate commerce, it will be struck down, unless the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism. Indeed, when the state statute amounts to simple economic protectionism, a "virtually per se rule of invalidity” has applied. [Wyoming v Oklahoma, 502 US —; 112 S Ct 789; 117 L Ed 2d 1, 22 (1992). Citations omitted.]

It is well established, of course, that the prohibition of discrimination against interstate commerce *432applies to tax as well as regulatory legislation. One of the earliest leading Commerce Clause cases involved a discriminatory license tax imposed on vendors of goods made out of state. The United States Supreme Court struck down the tax, holding that the Commerce Clause was designed to guard against "all the evils of discriminating State legislation, favorable to the interests of one State and injurious to the interests of other states and countries, which existed previous to the adoption of the Constitution . . . .” Welton v Missouri, 91 US (23 Wall) 275, 281; 23 L Ed 347 (1876).

It is also well established that the Commerce Clause generally operates to forbid two distinct types of discrimination. States may not discriminate between economic entities on the basis of instate or out-of-state status, see, e.g., Dean Milk Co v Madison, 340 US 349; 71 S Ct 295; 95 L Ed 329 (1951) (discrimination against out-of-state milk producers); Nippert v Richmond, 327 US 416; 66 S Ct 586; 90 L Ed 760 (1946) (license tax on sales solicitation effectively discriminating against out-of-state distributors), nor may they discriminate between economic goods, services, or activities on the basis of in-state or out-of-state origin or location, see, e.g., Wyoming v Oklahoma, supra (discrimination against coal mined out of state); New Energy Co of Indiana v Limbach, 486 US 269; 108 S Ct 1803; 100 L Ed 2d 302 (1988) (discrimination against ethanol produced out of state); Boston Stock Exchange v State Tax Comm, 429 US 318; 97 S Ct 599; 50 L Ed 2d 514 (1977) (discriminatory tax on securities transfers resulting from out-of-state sales).

Either type of discrimination will run afoul of the Commerce Clause.4 In Nippert, the Court in*433validated a municipal license tax on door-to-door salespeople because it had the effect of discriminatorily burdening out-of-state distributors as compared to established local businesses engaged in similar solicitation, see 327 US 429-432, even though the tax in no way hinged on whether the goods being sold were of in-state or out-of-state origin. Conversely, in Boston Stock Exchange, the Court struck down a discriminatory state tax on securities transfers resulting from out-of-state sales even though, in certain respects, it did not discriminate between in-state and out-of-state residents. The Court specifically rejected the argument that the tax was valid to the extent that it merely favored in-state sales by nonresidents over out-of-state sales by those same nonresidents.

The fact that this discrimination is in favor of nonresident, in-state sales which may also be considered as interstate commerce, does not save [it] from the restrictions of the Commerce Clause. A State may no more use discriminatory taxes to assure that nonresidents direct their commerce to businesses within the State than to assure that residents trade only in intrastate commerce. [429 US 334-335. Citation omitted; emphasis added.]

B. THE PURPORTED STATE INTEREST IN PROMOTING DOMESTIC DEVELOPMENT

The majority and Justice Brickley rely very heavily on language in some opinions of the *434United States Supreme Court to the effect that the promotion of in-state investment and economic development is not, generally speaking, an impermissible state goal. See Riley, J., ante, pp 424, 425-426; Brickley, J., post, pp 480-481. My colleagues rely principally on passages in three United States Supreme Court opinions: Boston Stock Exchange, 429 US 336-337, Armco, Inc v Hardesty, 467 US 638, 645-646; 104 S Ct 2620; 81 L Ed 2d 540 (1984), and Trinova, 112 L Ed 2d 912. Because this issue appears to dominate my colleagues’ analysis and conclusions, and because I believe my colleagues have misconstrued the United States Supreme Court’s case law in this regard, I discuss this issue in some detail.

Trinova would seem, at face value, to afford the greatest support to my colleagues’ position. The Court there stated:

It is a laudatory goal in the design of a tax system to promote investment that will provide jobs and prosperity to the citizens of the taxing state. States are free to "structure] their tax systems to encourage the growth and development of intrastate commerce and industry.” [112 L Ed 2d 912, quoting Boston Stock Exchange, 429 US 336.]

Such sweeping language, if taken out of context and in isolation, would seem to flash a green light to economic protectionism. But this language can only properly be understood in context. In the first place, the Court in Trinova, in the passage containing the quoted language, was simply disposing of a claim that the three-factor sbt apportionment, although otherwise nondiscriminatory on its face and in its effect, had an unconstitutional discriminatory purpose as revealed in a speech by former Governor Blanchard, who stated "that the sbt was *435enacted ' "to promote the development and investment of business within Michigan.” ’ ” Trinova, 112 L Ed 2d 912. The Court was simply holding that such a broadly stated beneficial purpose, without more, did not establish unconstitutional discrimination.

It is inappropriate to read such generalized language endorsing a state’s right to promote in-state economic development as a license to discriminate against interstate commerce, when the Court has otherwise emphatically and uniformly condemned such discrimination. There are many ways in which a state might promote domestic development without discriminating in any way against interstate commerce. To take the easiest example in the tax area, a state could simply reduce its uniform rate of taxation on all business activity conducted in, or fairly apportioned to, the state, with regard to all economic entities, both in state and out of state. Given the long and emphatic line of United States Supreme Court case law condemning state taxes that discriminate against interstate commerce, I think the only fair conclusion that can be drawn is that, however legitimate in general terms it may be for a state to promote domestic development, it may not pursue that goal by means of taxes that discriminate against out-of-state economic entities or interstate economic activities. Boston Stock Exchange, on which the above-quoted passage in Trinova relied, stated:

Our decision today does not prevent the States from structuring their tax systems to encourage the growth and development of intrastate commerce and industry. Nor do we hold that a State may not compete with other States for a share of interstate commerce; such competition lies at the heart of a free trade policy. We hold only that in the process of competition no State may discrimi*436natorily tax the products manufactured or the business operations performed in any other State. [429 US 336-337. Emphasis added.]

In Armco, the Court addressed a West Virginia gross receipts sales tax that exempted companies engaged in manufacturing in West Virginia, thereby disfavoring manufacturers based out of state that wished to sell their products in West Virginia. The asserted justification for the exemption was that West Virginia imposed a separate and higher tax on manufacturing conducted in West Virginia. West Virginia argued that, unless an out-of-state company subject to the gross receipts tax could demonstrate that it was also subject to a manufacturing tax in the state or states where it manufactured its goods, to the extent that the overall tax burden on the out-of-state company exceeded the overall burden on the instate company, no improper discrimination would be established. See 467 US 639-644. The Court rejected this argument and struck down the tax as discriminatory on its face, stating:

Any other rule would mean that the constitutionality of West Virginia’s tax laws would depend on the shifting complexities of the tax codes of 49 other States, and that the validity of the taxes imposed on each taxpayer would depend on the particular other States in which it operated. [Id. at 644-645.]

Most relevant to present purposes, the Court continued:

It is true, as the . . . amicus curiae points out, that Armco would be faced with the same situation that it complains of here if Ohio (or some other State) imposed a tax only upon manufactur*437ing, while West Virginia imposed a tax only upon wholesaling. In that situation, Armco would bear two taxes, while West Virginia sellers would bear only one. But such a result would not arise from impermissible discrimination against interstate commerce but from fair encouragement of in-state business. [467 US 645.][5]

Thus, the Court indicated that a state may indeed fashion its tax laws to promote its domestic economy and "compete with other States for a share of interstate commerce,” Boston Stock Exchange, 429 US 336-337, but only in ways uniformly affecting a given type of economic activity, without any discriminatory treatment of out-of-state entities or activities. In other words, according to Armco, West Virginia could repeal its manufacturing tax altogether in order to compete, but it could not grant domestic manufacturers a discriminatory exemption from its gross receipts tax.6

This conclusion has been repeatedly emphasized *438in other United States Supreme Court opinions. Quotations from two cases decided in the Court’s most recent term should suffice to underscore my point. In Chemical Waste Management, Inc v Hunt, 504 US —; 112 S Ct 2009; 119 L Ed 2d 121 (1992), the Court, after reciting a number of its earlier decisions condemning discrimination under the Commerce Clause, stated:

To this list may be added cases striking down a tax discriminating against interstate commerce, even where such tax was designed to encourage the use of ethanol and thereby reduce harmful exhaust emissions, New Energy Co of [Indiana v Limbach, supra], or to support inspection of foreign cement to ensure structural integrity. For in all of these cases, "a presumably legitimate goal was sought to be achieved by the illegitimate means of isolating the State from the national economy.” [119 L Ed 2d 131-132. Some citations omitted; emphasis added.]

