Federal Constitutional Limitations on State Taxation provides an overview of the federal limitations imposed on state taxation by the United States Constitution and by the federal statutes. Written by Professor Walter Hellerstein, University of Georgia School of Law, this Portfolio focuses on the restraints on state taxation imposed by the various clauses—the Import-Export Clause, Commerce Clause, Due Process Clause, Equal Protection Clause, Privileges and Immunities Clause, and Supremacy Clause—and by the First Amendment. As such, this Portfolio covers a range of legal issues and considerations, including:
This Portfolio also discusses taxpayer remedies for unconstitutional state taxes, examining such key cases as 1990’s McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, which held that a taxpayer who is compelled to pay a tax that is later held to be unconstitutional under established Commerce Clause principles is entitled to meaningful retroactive relief. Federal Constitutional Limitations on State Taxation also discussesAmerican Trucking Associations Inc. v. Smith, which held that the taxpayers were entitled to meaningful retroactive relief only from the date of their earlier decision, which overturned past precedent in establishing the taxpayers' substantive claim under the Commerce Clause. The ramifications of these decisions are discussed in detail.
Federal Constitutional Limitations on State Taxation allows you to benefit from:
This Portfolio is part of the Premier State Tax Library, a comprehensive series, which covers major state tax transactions and issues with expert, in-depth analysis, and offers commentary on a wide range of multi-state and state-specific taxation topics, including Sales and Use, Corporate Income, Individual Income, Property, Gross Receipts, Limitations on States' Authorities to Tax, Credits and Incentives, Electronic Commerce, Mergers and Acquisitions, Procedure and Administration, Special Industries, and more.
Detailed Analysis
1400.01. INTRODUCTION
1400.02. THE IMPORT–EXPORT CLAUSE
Introductory Material
A. State Taxation of Imports
B. State Taxation of Exports
1400.03. THE DUTY–OF–TONNAGE PROHIBITION
1400.04. THE COMMERCE CLAUSE
A. Doctrinal Background
B. The Early Tax Cases
1. Theories Applied in the Early Cases
C. The Multiple Taxation Doctrine
D. The Contemporary Analytical Framework
E. Complete Auto Transit Inc. v. Brady
1. Nexus (First Prong of Complete Auto Transit Test)
2. Fair Apportionment (Second Prong of Complete Auto Transit Test)
a. Differing Formulas Between States
b. Dividend Income
c. Telecommunications Excise Tax: Internal and External Consistency
d. Nondeductibility of Out-of-State Expenses (Windfall Profit Tax)
e. Michigan Single Business Tax (Value Added Tax)
(i). Challenge by Out-of-State Manufacturer
(ii). Indentification of Geographic Source of Added Value
(iii). Apportionability of Single Business Tax
(iv). Dissent Rejected Analogy Between Income Tax and Single Business Tax
f. Tax on Interstate Transportation
3. Discrimination Against Interstate Commerce (Third Prong of Complete Auto Transit Test)
a. Boston Stock Exchange
b. Maryland v. Louisiana
c. Bacchus
d. Westinghouse
e. Other Cases
4. Discriminatory Tax/Subsidy Scheme
5. Fair Relation Between a Tax and Services Provided by the State (Fourth Prong of Complete Auto Transit Test)
F. The “Internal Consistency” Test
G. The “Complementary” or “Compensatory” Tax Doctrine
1. Historical Treatment
2. Modern Treatment
a. Oregon Waste Systems Inc. v. Dept. of Envirn. Quality
b. Associated Industries of Missouri v. Lohman
c. Fulton Corp. v. Faulkner
d. South Central Bell Telephone Co. v. Alabama
H. The Foreign Commerce Clause
1. Discrimination Against Foreign Commerce
2. Worldwide Combined Reporting as Applied to a Foreign–Based Multinational: The Barclays Bank Case
a. Discrimination
b. Void–for–Vagueness
c. International Multiple Taxation
d. The “One Voice” Doctrine
1400.05. THE DUE PROCESS CLAUSE
A. General Principles
B. Prohibition Against Distortion
1400.06. THE EQUAL PROTECTION CLAUSE
A. General Principles of Equal Protection Analysis
B. Discrimination Against Out–of–State Interests Under the Equal Protection Clause
1. Metropolitan Life Insurance Co. v. Ward
2. Williams v. Vermont
3. Hooper v. Bernalillo County Assessor
C. Discrimination in Real Property Tax Assessments
1. The Constitutionality of Proposition 13
1400.07. THE PRIVILEGES AND IMMUNITIES CLAUSE
1400.08. THE SUPREMACY CLAUSE
A. Taxes Discriminating Against the Federal Government
1400.09. THE FIRST AMENDMENT
A. Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue
B. Arkansas Writers' Project v. Ragland
C. Texas Monthly Inc. v. Bullock
D. Jimmy Swaggart Ministries v. Board of Equalization
1. The Free Exercise Clause Issues
2. The Establishment Clause Issue
E. Leathers v. Medlock
1400.10. TAXPAYER REMEDIES FOR UNCONSTITUTIONAL STATE TAXES
A. McKesson Corp. v. Division of Alcoholic Beverages & Tobacco
1. “Equitable Considerations,” “Windfalls,” and Other Defenses to Providing “Meaningful Backward–Looking Relief”
B. American Trucking Ass'ns, Inc. v. Smith
1. The Plurality's Opinion
2. The Dissenting Opinion
3. Justice Scalia's Concurring Opinion
C. Implications of McKesson and American Trucking Ass'ns
D. The Prohibition of “Selective Prospectivity”: James Beam and Harper
Working Papers
Table of Worksheets
Worksheet 1 McKESSON CORP. v. DIVISION OF ALCOHOLIC BEVERAGES & TOBACCO, 496 U.S. 18
Opinion
Worksheet 2 OKLAHOMA TAX COMMISSION v. JEFFERSON LINES, INC.
Bibliography