* Together with No. 92-1839, ColgatePalmolive Co. v. Franchise Tax Board of California, also on certiorari to the same court.

1 This Court first considered the “unitary business principle” in 1897, Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 220-221; we revisited this “settled jurisprudence” most recently in Allied-signal, Inc. v. Director, Div. of Taxation, 504 U.S.—,—-—(1992) (slip op., at 6-13). See generally J. Hellerstein & W. Hellerstein, State Taxation: Corporate Income and Franchise Taxes 18.03, pp. 829 (2d ed. 1993); id., 18.05. On the determination whether a business is “unitary,” see Allied Signal, supra, at (slip op., at 11) (business may be treated as unitary,compatibly with constitutional limitations, if it exhibits functional integration, centralization of management, and economies of scale); Edison California Stores, Inc. v. McColgan, 30 Cal. 2d 472,481,183 P. 2d 16,21 (1947) (“If the operation of the portion of the business done within the state is dependent upon or contributes to the operation of the business without the state, the operations are unitary.”); Butler Brothers v. McColgan, 17 Cal. 2d 664,678, 111 P. 2d 334, 341 (1941) (A business is unitary if there is “(1) [u]nity of ownership; (2) [u]nity of operation as evidenced by centra] purchasing, advertising, accounting and management divisions; and (3) unity of use of its centralized executive force and general system of operation.”), affd, 315 U.S. 501 (1942).

2 In 1993, California modified the formula to double the weight of the sales factor. Cal. Rev. & Tax. Code Ann. §25128 (West Supp. 1994); 1993 Cal. Stats., ch. 946, § 1.

3 An affiliated group of domestic corporations may, however, elect to file a consolidated federal tax return in lieu of separate returns. 26 U.S.C. § 1501.

4 Effective enforcement of arm's length standards requires exacting scrutiny by the taxing jurisdiction, and some commentators maintain that the results are arbitrary in any event. See 1 Hellerstein & Hellerstein, supra, 18.03 (describing “three inherent defects” of separate accounting: compliance expense, impracticability, and the difficulty of arriving at “arm's length” prices).

5 Under the Internal Revenue Code, a foreign corporation reports only income derived from a United States source or otherwise effectively connected with the corporation's conduct of a United States trade or business. 26 U.S.C. §§881, 882, 884, 864(c). Domestic corporations must report all income, whether the source is domestic or foreign, 26 U.S.C. § 11, though they receive a taxcredit for qualifying taxes paid to foreign sovereigns. 26 U.S.C. §§ 901908 (1988 ed. and Supp. IV).

6 The figures used by the Tax Board were: Worldwide California Taxable Formula Business Franchise Taxpayer Income Percentage Income Tax Barcal $401,566,973 .0139032% $5,583,066 $693,696 BBI 401,666,973 .0003232% 129,786 16,126 App. in No. 921384, p. A13 (Joint Stipulation of Facts, 122).

7 The petitioner in No. 921384, Barclays Bank PLC, is the successor in interest to the tax refund claims of both Barcal and BBI. For convenience, this opinion uses “Barclays” to refer collectively to the taxpayers and the petitioner in No. 921384

8 Colgate offered the following figures, using a water's edge ap proach: Water's edge California Income Taxable Formula Business Franchise Year Income Percentage Income Tax 1970 $25,652,055 9.31920% $2,390,566 $167,340 1971 27,520,141 9.01730% 2,481,674 173,710 1972 32,440,358 9.21640% 2,989,833 227,227 1973 36,554,060 8.88730% 3,248,669 269,640 No. 319715 (Super. Ct. Sacramento County, Apr. 19, 1989) (reprinted in App. to Pet. for Cert, in No. 921839, p. 85a). Under California's worldwide combined reporting method, the computations were: Worldwide California Income Taxable Formula Business Franchise Year Income Percentage Income Tax 1970 $ 91,566,729 4.42075% $4,047,936 $283,366 108,177,612 4.12017% 4,457,101,311,997,123,779,352 4.03444% 4,993,803,379,629 151,685,860 3.71812% 6,636,144,467,800 Id., at 84a. credit for qualifying taxes paid to foreign sovereigns. 26 U.S.C. §§901-908 (1988 ed. and Supp. IV).