And in Kraft General Foods, Inc v Iowa Dep’t of Revenue & Finance, 505 US —; 112 S Ct 2365; 120 L Ed 2d 59 (1992), the Court, in striking down yet another discriminatory state tax, declared:

Absent a compelling justification, ... a State may not advance its legitimate goals by means that facially discriminate against foreign commerce. [120 L Ed 2d 69. Emphasis added.][7]

C. DIRECTLY APPLICABLE CASE LAW

The principle that a state may not impose a tax that discriminates against interstate commerce *439has been reaffirmed repeatedly by a long line of United States Supreme Court decisions. See, e.g., Amerada Hess Corp v New Jersey Dep’t of the Treasury, 490 US 66; 109 S Ct 1617; 104 L Ed 2d 58 (1989); New Energy Co of Indiana v Limbach, supra; American Trucking Ass’ns, Inc v Scheiner, 483 US 266; 107 S Ct 2829; 97 L Ed 2d 226 (1987); Bacchus Imports, Ltd v Dias, 468 US 263; 104 S Ct 3049; 82 L Ed 2d 200 (1984); Armco, Inc v Hardesty, supra; Westinghouse Electric Corp v Tully, 466 US 388; 104 S Ct 1856; 80 L Ed 2d 388 (1984); Maryland v Louisiana, 451 US 725; 101 S Ct 2114; 68 L Ed 2d 576 (1981); Boston Stock Exchange v State Tax Comm, supra; Halliburton Oil Well Cementing Co v Reily, 373 US 64; 83 S Ct 1201; 10 L Ed 2d 202 (1963); Nippert v Richmond; Welton v Missouri, supra.

The instant case, of course, like all the cases cited above, presents this familiar issue within its own unique factual context. The two cases most closely on point would appear to be Westinghouse Electric Corp v Tully, supra, and the very recent decision in Kraft General Foods, Inc v Iowa Dep’t of Revenue & Finance, supra. Each of those cases, like the instant case, involved a state tax that discriminated through the operation of certain tax credits or deductions.

Westinghouse involved a challenge to a New York franchise income tax imposed on export companies.8 A company’s New York tax base is *440generally apportioned according to a three-factor formula analogous to that upheld in Trinova.9 The Court in Westinghouse noted that New York’s apportionment formula (its "business allocation percentage”) was not at issue in Westinghouse, and, indeed, had previously been upheld. See 466 US 398-399. At issue in Westinghouse was an amendment to the New York law providing for a tax credit "limited to gross receipts from export products 'shipped from a regular place of business of the taxpayer within [New York].’ ” Id. at 393. As the Court explained, "[t]he result of the credit is to lower the effective tax rate on the accumulated . . . income ... to 30% of the otherwise applicable franchise tax rate.” Id. Because the benefits of the tax credit increased or decreased in proportion to the percentage of the company’s gross receipts derived from exporting goods from New York, as compared to the company’s total gross receipts from exporting goods, the company argued, and the Court agreed, that the credit resulted in higher effective tax rates on New York-apportioned income for those companies exporting a smaller percentage of their products from New York, thereby discriminating against companies with a greater proportion of out-of-state business. See id. at 400-401, and n 9.

Most significantly for present purposes, the state argued in Westinghouse that limiting the tax credit to exports shipped from New York was *441justified as a way to ensure that the tax credit only applied to income that, was taxable by New York in the first place. This is similar to the argument primarily relied upon by the state in this case: that the apportionment of the cad is a fair, if rough, way of ensuring that taxpayers like Caterpillar benefit from the cad only to the extent that they actually do business in Michigan. The Court in Westinghouse rejected New York’s argument because the calculation of the tax credit already took into account New York’s business allocation percentage.

In'computing the allowable credit, the statute requires the [company] to factor in its business allocation percentage. . . . This procedure alleviates the State’s fears that it will be overly generous with its tax credit, for once the adjustment of multiplying the allowable . . . export credit by the [company’s] business allocation percentage has been accomplished, the tax credit has been fairly apportioned to apply only to the amount of the accumulated . . . income taxable to New York. From the standpoint of fair apportionment of the credit, the additional adjustment of the credit to reflect the . . . New York export ratio is both inaccurate and duplicative. [Id. at 399.]

In this case, of course, the apportionment formulas applied to the cad are not "duplicative” of any other formulas. But Caterpillar contends that they are nevertheless "inaccurate” in the sense condemned by Westinghouse. Caterpillar contends that if the state’s concern is to ensure that the benefits of the cad are limited in proportion to the amount of business that a company does in Michigan, the state could satisfy that concern by simply applying the same three-factor apportionment formula to the cad that is already applied to the *442sbt.10 Thus, as I discuss more fully in part n, to the extent the state’s asserted justification for the cad apportionment is to apportion the benefits of the cad to Michigan-related business, Westinghouse indicates that this asserted state interest simply does not justify the discriminatory nature and effect of the chosen formulas.

Kraft involved a challenge to Iowa’s business income tax. While the challenge alleged only discrimination against foreign commerce rather than domestic interstate commerce, the relevant Commerce Clause analysis is fully applicable for present purposes. In defining the income subject to taxation, Iowa generally chooses, for purposes of convenience, to follow the definitions of federal tax law. One of the results of applying the federal definitions to Iowa’s tax structure was that Iowa allowed a parent company doing business in Iowa to deduct from its Iowa-apportioned tax base dividends received from subsidiaries incorporated in the United States, but not dividends received from subsidiaries incorporated in foreign countries, unless the dividends reflected business activity in the United States. See Kraft, 120 L Ed 2d 65-66.

Because the inevitable effect of Iowa’s deduction scheme was to increase the effective rate of taxation on a company’s Iowa-apportioned income when it received dividends from foreign subsidiaries reflecting foreign business activity, as compared to when it received dividends from domestic subsidiaries,11 the Court concluded that the Iowa *443tax "facially discriminates against foreign commerce and therefore violates the Foreign Commerce Clause.” 120 L Ed 2d 69.12

Taken together, Westinghouse and Kraft indicate that a state tax discriminates in violation of the Commerce Clause if, as a result of the operation of credits or deductions, the effective tax rate imposed on the income or other tax base apportioned to a state varies on the basis of the out-of-state (or foreign) status of the taxpayer or related business entity, or on the basis of the degree of activity in interstate (or foreign) commerce, so as to favor in-state (or domestic) commerce and disfavor out-of-state (or foreign) commerce. As I hope to demonstrate in part ii and in the appendix, these are precisely the discriminatory effects of the cad apportionment at issue in this case.

II. APPLICATION OF THE ANALYSIS TO THIS CASE

The majority in this case correctly cites Complete Auto Transit, Inc v Brady, 430 US 274; 97 S Ct 1076; 51 L Ed 2d 326 (1977), for the general framework of analysis applied to a challenge to a state tax under the Commerce Clause. As the United States Supreme Court recently reaffirmed, a court

will sustain a tax against a Commerce Clause challenge so long as the "tax [1] is applied to an activity with a substantial nexus with the taxing State, [2] is fairly apportioned, [3] does not discriminate against interstate commerce, and [4] is fairly *444related to the services provided by the State.” [Quill Corp v North Dakota, 504 US —; 112 S Ct 1904; 119 L Ed 2d 91, 105 (1992), quoting Complete Auto, 430 US 279.]

