Opinion of the Court 155. In this period Bendix's primary operations in New Jersey were the development and manufacture of aerospace products. App. 161. ASARCO is a New Jersey corporation with its principal offices in New York. It is one of the world's leading producers of nonferrous metals, treating ore taken from its own mines and ore it obtains from others. Id., at 163-164. From December 1977 through November 1978, Bendix acquired 20.6% of ASARCO's stock by purchases on the open market. Id., at 165. In the first half of 1981, Bendix sold its stock back to ASARCO, generating a gain of $211.5 million. Id., at 172. The issue before us is whether New Jersey can tax an apportionable part of this income. Our determination of the question whether the business can be called "unitary," see infra, at 788-789, is all but controlled by the terms of a stipulation between the taxpayer and the State. They stipulated: "During the period that Bendix held its investment in ASARCO, Bendix and ASARCO were unrelated business enterprises each of whose activities had nothing to do with the other." App. 169. Furthermore, "[p]rior to and after its investment in Asarco, no business or activity of Bendix (in New Jersey or otherwise), either directly or indirectly (other than the investment itself), was involved in the nonferrous metal production business or any other business or activity (in New Jersey or otherwise) in which Asarco was involved. On its part, Asarco had no business or activity (in New Jersey or otherwise) which, directly or indirectly, was involved in any of the businesses or activities (in New Jersey or otherwise) in which Bendix was involved. None of Asarco's activities, businesses or income (in New Jersey or otherwise) were related to or connected with Bendix's activities, business or income (in New Jersey or otherwise)." Id., at 164-165. Opinion of the Court The stipulation gives the following examples of the independence of the businesses: "There were no common management, officers, or employees of Bendix and Asarco. There was no use by Bendix of Asarco's corporate plant, offices or facilities and no use by Asarco of Bendix's corporate plant, offices or facilities. There was no rent or lease of any property by Bendix from Asarco and no rent or lease of any property by Asarco from Bendix. Bendix and Asarco were each responsible for providing their own legal services, contracting services, tax services, finance services and insurance. Bendix and Asarco had separate personnel and hiring policies. . . and separate pension and employee benefit plans. Bendix did not lend monies to Asarco and Asarco did not lend monies to Bendix. There were no joint borrowings by Bendix and Asarco. Bendix did not guaranty any of Asarco's debt and Asarco did not guaranty any of Bendix's debt. Asarco had no representative on Bendix's Board of Directors. Bendix did not pledge its Asarco stock. As far as can be determined there were no sales of product by Asarco itself to Bendix or by Bendix to Asarco. There were certain sales of product in the ordinary course of business by Asarco subsidiaries to Bendix but these sales were minute compared to Asarco's total sales.... These open market sales were at arms length prices and did not come about due to the Bendix investment in Asarco. There were no transfers of employees between Bendix and Asarco." Id., at 169-171. While Bendix held its ASARCO stock, ASARCO agreed to recommend that two seats on the 14-member ASARCO Board of Directors be filled by Bendix representatives. The seats were filled by Bendix chief executive officer W. M. Agee and a Bendix outside director. Id., at 168. Nonetheless, "Bendix did not exert any control over Asarco." Ibid. Opinion of the Court After respondent assessed Bendix for taxes on an apportioned amount which included in the base the gain realized upon Bendix's disposition of its ASARCO stock, Bendix sued for a refund in New Jersey Tax Court. The case was decided based upon the stipulated record we have described, and the Tax Court held that the assessment was proper. Bendix Corp. v. Taxation Div. Director, 10 N. J. Tax 46 (1988). The Appellate Division affirmed, Bendix Corp. v. Director, Div. of Taxation, 237 N. J. Super. 328, 568 A. 2d 59 (1989), and so, in turn, did the New Jersey Supreme Court, Bendix Corp. v. Director, Div. of Taxation, 125 N. J. 20, 592 A. 2d 536 (1991). The New Jersey Supreme Court held it was constitutional to consider the gain realized from the sale of the ASARCO stock as earned in Bendix's unitary business, drawing from our decision in Container Corp. of America v. Franchise Tax Bd., 463 U. S. 159, 166 (1983), the principle that "the context for determining whether a unitary business exists has, as an overriding consideration, the exchange or transfer of value, which may be evidenced by functional integration, centralization of management, and economies of scale." 