9 Our jurisprudence refers to the selfexecuting aspect of the Commerce Clause as the “dormant” or “negative” Commerce Clause

10 Amicus curiae the Government of the United Kingdom points to Quill Corp. v. North Dakota, 604 U.S. (1992), which held that the Commerce Clause demands more of a connection than the“minimum contacts” that suffice to satisfy the due process nexus requirement for assertion of judicial jurisdiction. Brief for Government of United Kingdom as Amicus Curiae in No. 921384, pp. 2425. Noting the absence of “any meaningful contact” between California and the activities of Barclays Group members operating exclusively outside the United States, id., at 25, the United Kingdom asserts that the trial court erred if it concluded that “California had the requisite nexus with every member of the Barclays group.” Id., at 27 (emphasis added). The trial court, however, did not reach the conclusion the United Kingdom suggests it did, nor was there cause for it so to do. As the United Kingdom recognizes, the theory underlying unitary taxation is that “certain intangible flows of value’ within the unitary group serve to link the various members together as if they were essentially a single entity.” Id., at 26. Formulary apportionment of the income of a multijurisdictional (but unitary) business enterprise, if fairly done, taxes only the “income generated within a State.” AlliedSignal, Inc. v. Director, Div. of Taxation, 604 U. S., at(1992) (slip op., at 12) (upholding “unitary business principle” as “an appropriate means for distinguishing between income generated within a State and Income generated without”). Quill held that the Commerce Clause requires a taxpayer's “physical presence” in the taxing jurisdiction before that jurisdiction can constitutionally impose a use tax. The California presence of the taxpayers before us is undisputed, and we find nothing in Quill to suggest that California may not reference the income of corporations worldwide with whom those taxpayers are closely intertwined in order to approximate the taxpayers’ California income.

11 Barclays estimates, and the trial court found, that an accounting system capable of conveying the information Barclays thought California's worldwide reporting scheme required for all of the enterprise's foreign affiliates would cost more than $5 million to set up, and more than $2 million annually to maintain. Brief for Petitioner in No. 921384, p. 44, n. 13; Nos. 325059 and 325061 (Super. Ct. Sacramento County, Aug. 20, 1987) (reprinted in App. to Pet. for Cert, in No. 921384, pp. A27 to A28).

12 Under the regulations to which Barclays refers, a “unitary business with operations in foreign countries” may determine its worldwide income based upon either (1) “[a] profit and loss statement … for each foreign branch or corporation,” Cal. Code of Regs., Tide 18, §251376(bXl) (1985); (2) the “consolidated profit and loss statement prepared for the related corporations of which the unitary business is a member which is prepared for filing with the Securities and Exchange Commission,” Cal. Code of Regs., Title 18, §251376(bX2); or (3) “the consolidated profit and loss statement prepared for reporting to shareholders and subject to review by an independent auditor.“ Ibid.

13 The California Court of Appeal additionally found that Barclays’ actual compliance costs were “relatively modest” during the years just prior to those here at issue, ranging from $900 to $1,250 per annum, for BBI. See 10 Cal. App. 4th, at 1760, n. 9, 14 Cal. Rptr. 2d, at 548, n. 9.