Caterpillar does not contend before this Court, however, that the sbt, as modified by the cad, taxes any activity lacking a "substantial nexus” with Michigan, nor does it contend that the tax is not "fairly related to the services provided by” Michigan. Caterpillar also does not challenge the apportionment formulas applied to the personal property and real property components of the cad on the ground that either of those formulas, taken alone, would not constitute a fair method of apportioning Caterpillar’s business activity attributable to Michigan.13 Thus, the first, second, and fourth prongs of the Complete Auto analysis are not at issue in this case.14

*445Caterpillar’s only contention before this Court is that the cad apportionment formulas, in conjunction with the underlying three-factor apportionment of the sbt itself, improperly discriminate against interstate commerce, and specifically against Caterpillar itself as a predominantly out-of-state commercial entity engaged in interstate commerce.15 This issue is governed by the principles and case law set forth in part i.

Under the personal property cad, the taxpayer is, generally speaking, allowed to deduct from its Michigan-apportioned tax base the costs of depreciable personal property accrued during the tax year. The personal property cad for a given year is apportioned to Michigan according to the average of the taxpayer’s property and payroll factors.16 Leaving aside the effect of apportionment, the personal property cad is available without regard to whether the personal property is acquired or placed into service in state or out of state. Because the property factor is based on all real and personal property owned or rented during the tax year,17 however, it will necessarily be affected — and the apportionment formula resulting from the *446average of the property and payroll factors will thus also be affected — by whether newly acquired personal property subject to the cad is placed into service in state or out of state.

Thus, it is clear, on the face of the statute, that two otherwise similarly situated companies that invest in equal-value amounts of new personal property during the tax year will receive different deductions under the cad, depending on the degree to which they are physically based in Michigan to begin with (as measured by the property and payroll factors), and depending on whether they invest the newly acquired personal property in state or out of state. Furthermore, it is clear that a greater deduction, resulting in a lower effective tax rate on the Michigan-apportioned tax base, is afforded both to (1) a company that is more predominantly based in Michigan to begin with, as compared to a company more predominantly based out of state, and (2) a company investing the new personal property in state, as compared to a company investing the new personal property out of state. These discriminatory effects are illustrated by the hypothetical numerical examples set forth in the appendix, tables i(a) and ii(a).18

The first effect needs little explanation. Because the apportionment of the personal property cad is directly tied to the average proportion of property and payroll situated in Michigan, it is obvious that a predominantly Michigan-based company will reap a far greater benefit from any investment in personal property (whether in state or out of state) than will a predominantly non-Michigan-based company (with the same Michigan-apportioned tax *447base) making an identical investment.19 The second effect is more subtle and indirect, but no less inevitable. Because an in-state investment in personal property will always increase (however slightly) the property factor and thus the personal property cad apportionment formula, while an out-of-state investment will always decrease both numbers, a company investing in personal property in state will always end up reaping a greater personal property cad than will a .similarly situated company making an equivalent investment out of state.20

*448Under the real property cad, the taxpayer is, generally speaking, allowed to deduct from its Michigan-apportioned tax base the costs of depreciable real property accrued during the tax year. The real property cad, however, is limited to property "physically located in Michigan.”21 The "apportionment” of the real property cad to Michigan is thus strictly dependent on the in- or out-of-state location of the property in which the taxpayer invests, and does not depend on the relative in- or out-of-state status of the taxpayer.22

It is clear, on the face of the statute, that two otherwise similarly situated companies that invest in real property of equal value during the tax year will receive either a substantial deduction or no deduction at all, depending on whether that property is located in state or out of state. Furthermore, the deduction, resulting in a substantially lower effective tax rate on the Michigan-apportioned tax base, is afforded only to a company investing in Michigan real property, as compared to a similarly situated company investing in out-of-state real property. This discriminatory effect is illustrated by the hypothetical numerical examples set forth in the appendix, tables i(b) and ii(b).23

Thus, both the personal property and real prop*449erty cad apportionment formulas, when applied in conjunction with the three-factor apportionment of the sbt itself, result in the imposition of higher effective tax rates on the Michigan-apportioned tax base with regard to companies that are either predominantly non-Michigan based or that direct their investments outside Michigan, as compared to companies that are predominantly Michigan based or that direct their investments inside Michigan. These discriminatory effects converge so as to afford an especially preferential tax rate to a Michigan-based company that invests in Michigan, as compared to a non-Michigan-based company that invests outside Michigan.

These facial and inevitable discriminatory effects contravene the Commerce Clause as interpreted by the United States Supreme Court, most notably in Westinghouse and Kraft See part i(c).24 That the disputed tax, as in this case, is a general tax on income, value-added, or other business activity, rather than a transactional tax directly targeting interstate activities or out-of-state products, is

irrelevant to our analysis. The franchise tax [at issue in Westinghouse] is a tax on the income of a business from its aggregated business transactions. It cannot be that a State can circumvent the *450prohibition of the Commerce Clause against placing burdensome taxes on out-of-state transactions by burdening those transactions with a tax that is levied in the aggregate — as is the franchise tax— rather than on individual transactions. [Westinghouse, 466 US 404.]

Nor is it relevant that a discriminatory effective tax rate results indirectly from the operation of tax credits or deductions, rather than being directly imposed. "We have declined to attach any constitutional significance to such formal distinctions that lack economic substance.” Id. at 405; see also Kraft, supra. Finally, the magnitude of the discriminatory effect is irrelevant; any measurable discriminatory effect, however small, is unconstitutional. See Wyoming v Oklahoma, 117 L Ed 2d 23; Westinghouse, 466 US 407 ("the Court 'need not know how unequal the Tax is before concluding that it unconstitutionally discriminates’ ”).25

"When a state statute clearly discriminates against interstate commerce, it will be struck down, unless the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism.” Wyoming v Oklahoma, 117 L Ed 2d 22 (citations omitted; emphasis added). As the Court stated even more recently in the context of discrimination against foreign commerce: "Absent a compelling justification, . . . a State may not advance its legitimate goals by means that facially discriminate . . . .” Kraft, 120 L Ed 2d 69 (emphasis added). The Court struck down the discrimina*451tory tax in Krañ because "this is not a case in which the State’s goals 'cannot be adequately served by reasonable nondiscriminatory alternatives.’ ” Id.

The primary state interest asserted in support of the chosen apportionment formulas for both the personal property and real property cad is the need to apportion the cad to Michigan, consistent with the apportionment of a company’s overall tax base to Michigan for purposes of the sbt. While this goal is certainly legitimate (and even, it may be assumed, compelling), it completely fails to justify the discriminatory nature and effect of the apportionment formulas the state has chosen to achieve that goal. All of the demonstrated discriminatory effects could easily have been avoided by simply apportioning both components of the cad by the same three-factor formula used to apportion the sbt itself. The state has not argued, and could not reasonably argue, that applying the sbt three-factor apportionment to the cad would fail to achieve its asserted goal in this regard. Indeed, the state has already amended the cad statute in response to the lower court decisions in this case to provide for precisely such an apportionment of the cad for tax years beginning after September 30, 1989.26

*452The state asserts an additional goal limited to the real property cad apportionment: the encouragement of investment in Michigan real property. This goal, however, is clearly not "unrelated to economic protectionism.” On the contrary, the goal of encouraging both in- and out-of-state companies to direct their investments in real property toward Michigan as opposed to outside Michigan bears a strong and obvious relationship to economic protectionism.

I agree with Justice Brickley, of course, that this asserted goal is not, generally speaking, a categorically impermissible purpose. Cf. Brickley, J., post, p 480. As I have discussed in part i(b), it is perfectly permissible for a state to promote instate investment and economic development, but only as long as the state does not attempt to do so by means of discriminating against interstate commerce. It would turn logic and more than a century of United States Supreme Court precedent upside down to imply, as my Brother Brickley comes close to doing, that a state may discriminate against interstate commerce whenever doing so serves (as it inevitably would) the goal of promoting in-state investment and economic development. That goal, while not categorically invalid, is simply not, by any stretch of the imagination, sufficiently "unrelated to economic protectionism” to justify a state tax that discriminates against interstate commerce.27

*453It is important to keep in mind that the issue in this case is not the validity of the state’s goal, but rather the validity of the cad apportionment at issue. Just as generalized assertions of "interstate economic protectionism” do not suffice to demonstrate the invalidity of the cad apportionment, generalized endorsements of the goal of "providing incentives for the growth of intrastate industry,” post, p 480, upon which my Brother Brickley relies so heavily, go no further to support its validity.