125 N. J., at 34, 592 A. 2d, at 543-544. The New Jersey Supreme Court went on to state: "The tests for determining a unitary business are not controlled, however, by the relationship between the taxpayer recipient and the affiliate generator of the income that becomes the subject of State tax." Id., at 35, 592 A. 2d, at 544. Based upon Bendix documents setting out corporate strategy, the court found that the acquisition and sale of ASARCO "went well beyond . . . passive investments in business enterprises," id., at 36, 592 A. 2d, at 544, and Bendix "essentially had a business function of corporate acquisitions and divestitures that was an integral operational activity." Ibid. As support for its conclusion that the proceeds from the sale of the ASARCO stock were attributable to a unitary business, the New Jersey Supreme Court relied in part on the fact that Bendix intended to use those pro Opinion of the Court ceeds in what later proved to be an unsuccessful bid to acquire Martin Marietta, a company whose aerospace business, it was hoped, would complement Bendix's aerospace/ electronics business. Id., at 36, 592 A. 2d, at 545. We granted certiorari. 502 U. S. 977 (1991). At the initial oral argument in this case New Jersey advanced the proposition that all income earned by a nondomiciliary corporation could be apportioned by any State in which the corporation does business. To understand better the consequences of this theory we requested rebriefing and reargument. Our order asked the parties to address three questions: "1. Should the Court overrule ASARCO Inc. v. Idaho State Tax Comm'n, 458 U. S. 307 (1982), and F. W. Woolworth Co. v. Taxation and Revenue Dept. of New Mexico, 458 U. S. 354 (1982)? "2. If ASARCO and Woolworth were overruled, should the decision apply retroactively? "3. If ASARCO and Woolworth were overruled, what constitutional principles should govern state taxation of corporations doing business in several states?" 503 U. S. 928 (1992). Because we give a negative answer to the first question, see infra, at 783-786, we need not address the second and third. II The principle that a State may not tax value earned outside its borders rests on the fundamental requirement of both the Due Process and Commerce Clauses that there be "some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax." Miller Brothers Co. v. Maryland, 347 U. S. 340, 344-345 (1954). The reason the Commerce Clause includes this limit is self-evident: In a Union of 50 States, to permit each State to tax activities outside its borders would have drastic conse Opinion of the Court quences for the national economy, as businesses could be subjected to severe multiple taxation. But the Due Process Clause also underlies our decisions in this area. Although our modern due process jurisprudence rejects a rigid, formalistic definition of minimum connection, we have not abandoned the requirement that, in the case of a tax on an activity, there must be a connection to the activity itself, rather than a connection only to the actor the State seeks to tax, see Quill Corp. v. North Dakota, ante, at 306–308. The constitutional question in a case such as Quill Corp. is whether the State has the authority to tax the corporation at all. The present inquiry, by contrast, focuses on the guidelines necessary to circumscribe the reach of the State's legitimate power to tax. We are guided by the basic principle that the State's power to tax an individual's or corporation's activities is justified by the "protection, opportunities and benefits" the State confers on those activities. Wisconsin v. J. C. Penney Co., 311 U. S. 435, 444 (1940). Because of the complications and uncertainties in allocating the income of multistate businesses to the several States, we permit States to tax a corporation on an apportionable share of the multistate business carried on in part in the taxing State. That is the unitary business principle. It is not a novel construct, but one that we approved within a short time after the passage of the Fourteenth Amendment's Due Process Clause. We now give a brief summary of its development. When States attempted to value railroad or telegraph companies for property tax purposes, they encountered the difficulty that what makes such a business valuable is the enterprise as a whole, rather than the track or wires that happen to be located within a State's borders. The Court held that, consistent with the Due Process Clause, a State could base its tax assessments upon "the proportionate part of the value resulting from the combination of the means by which the business was carried on, a value existing to an |