14 As noted by the California Court of Appeal, even the federal separate accounting scheme preferred by Barclays entails recourse to a standard “akin to reasonable approximation.” 10 Cal. App. 4th 1742, 1763, 14 Cal. Rptr. 2d 537, 550 (1993). The Internal Revenue Code allows the Secretary of Treasury to “distribute, apportion, or allocate gross income, deductions, credits, or allowances” among a controlled group of businesses “if he determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income” of such businesses. 26 U.S.C. §482; see App. in No. 921384, p. A829 (testimony of Barclays’ expert witness that §482 requires “reasonable approximation[s]” of arm'8length prices); Peck v. Commissioner, 752 F. 2d 469, 472 (CA9 1985) (under §482, IRS determination of arm'slength prices will be sustained unless unreasonable, arbitrary, or capricious)

15 We reserved judgment on whether an altered analysis would be required where the taxpayer was part of a foreignbased enterprise. See Container Corp., 463 U. S., at 189, n. 26; id., at 195, n. 32.

16 To illustrate, Barclays points to its own operations: only three of the more than 220 entities in the Barclays Group did any business in the United States. Brief for Petitioner in No. 921384, p. 33“

17 The Court stated: “[T]he double taxation in this case, although real, is not the ‘inevitabl[e]’ result of the California taxing scheme… . [W]e are faced with two distinct methods of allocating the income of a multinational enterprise. The ‘arm'slength’ approach divides the pie on the basis of formal accounting principles. The formula apportionment method divides the same pie on the basis of a mathematical generalization. Whether the combination of the two methods results in the same income being taxed twice or in some portion of income not being taxed at all is dependent solely on the facts of the individual case.” Container Corp., 463 U. S.₍ at 188 (internal citation omitted).

18 The Court's decision in Container Corp. effectively modified, for purposes of income taxation, the Commerce Clause multiple taxation inquiry described in Japan Line, Ltd. v. County of Los Angeles, 441 U. S. 434 (1979) (holding unconstitutional application of California's ad valorem property tax to cargo containers based in Japan and used exclusively in foreign commerce). In Japan Line, confronting a property tax on containers used as “instrumentalities of [foreign] commerce,” not an income tax on companies, we said that a state tax is incompatible with the Commerce Clause if it “creates a substantial risk of international multiple taxation.” Id.,at. 451.

19 Container Corp. noted: “We recognize that the fact that legal incidence of a tax falls on a corporation whose formal corporate domicile is domestic might be less Bigniflcant in the case of a domestic corporation that was owned by foreign interests. We need not decide here whether such a case would require us to alter our analysis.“ 463 U.S., at 196, n. 32.

20 Container Corp. observed that “the tax here does not create an automatic ‘asymmetry,’ … in international taxation,” id., at 194195, quoting Japan Line, supra, at 463—i.e., it does not inevitably lead to double taxation. See supra, at 1920, and n. 17. Furthermore, Colgate, Barcal, and BBI are “without a doubt amenable to be taxed in California in one way or another,” and “the amount of tax [they] pa[y] is much more the function of California's tax rate than of its allocation method.“ 463 U. S., at 195.

21 See also Itel Containers Inti Corp. v. Huddles ton, 507 U. S.(1993) (slip op., at 14) (upholding Tennessee's tax on lease of cargo containers used exclusively in international shipping; because tax in question was not among those proscribed by “various conventions, statutes and regulations[,] … the most rational inference to be drawn is that th[e] tax, one quite distinct from the general class of import duties, is permitted“)

22 The governments of many of our trading partners have expressed their strong disapproval of California's method of taxation, as demonstrated by the amid briefs in support of Barclays from the Government of the United Kingdom, and from the Member States of the European Communities (Belgium, Denmark, France, Germany, Greece, Ireland, Italy,Luxembourg, the Netherlands, Portugal, and Spain) and the Governments of Australia, Austria, Canada, Finland, Japan, Norway, Sweden, and Switzerland. Barclays has also directed our attention to a series of diplomatic notes similarly protesting the tax. See, e.g., App. in No. 921384, pp. A92 to A123, A127 to A128, A131 to A138; see also p. A603 (Letter from Secretary of State George Schultz to California Governor Deukmejian (Jan. 30, 1986)) (“The Department of State has received diplomatic notes complaining about state use of the worldwide unitary method of taxation from virtually every developed country in the world.“). The British Parliament has gone further, enacting retaliatory legislation that would, if implemented, tax United States corporations on dividends they receive from their United Kingdom subsidiaries. See Finance Act, 1985, Pt. 2., ch. 1, § 54, and Sch. 13, 1 6 (Eng.), reenacted in Income and Corporation Taxes Act, 1988, Pt 18, ch. 3, §812 and Sch. 30, 20, 21 (Eng.).