In conclusion, it is useful to step back and consider the discriminatory effect of the cad apportionment in broad, practical terms. A company like Caterpillar that is physically based primarily out of state, but that has a more significant proportion of sales in Michigan, is taxed to some extent under Michigan’s sbt on the value added to its products in its non-Michigan plants, on the basis of its Michigan sales as incorporated into the three-factor formula. While such taxation might, at first glance, seem to be improperly "extraterritorial,” the United States Supreme Court upheld the sbt in Trinova on the theory that the "true” geographical origin of value-added, like that of business income, cannot be determined with any meaningful precision. See 112 L Ed 2d 904-911.

Rather, the Court held that . Michigan could reasonably assume that the Michigan-related sales activities of a company physically based primarily outside Michigan add significantly to the value of *454the products sold. See 112 L Ed 2d 905-906. Thus, while it is impossible-to identify precisely how much value is added by sales activities, see 112 L Ed 2d 905-908, the sbt may properly be apportioned in part on the basis of where sales occur. The theory is that it would be artificial and unrealistic to geographically assign a company’s value-added solely on the basis of where the company’s productive activities physically take place, as measured by the location of property and payroll. See 112 L Ed 2d 910 ("[we] reject the complete exclusion of sales as somehow resulting in more accurate apportionment”).

The problem is that Michigan, having chosen to tax with one hand a non-Michigan-based company’s productive activities conducted at out-of-state factories with out-of-state employees and equipment, on the basis of Michigan sales as calculated under the three-part formula, then turns around and refuses, with the other hand, to allow the company a deduction for acquisitions of property that would also reflect, to an equivalent degree, the company’s Michigan sales. On the contrary, Michigan limits the availability of the personal property cad strictly according to the degree to which the company’s overall property and payroll are physically located in Michigan. And Michigan limits the availability of the real property cad according to whether the property obtained is physically located in Michigan. Thus, a company that purchases or builds a factory outside Michigan, and hires employees and places equipment into service in that factory to engage in production, will be taxed by Michigan on the productive activities that take place in that factory, to the extent, as reflected in the three-factor formula, that the products manufactured are sold in Michi*455gan.28 And yet the company will not receive any deduction for its acquisition of the factory, and will receive a deduction for its ácqúisition of the equipment only to the extent (small or nonexistent, by hypothesis) that the company’s overall property and payroll are based in Michigan.29

By relying in part on Michigan sales for initial taxation purposes, while relying exclusively on Michigan property and payroll for relevant deduc*456tion purposes, the combined apportionment scheme of the sbt and the cad results in classic economic protectionism. Predominantly non-Michigan-based companies that import heavily into Michigan have the worst of both worlds: relatively higher tax bases due to their higher proportion of sales in Michigan, and relatively lower (or nonexistent) deductions pursuant to the cad. In stark contrast, predominantly Michigan-based companies that export heavily to other states have the best of both worlds: relatively lower tax bases due to their lower proportion of sales in Michigan, and much higher deductions pursuant to the cad. At risk of beating a dead horse, let me quote once again from Wyoming v Oklahoma, 117 L Ed 2d 22: "[W]hen the state statute amounts to simple economic protectionism, a 'virtually per se rule of invalidity’ has applied.”

III. THE ANALYSIS OF JUSTICE BRICKLEY AND THE MAJORITY

I agree with my Brother Brickley’s conclusion that the personal property cad apportionment is invalid under the Commerce Clause. With regard to the real property cad apportionment, however, I believe, with all due respect, that Justice Brickley and the majority misconstrue the governing case law of the United States Supreme Court. Justice Brickley suggests that the real property cad is valid simply because it "is provided wholly independent of a company’s interstate character.” Post, p 471. The majority, likewise, relies on a law review article published in 1976 that asserts:

"The [sbt] does not contain provisions aimed at imposing adverse tax consequences upon multistate taxpayers as a class. Generally speaking, the overall tax consequences to a multistate taxpayer *457will be dependent upon the nature of its business activities . . . [Ante, p 425, quoting Pollock, Multistate taxpayers under the Single Business Tax Act, 22 Wayne L R 1101, 1113 (1976).]

In fact, as I have attempted to demonstrate in part ii, the cad apportionment does "impos[e] adverse tax consequences upon multistate taxpayers as a class,” as compared to taxpayers primarily or exclusively based in Michigan. More fundamentally, however, it is not necessary to demonstrate that a tax discriminates against interstate or multistate taxpayers as a group in order for it to violate the Commerce Clause. As I have discussed, even holding constant the in- or out-of-state character of the company, the cad apportionment discriminates against interstate economic activities. This alone would be sufficient to invalidate the scheme. The author of the quoted law review article did not have the benefit of Boston Stock Exchange, supra, decided the following year, in which the Court clarified that even when both the favored and disfavored business activities involve out-of-state entities and interstate commerce, the Commerce Clause is violated by discrimination designed to "direct [such] commerce to businesses within the State . . . .” 429 US 334-335, quoted more fully in part i(a).

In view of that unequivocal language in Boston Stock Exchange, I disagree with Justice Brickley’s assertion that "it is entirely permissible to grant a credit using in-state activity as a criterion.” Post, p 480. In fact, relying on the in-state status of an economic transaction or activity was precisely what the Court struck down as invalid in both Boston Stock Exchange and Westinghouse, supra. My colleague relies heavily on the analogies between Westinghouse and this case with regard to *458the personal property cad, but seems to overlook the even more obvious analogies with regard to the real property cad. While the parallels with Westinghouse should not be overdrawn, as that case involved a tax credit operating differently from the tax deduction at issue here, Westinghouse squarely rejected New York’s decision to tie the benefits of its tax credit to the geographical location (inside New York) from which the taxpayer exported goods. Similarly, Michigan has chosen to tie the benefits of its real property cad to the geographical location (inside Michigan) of the real property potentially subject to the deduction.

I think it is incorrect, in light of Boston Stock Exchange and Westinghouse, to suggest that facial discrimination under the Commerce Clause results only

when a statute creates two categories of jurisdictional activity, one that is composed of intrastate activity and one that is composed of interstate activity, and imposes a burden on the interstate activity not shared by intrastate taxpayers. [Brickley, J., post, p 478.]

In both Boston Stock Exchange and Westinghouse, both the favored and disfavored activities could be characterized as "interstate commerce,” and both the favored and disfavored entities could be characterized as "interstate taxpayers.” And yet the Court struck down the taxes at issue because they discriminated in favor of activities directed toward the taxing state. Such discrimination, after all, is the very essence of "interstate economic protectionism.”

Justice Brickley states that "the cad for real property treats all acquisitions of real property in Michigan without regard to a company’s interstate *459activity . . . Post, p 478. But the very acquisition of property outside Michigan, as opposed to inside Michigan, constitutes a type of "interstate activity” protected against discrimination by the Commerce Clause. Obviously, the real property cad does have "regard” to — indeed, it relies exclusively upon — whether the property acquired is inside Michigan or outside Michigan. Relying exclusively on that in-state geographical criterion is no more valid in this case than was New York’s reliance on the in-state location from which exports were shipped in Westinghouse, or New York’s reliance on the in-state location of securities sales in Boston Stock Exchange.30

Finally, I must take issue with Justice Brickley’s assertion that my analysis with regard to the real property cad "hinges on a faulty comparison of in-state, jurisdictional activity and out-of-state, nonjurisdictional activity,” and that "[f]or the purposes of the Commerce Clause, these activities are noncomparable.” Post, p 481. As I believe my analysis makes perfectly clear, the unlawful dis*460crimination that I discern in this case consists of the different and discriminatory effective tax rates imposed on a company’s sbt tax base concededly within Michigan’s jurisdiction. The effective tax rate hinges in part on a company’s choice to direct its commerce toward Michigan or away from Michigan. Whether Michigan would have "jurisdiction” for tax purposes over the commerce directed away from Michigan is irrelevant; this case does not involve a transaction tax aimed directly at the disfavored commerce. Rather, as the governing case law indicates, Michigan may not discriminate against such commerce by varying the effective rate of tax imposed on that portion of the company’s value-added that is concededly within Michigan ’s jurisdiction.