23 Pursuant to §201 of Pub. L. 86272, 73 Stat. 556, in which Congress undertook to “make full and complete studies of all matters pertaining to the taxation … of interstate commerce … by the States,” the House Committee on the Judiciary held extensive hearings on the (primarily domestic) implications of alternative tax apportionment schemes. See State Income Taxation of Mercantile and Manufacturing Corporations: Hearings before the Special Subcommittee on State Taxation of Interstate Commerce of the House Committee on the Judiciary, 87th Cong., 1st Seas. (1961). The Subcommittee's comprehensive final Report recommended, inter alia, that “formula apportionment be used as the sole method of dividing income among the States for tax purposes,” State Taxation of Interstate Commerce: Report of the Special Subcommittee on State Taxation of Interstate Commerce, House Committee on the Judiciary, H. R. Rep. No. 952, 89th Cong., 1st Sees. 1144 (1965), and that States be required to refrain from taxing any foreign income exempt from federal taxation. Id,, at 1135. Congress, however, enacted no legislation embodying these recommendations. Congress continued to study and debate this matter over the next two decades. See Interstate Taxation Act, H. R. 11798 and Companion Bills: Hearings before the Special Subcommittee on State Taxation of Interstate Commerce of the House Committee on the Judiciary, 89th Cong., 2d Sess. (1966); State Taxation of Interstate Commerce: Hearings before the Subcommittee on State Taxation of Interstate Commerce of the Senate Committee on Finance, 93d Cong., 1st Seas. (1973); Interstate Taxation, S. 1273: Hearings before the Senate Committee on the Judiciary, 95th Cong., 1st and 2d Sess. (19771978); Recommendations of the Task Force on Foreign Source Income, House Committee on Ways and Means, 96th Cong., 1st Sess. (Comm. Print 1977); State Taxation of Foreign Source Income, 1980: Hearings on H. R. 5076 before the House Committee on Ways and Means, 96th Cong., 2d Sess. (1980); State Taxation of Interstate Commerce and Worldwide Corporate Income, Hearings on S. 983 and S. 1688 before the Subcommittee on Taxation and Debt Management Generally of the Senate Committee on Finance, 96th Cong., 2d Sess. (1980); Unitary Taxation: Hearing before the Subcommittee on International Economic Policy of the Senate Committee on Foreign Relations, 98th Cong., 2d Sess. (1984).

24 See, e.g., S. 1246, 93d Cong., 1st Sess. (1973); S. 2173, 96th Cong., 1st SesB. (1978); H. R. 6146, 98th Cong., 2d Sess. (1984); H. R. 4940, 98th Cong., 2d Sess. (1984); S. 3061, 98th Cong., 2d Sess. (1984); S. 1974, 99th Cong., 1st Sess. (1986); H. R. 3980, 99th Cong., 1st Sess. (1986); S. 1139, 101st Cong., 1st Sess. (1989); S. 1775, 102d Cong., 1st Sess. (1991).

25 See, e.g., H. R. 11798, 89th Cong., 1st Sess. (1966); H. R. 6076, 96th Cong., 1st Sess. (1979); S. 1688, 96th Cong., 1st Sess. (1979); H. R. 8277, 96th Cong., 2d Sess. (1980); H. R. 1983, 97th Cong., 1stSeas. (1981); H. R. 2918, 98th Cong., 1st Seas. (1983); S. 1225, 98th Cong., 1st Seas. (1983); S. 1113, 99th Cong., 1st Seas. (1985).