My difficulties with the majority’s analysis run even deeper. The majority does not come to grips with the facial discriminatory effect of the cad apportionment. As my Brother Brickley points out, the mere fact that "[t]he cad is available for any taxpayer,” Riley, J., ante, p 422 (emphasis added), wholly fails to alleviate the infirmity of the cad apportionment formulas, which render the cad "available” only on terms that facially discriminate against interstate commerce. See Brickley, J., post, pp 476-477.

The majority correctly states that

[t]he United States Supreme Court has held that when the different effects of a tax provision on different companies result solely from the differences between the nature of these companies’ businesses and not from the location of their activities (i.e., in state or out of state), there exists no discriminatory effect on interstate commerce. [Ante, p 425.]

*461But as I have attempted to demonstrate in part n, the "different effects” of the tax scheme at issue do result "from the location of [the companies’] activities,” and not just from the different nature of the taxed business activities. Indeed, I have postulated, in my analysis and in the hypothetical examples in the appendix, similarly situated companies engaged in identical types of business activity, with the only differences being the in- or out-of-state character of the companies or their activities.

IV. THE RETROACTIVITY ISSUE AND THE REMEDY ISSUE

In view of my dissenting posture, I will not attempt to reach a definitive conclusion with regard to the retroactivity or remedy issues. I would note only the general principle set forth in McKesson Corp v Florida Dep’t of Business Regulation, 496 US 18, 43, n 27; 110 S Ct 2238; 110 L Ed 2d 17 (1990):

In order to cure the illegality of [a] tax as originally imposed, the State must ultimately collect a tax for the contested tax period that in no respect impermissibly discriminates against interstate commerce.

V. CONCLUSION

For the reasons I have stated, I respectfully dissent.

*462APPENDIX

I. A HYPOTHETICAL, PREDOMINANTLY NON-MICHIGAN-BASED IMPORT COMPANY

A. EFFECT OF PERSONAL PROPERTY INVESTMENTS

At the outset Following $100,000 personal property investment,

in state out of state

Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000

Total Real Property $1,000,000 $1,000,000 $1,000,000

In Michigan 300.000 300.000 300.000

Outside Michigan 700.000 700.000 700.000

Total Personal Property $1,000,000 $1,100,000 $1,100,000

In Michigan 300.000 400.000 300.000

Outside Michigan 700.000 700.000 800.000

Total Payroll $1,000,000 $1,000,000 $1,000,000

In Michigan 300.000 300.000 300.000

Outside Michigan 700.000 700.000 700.000

Sales Percentage:

In Michigan 90% 90% 90%

Outside Michigan 10% 10% 10%

Sbt Property Factor 0.3 0.3333 0.2857

Sbt Payroll Factor 0.3 0.3 0.3

Sbt Sales Factor 0.9 0.9 0.9

3-Factor'Apportionment 0.5 0.5111 0.4952

Apportioned Tax Base $500,000 $511,111 $495,238

Apportioned cad:

Real Property $0 $0 $0

Personal Property $0 $31,667 $29,286

Adjusted Tax Base $500,000 $479,444 $465,952

Tax (at 2.35% rate) $11,750 $11,267 $10,950

Effective Tax Rate31 2.3500% 2.2044% 2.2111%

Discriminatory advantage of in-state investments:32 0.0067% or $34

*463B. EFFECT OF REAL PROPERTY INVESTMENTS

At the outset Following $100,000 real property investment,

in state out of state

Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000

Total Real Property $1,000,000 $1,100,000 $1,100,000

In Michigan 300.000 400.000 300.000

Outside Michigan 700.000 700.000 800.000

Total Personal Property $1,000,000 $1,000,000 $1,000,000

In Michigan 300.000 300.000 300.000

Outside Michigan 700.000 700.000 700.000

Total Payroll $1,000,000 $1,000,000 $1,000,000

In Michigan 300.000 300.000 300.000

Outside Michigan 700.000 700.000 700.000

Sales Percentage:

In Michigan 90% 90% 90%

Outside Michigan 10% 10% .10%

Sbt Property Factor 0.3 0.3333 0.2857

Sbt Payroll Factor 0.3 0.3 0.3

Sbt Sales Factor 0.9 0.9 0.9

3-Factor Apportionment 0.5 0.5111 0.4952

Apportioned Tax Base $500,000 $511,111 $495,238

Apportioned cad:

Real Property $0 $100,000 $0

Personal Property $0 $0 $0

Adjusted Tax Base $500,000 $411,111 $495,238

Tax (at 2.35% rate) $11,750 $9,661 $11,638

Effective Tax Rate 2.3500% 1.8902% 2.3500%

Discriminatory advantage of in-state investment: 0.4598% or $2,350

*464II. A HYPOTHETICAL, PREDOMINANTLY MICHIGAN-BASED EXPORT COMPANY

A. EFFECT OF PERSONAL PROPERTY INVESTMENTS

At the outset Following $100,000 personal property investment,

in state out of state

Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000

Total Real Property $1,000,000 $1,000,000 $1,000,000

In Michigan 700.000 700.000 700.000

Outside Michigan 300.000 300.000 300.000

Total Personal Property $1,000,000 $1,100,000 $1,100,000

In'Michigan 700.000 800.000 700.000

Outside Michigan 300.000 300.000 400.000

Total Payroll $1,000,000 $1,000,000 $1,000,000

In Michigan 700.000 700.000 700.000

Outside Michigan 300.000 300.000 300.000

Sales Percentage:

In Michigan 10% 10% 10%

Outside Michigan 90% 90% 90%

Sbt Property Factor 0.7 0.7143 0.6667

Sbt Payroll Factor 0.7 0.7 0.7

Sbt Sales Factor 0.1 0.1 0.1

3-Factor Apportionment 0.5 0.5048 0.4889

Apportioned Tax Base $500,000 $504,762 $488,889

Apportioned cad:

Real Property $0 $0 $0

Personal Property $0 $70,714 $68,333

Adjusted Tax Base $500,000 $434,048 $420,556

Tax (at 2.35% rate) $11,750 $10,200 $9,883

Effective Tax Rate 2.3500% 2.0208% 2.0215%

Discriminatory advantage of in-state investment: 0.0007% or $4

Discriminatory advantage of Michigan-based status,

(1) with regard to in-state investment: 0.1836% or $927

(2) with regard to out-of-state investment: 0.1896% or $92733

*465B. EFFECT OF REAL PROPERTY INVESTMENTS

At the outset Following $100,000 real property investment,

in state out of state

Total sbt Tax Base $1,000,000 $1,000,000 $1,000,000

Total Real Property $1,000,000 $1,100,000 $1,100,000

In Michigan 700.000 800,000 700.000

Outside Michigan 300.000 300.000 400.000

Total Personal Property $1,000,000 $1,000,000 $1,000,000

In Michigan 700.000 700.000 700.000

Outside Michigan 300.000 300.000 300.000

Total Payroll $1,000,000 $1,000,000 $1,000,000

In Michigan 700.000 700.000 700.000

Outside Michigan 300.000 300.000 300.000

Sales Percentage:

In Michigan 10% 10% 10%

Outside Michigan 90% 90% 90%

Sbt Property Factor 0.7 0.7143 0.6667

Sbt Payroll Factor 0.7 0.7 0.7

Sbt Sales Factor 0.1 0.1 0.1

3-Factor Apportionment 0.5 0.5048 0.4889

Apportioned Tax Base $500,000 $504,762 $488,889

Apportioned cad:

Real Property $0 $100,000 $0

Personal Property $0 $0 $0

Adjusted Tax Base $500,000 $404,762-$488,889

Tax (at 2.35% rate) $11,750 $9,512 $11,489

Effective Tax Rate 2.3500% 1.8845% 2.3500%

Discriminatory advantage of in-state investment: 0.4655% or $2,350

Discriminatory advantage of Michigan-based status with regard to in-state investment: 0.0057% or $2934

(dissenting). This case raises two relatively straightforward questions. The first is whether granting a deduction to companies on the basis of a percentage that changes depending upon the amount of a company’s Michigan property and payroll relative to the total amount of its property and payroll is constitutional. The second, similarly, is whether providing an incentive in the form of a tax deduction for activity within Michigan, but declining to provide it for activity in other states, can withstand constitutional scrutiny. Because the United States Supreme Court has unequivocally declared that basing a deduction on the percentage of a company’s in-state activity relative to its interstate activity is unconstitutional, I would answer the first question in the negative. However, because the United States Supreme Court has also consistently reaffirmed the propriety of uniformly available tax incentives, the latter question should be resolved in favor of constitutional validity.

i

Historically, the Commerce Clause has played an important role in guaranteeing the free flow of commerce among the states. Adopted in response to attempts by the legislatures of many states to *467exploit their natural advantages, the Commerce Clause created a national market for goods and services. H P Hood & Sons, Inc v Du Mond, 336 US 525; 69 S Ct 657; 93 L Ed 865 (1949). It did this by neutralizing the ability of states to extract wealth from other states. By linking the states together economically, the Commerce Clause fosters a strong political union.

The most blatant form in which states attempted to capture revenues from other states is the exaction of a duty. The Commerce Clause prohibits placing duties on the movement of goods in interstate commerce and few states engage in such crude discrimination. When they do, such statutes are struck down as a matter of course. Chemical Waste Management, Inc v Hunt, 504 US —; 112 S Ct 2009; 119 L Ed 2d 121 (1992); Philadelphia v New Jersey, 437 US 617; 98 S Ct 2531; 57 L Ed 2d 475 (1978). A more subtle version of the duty is a discriminatory tax. Instead of imposing the extra cost directly, the state relies on a company’s ability to pass the tax on to its customers in other states. A company subject to a discriminatory tax thus becomes a conduit for extracting revenue from producers and consumers in other jurisdictions just as if an explicit duty had been placed on each transaction. Trinova Corp v Dep’t of Treasury, 498 US 358, —; 111 S Ct 818; 112 L Ed 2d 884, 913 (1991) (the Commerce Clause defends against taxes that "attempt to capture tax revenues that . . . belong of right to other jurisdictions”).

The Supreme Court has long recognized the danger discriminatory taxes pose to political union. Welton v Missouri, 91 US (23 Wall) 275; 23 L Ed 347 (1876); Robbins v Shelby Co Taxing Dist, 120 US 489; 7 S Ct 592; 30 L Ed 694 (1887). Whenever a state has attempted to use a tax to *468extract revenue or coerce another’s sovereign authority, the Court has invalidated the statute. Kraft General Foods, Inc v Iowa Dep’t of Revenue & Finance, 505 US —; 112 S Ct 2365; 120 L Ed 2d 59 (1992); New Energy Co of Indiana v Limbach, 486 US 269; 108 S Ct 1803; 100 L Ed 2d 302 (1988); Westinghouse Electric Corp v Tully, 466 US 388; 104 S Ct 1856; 80 L Ed 2d 388 (1984); Maryland v Louisiana, 451 US 725; 101 S Ct 2114; 68 L Ed 2d 576 (1981); Halliburton Oil Well Cementing Co v Reily, 373 US 64; 83 S Ct 1201; 10 L Ed 2d 202 (1963); McLeod v J E Dilworth Co, 322 US 327; 64 S Ct 1023; 88 L Ed 1304 (1944). Conversely, when the Court has upheld state taxes, it has done so because the state was not using its leverage to divert revenue impermissibly from other states’ citizens into its coffers. Trinova Corp v Michigan Dep’t of Treasury, supra; Dep’t of Revenue v Ass’n of Washington Stevedoring Cos, 435 US 734; 98 S Ct 1388; 55 L Ed 2d 682 (1978); Standard Pressed Steel Co v Washington Dep’t of Revenue, 419 US 560; 95 S Ct 706; 42 L Ed 2d 719 (1975); General Trading Co v Iowa Tax Comm, 322 US 335; 64 S Ct 1028; 88 L Ed 1309 (1944); Henneford v Silas Mason, 300 US 577; 57 S Ct 524; 81 L Ed 814 (1936); Western Union Telegraph Co v Attorney General of Massachusetts, 125 US 530; 8 S Ct 961; 31 L Ed 790 (1888). Multiplying examples serves no useful purpose except to reinforce both the logical and historical linkage of the use of leverage and invalidity under the Commerce Clause.

Only in light of this background can the phrases "discrimination,” "economic protectionism,” and "burden interstate commerce” have any meaning.1 *469Each phrase refers to the use of a state’s political power over activity within its jurisdiction to exert power over activity beyond its borders. Whether in the form of isolation of in-state markets from the broader national economy, Wyoming v Oklahoma, 502 US —; 112 S Ct 789; 117 L Ed 2d 1 (1992), or participation in in-state markets under unequal conditions, Westinghouse Electric Corp v Tully, supra, the Commerce Clause nullifies any extraterritorial exertion of power over commerce.

Several propositions of law follow directly from the Commerce Clause’s protection of interstate enterprise. No state may tax "a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the State.” Armco, Inc v Hardesty, 467 US 638, 642; 104 S Ct 2620; 81 L Ed 2d 540 (1984); see also Boston Stock Exchange v State Tax Comm, 429 US 318; 97 S Ct 599; 50 L Ed 2d 514 (1977). Because it is likely to represent protectionism, American Trucking Ass’ns, Inc v Scheiner, 483 US 266; 107 S Ct 2829; 97 L Ed 2d 226 (1987) (Scalia, J., dissenting), any cost imposed selectively on interstate commerce runs afoul of the Commerce Clause. From license fees borne in greater amounts by interstate salesmen, Welton v Missouri, supra; Robbins v Shelby Co Taxing Dist, supra, to lump-sum taxes falling more heavily on interstate trucking, American Trucking Ass’ns v Scheiner, supra; United States v Sperry Corp, 493 US 52, 61, n 7; 110 S Ct 387; 107 L Ed 2d 290 (1989), to tax codes that, through an interlocking system of credits and deductions, unequally burden interstate commerce, Halliburton Oil Well Cementing Co v Reily, supra; Boston Stock Exchange v State Tax Comm, supra; Maryland v Louisiana, supra; Westinghouse Electric Corp v Tully, supra, no tax treating interstate commerce unequally and disadvantageously has *470survived scrutiny under the Commerce Clause.2 The rule is simple and absolute: Interstate commerce is not, and may not be made, a means for the export of tax burdens or the import of tax revenues. Trinova Corp, supra.

The beguiling simplicity of these rules makes straying from their purpose and rationale easy. Because discrimination involves the use of power in a way hostile to political and economic union, once a tax is found to discriminate, the amount of discrimination is irrelevant. Other states’ tax laws cannot validate discrimination, Armco Inc v Hardesty, supra at 644-645; Freeman v Hewit, 329 US 249; 67 S Ct 274; 91 L Ed 265 (1946),3 because these laws in no way repair the damage to union caused by the initially improper exercise of power. Furthermore, if a credit discriminates, it is irrelevant whether a tax or formula fairly reflects the in-state component of business activity. Westinghouse Electric Corp, supra. Such an inquiry *471"serves only to obscure,” id. at 398, and make' more difficult the determination whether a particular statute threatens the values protected by the Commerce Clause.