26 Article 9(4) would have provided: “Except as specifically provided in this Article, in determining the tax liability of an enterprise doing business in a Contracting State, or in a political subdivision or local authority of a Contracting State, such Contracting State, political subdivision, or local authority shall not take into account the income, deductions, receipts, or outgoings of a related enterprise of the other Contracting State or of an enterprise of any third State related to any enterprise of the other Contracting State.“ (Emphasis added.)

27 Article 2(4) provides: “For the purpose of Article 24 (Nondiscrimination), this Convention shall also apply to taxes of every kind and description imposed by each Contracting State, or by its political subdivisions or local authorities.“

28 That “federal law has long embodied a preference for the arm's length method, in the sense that this method is used in computing the federal income tax liability of multinational corporations,” does not render a State's use of a different method unconstitutional, as the Solicitor General points out. Brief for United States as Amicus Curiae, pp. 1718 (emphasis in original), citing Mobil Oil Corp. v. Commissioner of Taxes of Vt., 445 U. S. 425, 448 (1980) (“Concurrent federal and state taxation of income, of course, is a wellestablished norm. Absent some explicit directive from Congress, we cannot infer that treatment of foreign income at the federal level mandates identical treatment by the States.“).

29 See, e.g., Brief for Petitioner in No. 921384, pp. 2528; Brief forGovernment of United Kingdom as Amicua Curiae in No. 921384, pp. 1924; Brief for Member States of European Communities et al, as Amid Curiae in No. 921384, pp. 1617.

30 Colgate cites, for example, President Reagan's decision to introduce legislation confining States to a water's edge method, State Taxation of Multinational Corporations, 21 Weekly Comp. of Pres. Doc. 1368 (Nov. 8, 1985) (Statement of President Reagan); letters sent by members of the Reagan and Bush administrations to the Governor of California and the Chairman of the Senate Finance Committee, expressing the Federal Government's opposition to worldwide combined reporting, App. in No. 921839, pp. 927; and Department of Justice amicua briefs filed in this Court, arguing that the worldwide combined reporting method violates the dormant Commerce Clause, e.g., Brief for United States as Amicua Curiae in Chicago Bridge &Iron Co. v. Caterpillar Tractor Co., O. T. 1982, No. 81349, cert, dismissed, 463 U. S. 1220 (1983); Brief for United States as Amicua Curiae in Barclays Bank PLC v. Franchiae Tax Bd. of Cal., O. T. 1992, No. 92212, cert, denied, 506 U. S.(1992).

31 See United States v. Belmont, 301 U. S. 324, 331332 (1937).

32 The Solicitor General suggests that when a court analyzes “whether a state tax impairs the federal government's ability to speak with one voice … the statements of executive branch officials are entitled to substantial evidentiary weight,” Brief for United States as Amicus Curiae, p. 19, but he argues that the constitutionality of a State's taxing practice must be assessed according to the federal policy, if any, in effect at the time the challenged taxes were assessed. He asserts that federal officials had not articulated a policy opposing use by the States of worldwide combined reporting prior to the mid1980*8, and urges the Court to affirm the judgments below on the ground that California's use of worldwide combined reporting was not unconstitutional during the years here at issue, even if it became unconstitutional in later years (a question on which he takes no position, see Tr. of Oral Arg. 3841). Colgate, on the other hand, suggests that the relevant time frame is “when the tax is definitively enforced by the state taxing authority, through judicial proceedings if necessary, not when the tax technically accrues under state law,* Reply Brief for Petitioner in No. 921839, p. 7, and argues in the alternative that a federal policy opposing combined worldwide reporting had been established as of 19701973, id., at 9. We need not resolve this dispute, because we have concluded that the Executive statements criticizing States’ use of worldwide combined reporting do not, in light of Congress’ acquiescence in the States’ actions, authorize judicial intervention here.