The specific question before us involves two deductions provided by the single business tax. One deduction, the capital acquisition deduction for personal property, is offered to companies and is dependent on the amount of property and payroll in Michigan relative to the amount elsewhere. The other, the cad for real property, is offered to all companies regardless of the interstate or intrastate character of their property when they purchase depreciable real property in Michigan. The first deduction is provided on an impermissible basis, and a precisely analogous deduction has been condemned by the Supreme Court. In light of Westinghouse Electric Corp v Tully, supra, I would hold the cad for personal property unconstitutional. The second deduction, however, is provided wholly independent of a company’s interstate character. Because this deduction does not, and cannot be made to, tax extraterritorial value, I would hold that the cad for real property does not violate the Commerce Clause.

II

A'multistate company may deduct a portion of its capital acquisition costs from its apportioned tax base. To arrive at the apportioned .tax base, a company uses an apportionment formula provided by statute. This formula is the average of the company’s sales factor, property factor, and payroll factor. MCL 208.45; MSA 7.558(45).4 This ad*472justment allocates a share of a company’s gross tax base to Michigan, as required by the Due Process and Commerce Clauses. Quill Corp v North Dakota, 504 US —; 112 S Ct 1904; 119 L Ed 2d 91 (1992); Moorman Mfg Co v Bair, 437 US 267; 98 S Ct 2340; 57 L Ed 2d 197 (1978); Complete Auto Transit, Inc v Brady, 430 US 274; 97 S Ct 1076; 51 L Ed 2d 326 (1977).

After calculating its apportioned tax base, a company deducts the cost of its capital acquisitions. The single business tax treats acquisitions of depreciable real property5 and personal property differently. A company may deduct the entire cost of real property located in Michigan but may deduct none of the cost of real property located elsewhere. MCL 208.23(c); MSA 7.558(23)(c). The portion of the cost of personal property a company may deduct depends upon the value of another apportionment formula. Unlike the three-factor formula, this formula is merely the average of a company’s property and payroll factors. MCL 208.23(a); MSA 7.558(23)(a).

Caterpillar contends that this statutory arrangement is unconstitutional. The cad offered for depreciable personal property is assailed on two grounds. First, it is suggested that a company having a larger initial investment in Michigan receives a greater deduction than a company having a lesser investment. Second, Caterpillar argues that the cad for personal property is a form of percentage-based deduction specifically condemned *473in Westinghouse Electric Corp v Tully, supra. The cad for real property is challenged on separate grounds. Caterpillar contends that encouraging companies to locate productive resources in Michigan violates the Commerce Clause. The first contention is correct; the cad for personal property is an impermissible percentage-based deduction. The cad for real property, however, is available to all companies regardless of their interstate activity and does not discriminate in violation of the Commerce Clause.

A. THE CAD FOR PERSONAL PROPERTY

In Westinghouse Electric Corp v Tully, supra, the Supreme Court considered a credit New York offered for using New York facilities for exporting goods to other countries: the greater the New York-based exports, compared to a company’s total exports, the greater the credit the company was offered. The Supreme Court unanimously invalidated the credit.

The Court found that the credit not only " 'provide[d] a positive incentive for increased business activity in New York State,’ but also it penalize^] increases in . . . shipping activities in other States.” Id. at 401 (internal quotation and citation omitted). The penalty, the Court found, arose because New York decreased the incentive it awarded for in-state activity as out-of-state activity increased. This effect occurred because increases in out-of-state activity lowered the relative percentage of New York-based exports to the company’s total exports. Id. at 400, n 9. Summing up its analysis of the credit, the Court wrote: "[T]he credit is awarded in a discriminatory manner on the basis of the percentage of a [company’s] shipping conducted from within the State of New *474York.” Id. at 402, n 9. Because a company’s tax would increase if it took advantage of an incentive offered by another state, New York impaired the free flow of interstate commerce and clogged competition among the states for the export trade.

In deciding the case, the Court noted that the, opinion might cast doubt on investment credits generally. Because all investment credits reward in-state activity while denying a reward to out-of-state activity, it might be suggested that discrimination necessarily results. Denying the validity of this interpretation, the Court wrote: "We reiterate that it is not the provision of the credit that offends the Commerce Clause, but the fact that it is allowed on an impermissible basis, i.e., the percentage of a specific segment of the corporation’s business that is conducted in New York.” Id. at 406, n 12. The rule emerging from Westinghouse Electric Corp is clear-cut: Basing a deduction on a change in a subset of a company’s instate activity relative to its total activity is unconstitutional.6

Applying this rule to the cad for personal property leads to the conclusion that it is invalid. The amount of the deduction is determined by multiplying the cost of the asset by a percentage defined as the average percentage of property and payroll a company has in Michigan. This percentage, reflects only a portion of a company’s economic *475activity in Michigan. As such, the formula falls for the same reason as the credit in Westinghouse Electric Corp: it lowers a company’s incentive as it acquires and locates more property or payroll outside of Michigan.

A simple numerical example should illustrate this effect. Suppose a company purchases a new asset in another state costing $100,000. It has 50 percent of its property and payroll in Michigan before the purchase. By placing the asset in another state,, the percentage of its Michigan property and payroll will necessarily decrease. If the percentage decreases to 45 percent, the company only receives a $45,000 deduction, suffering a penalty of $5,000. If, however, the company places the new asset in Michigan, the percentage of Michigan property will increase. Instead of suffering a $5,000 penalty, the company will receive a $5,000 bonus. If the company continues to purchase new assets and to place them out of state, the amount of its deduction for each new purchase decreases because its percentage of Michigan property and payroll decreases. Worse, the cad for personal property can punish economic efficiency and growth. If the relative amount of property and payroll in Michigan decreases because a company grows, the effect is the same as when the company purchased a new asset: a lesser deduction for activity qualifying for one because it grew in other states and not in Michigan.7 Just as it was in Westinghouse Electric Corp, this method of granting a credit is unconstitutional.

The Attorney General and amici curiae defend the cad for personal property with four argu*476ments. None, however, show how the cad can escape the rule of Westinghouse Electric Corp. First, the Attorney General argues that the Commerce Clause does not require the state to use symmetrical formulas to apportion the tax base and the cad for personal property. While not requiring symmetry, the Commerce Clause does require that the statute not be discriminatory. Westinghouse Electric Corp v Tully, supra, clearly holds that formulas that lower the amount of a deduction because the percentage of a company’s property and payroll in state decreases relative to its total property and payroll are discriminatory. The cad for personal property is such a formula. It is, therefore, unconstitutional. The Attorney General’s argument does not even address this syllogism.

Secondly, the Attorney General suggests that the cad for personal property is available to all taxpayers. This observation is as irrelevant as it is correct. All taxpayers can qualify for a cad for personal property. The amount of the cad, however, is determined by the percentage of a company’s property and payroll in Michigan, relative to its total property and payroll. But, as Westinghouse Electric Corp makes clear, the federal constitution does not permit the deduction to be offered on that basis. This characteristic means that the cad is available on different, less favorable terms to companies depending on the amount of their interstate activities. The constitution does not permit such distinctions.

The Attorney General’s final two contentions are more substantial. The first suggestion is that providing a credit on the basis of the percentage of in-state property relative to a company’s total property and payroll benefits all companies that increase their in-state business. But "[t]he fact *477that this discrimination is in favor of nonresident, in-state sales which may also be considered as interstate commerce, does not save [the statute] from the restrictions of the Commerce Clause.” Boston Stock Exchange v State Tax Comm, supra at 334 (citation omitted). One of those restrictions is a prohibition of percentage-based deductions. A deduction granted on this basis necessarily penalizes increases in out-of-state activity. Absent such a penalty, a credit is constitutional, but the cad for personal property inevitably decreases the incentive offered for Michigan activity as interstate activity increases. This the state may not do.

The Attorney General’s last argument attempts to make a virtue out of necessity. It is suggested that limiting the deduction according to the relative percentage of a company’s in-state property "closely approximates” that company’s business activity generally. Michigan does have a strong and legitimate interest in not being "overly generous” with the cad for personal property. Westinghouse Electric Corp, supra at 399. That interest, however, does not justify using a segment of the company’s activity to apportion the deduction. By using a formula based only on a company’s property and payroll in Michigan as compared to property and payroll elsewhere, the sbt guarantees that companies moving assets out of state suffer a discriminatory penalty. This penalty renders the cad for personal property, MCL 208.23(a); MSA 7.558(23)(a), unconstitutional.

B. THE CAD FOR DEPRECIABLE REAL PROPERTY

The cad for real property offers a deduction of the cost of depreciable real property located in Michigan in the year of acquisition. The purchase of depreciable real property in other states does *478not qualify for the deduction. MCL 208.23(c); MSA 7.558(23)(c). Caterpillar attacks the cad because it encourages companies to locate assets in Michigan by lowering the effective cost on intrastate transactions. The Supreme Court has, however, unequivocally indicated that encouraging intrastate investment does not violate the Commerce Clause when nondiscriminatory means are used. Because the cad for real property treats all acquisitions of real property in Michigan without regard to a company’s interstate activity, I would find the cad constitutional.

The constitutionality of the cad for real property depends on whether it facially discriminates against interstate commerce. Facial discrimination results when a statute creates two categories of jurisdictional activity, one that is composed of intrastate activity and one that is composed of interstate activity, and imposes a burden on the interstate activity not shared by intrastate taxpayers. See e.g., Kraft General Foods, Inc v Iowa Dep’t of Revenue & Finance; Maryland v Louisiana; Boston Stock Exchange v State Tax Comm, supra.8 The inquiry is essentially the same when a statute providing a credit is challenged. Westinghouse Electric Corp v Tully, supra. The question is whether two companies engaging in the qualifying *479activity receive the same credit regardless of their interstate activity. If they do, the statute does not discriminate. If, however, an interstate enterprise receives a lesser credit because it operates in interstate commerce, the credit is unconstitutional. Once the statute is found not to discriminate facially, the inquiry shifts to whether it, in effect, taxes extraterritorial value. Trinova Corp v Michigan Dep’t of Treasury, supra. To resolve this question, one looks to whether the tax is fairly apportioned.9 Trinova Corp, supra; Container Corp of America v Franchise Tax Bd, 463 US 159; 103 S Ct 2933; 77 L Ed 2d 545 (1983). If it is fairly apportioned, the tax cannot tax extraterritorial value because no extraterritorial value is available for taxation. The tax would therefore be constitutional.

The cad for real property does not discriminate against interstate commerce. If a company acquires new depreciable real property in Michigan, it receives a cad equal to the cost of that asset. This is true whether the company is overwhelmingly multistate or overwhelmingly intrastate.10 The company’s status as an interstate or intrastate *480enterprise is wholly irrelevant to the operation of the tax. Although Caterpillar does not dispute the uniform application of the credit, Chief Justice Cavanagh in dissent does. He observes that when a company acquires an asset in Michigan it receives a deduction and that when a company acquires an asset in another state it does not. From this, he concludes that the cad facially discriminates.11

I do not share this view for two reasons. First, it is entirely permissible to grant a credit using instate activity as a criterion. As the Chief Justice discusses in detail, the Supreme Court has never said that providing, incentives for the growth of intrastate industry violates the Commerce Clause. In fact, the consistent theme of the Court’s decisions has been that such incentives promote free trade among the states. As the Supreme Court noted in Trinova Corp v Michigan Dep’t of Treasury, supra, 112 L Ed 2d 912, "It is a laudatory goal in the design of a tax system to promote investment that will provide jobs and prosperity to the citizens of the taxing state. States are free to 'structure] their tax systems to encourage the growth and development of intrastate commerce and industry,’ ” quoting Boston Stock Exchange v State Tax Comm. Far from threatening interstate commerce, investment incentives enhance the competition that "lies at the heart of a free trade policy.” Boston Stock Exchange v State Tax Comm, supra at 337; Metropolitan Life Ins Co v *481Ward, 470 US 869; 105 S Ct 1676; 84 L Ed 2d 751 (1985). Encouraging intrastate industry is not an impermissible purpose.12

Additionally, the Court has emphasized that providing credits to encourage particular kinds of in-state activity is constitutional. As the Court paused to note in Westinghouse Electric Corp v Tully, 466 US 406, n 12, the only recent case to consider a tax credit specifically, "We reiterate that it is not the provision of the credit that offends the Commerce Clause, but the fact that it is allowed on an impermissible basis, i.e., the percentage of a specific segment of the corporation’s business that is conducted in New York.” If the Chief Justice’s analysis is correct, this statement is incorrect because any credit necessarily creates a difference between those who qualify for it and those who do not qualify for it. This kind of difference is not constitutionally significant.

More importantly, Chief Justice Cavanagh’s analysis hinges on a faulty comparison of in-state, jurisdictional activity and out-of-state, nonjurisdictional activity. For the purposes of the Commerce Clause, these activities are noncomparable. The essential prohibition of the Commerce Clause is that a state may not treat jurisdictional activity differently simply because one company operates *482in interstate commerce and another does not. Two cases illustrating this proposition are Maryland v Louisiana and Kraft General Foods, Inc v Iowa Dep’t of Revenue & Finance.

In Maryland v Louisiana, the Supreme Court considered a challenge to a Louisiana tax, known as the First-Use Tax. The tax was imposed on all natural gas refined in Louisiana. Additionally, the tax provided credits for numerous uses of natural gas consumed in Louisiana. Louisiana had thus effectively distinguished between two types of natural gas: interstate natural gas (which, by definition, cannot be consumed in Louisiana) and domestic natural gas. The Court struck this statute down unanimously because Louisiana had taxed two types of jurisdictional activity differently and reserved the higher rates for interstate commerce. The Court compared treatment of jurisdictional activity; it did not compare treatment of natural gas refined in Texas and shipped interstate with the credits Louisiana offered, as the Chief Justice’s analysis suggests would have been appropriate.

The most recent case illustrating this analysis is Kraft General Foods. In that case, the Supreme Court considered whether Iowa’s taxation of dividends paid by a foreign corporation to an Iowa parent corporation but exemption of dividends paid by a domestic corporation to an Iowa parent corporation was constitutional. The Court invalidated the tax using the same analysis it had in Maryland v Louisiana. Iowa had divided the activities within its jurisdiction into two categories and treated the category containing foreign dividends less favorably than the category containing domestic dividends. When analyzing whether a. tax is discriminatory, then, - the proper inquiry is whether the state treats types of activity within its jurisdiction differently because of "some interstate *483element.” Armco, Inc v Hardesty, supra. If so and the interstate group bears a burden from which the intrastate group is exempted, the tax is unconstitutional. The cad for real property simply does not discriminate facially.

The final question is whether the cad for real property has discriminatory effects. This analysis focuses on whether the tax is a means to "export tax burdens or import tax revenues.” Trinova Corp v Michigan Dep’t of Treasury, 112 L Ed 2d 912. As the Supreme Court has noted, however, a tax does not have a discriminatory effect if it is fairly apportioned. Trinova Corp, supra. This conclusion follows directly from the concept of fair apportionment. If a tax is fairly apportioned, it distinguishes accurately between value-added properly attributable to Michigan and value-added properly attributable to other states. Container Corp of America v Franchise Tax Bd, supra. In other words, the burden of the tax is imposed only on value-added attributable to Michigan.13 As such, extraterritorial value is not taxed, and Michigan does not export burdens or unfairly import revenues. Because the sbt generally is fairly apportioned, the cad for real property does not import revenue or export burdens to other states. Absent either facial *484discrimination or a discriminatory effect, I would find the cad for real property to be constitutional.

The federal constitution prohibits Michigan from penalizing interstate commercial activity. The cad for personal property is awarded on an impermissible percentage basis. As such, it provides an incentive for investing in Michigan and punishment for investing elsewhere. The cad for real property is different. Any company purchasing depreciable real property in Michigan receives the deduction for the asset’s full cost no matter whether the company operates in several states or operates only in Michigan. I conclude, then, that the cad for real property is constitutional while the cad for personal property is not. In view of the majority’s resolution of this issue, I will not speculate at this juncture about what an appropriate remedy might be.