State Tax on Railway Gross Receipts
82 U.S. 284 (1872)

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U.S. Supreme Court

State Tax on Railway Gross Receipts, 82 U.S. 15 Wall. 284 284 (1872)

State Tax on Railway Gross Receipts

82 U.S. (15 Wall.) 284

Syllabus

1. A statute of a state imposing a tax upon the gross receipts of railroad companies is not repugnant to the Constitution of the United States, though the gross receipts are made up in part from freights received for transportation of merchandise from the state to another state or into the state from another.

2. Such a tax is not a regulation, of interstate commerce.

3. Nor is it a tax on imports or exports.

4. Nor is it a tax upon interstate transportation.

5. A distinction made between a tax upon freights carried between states because of their carriage and a tax upon the fruits of such transportation after they have become intermingled with the other property of the carrier.

By an Act of the Legislature of Pennsylvania passed on the 23d day of February, 1866, entitled "An act to amend the revenue laws of the Commonwealth," a tax was imposed upon the gross receipts of certain companies. The second section was as follows:

"In addition to the taxes now provided by law, every railroad, canal, and transportation company incorporated under the laws of this Commonwealth and not liable to the tax upon income under existing laws shall pay to the Commonwealth a tax of three-fourths of one percentum upon the gross receipts of said company; the said tax shall be paid semiannually upon the first days of July and January, commencing on the first day of July, 1866, and for the purpose of ascertaining the amount of the same, it shall be the duty of the treasurer or other proper officer of said company to transmit to the auditor general a statement, under oath or affirmation, of the amount of gross receipts of the said company during the preceding six months, and if such company shall refuse or fail, for a period of thirty days after such tax becomes due, to make said return or to pay the same, the amount thereof, with an addition of ten percentum

Page 82 U. S. 285

thereto, shall be collected for the use of the Commonwealth, as other taxes are recoverable by law from said companies."

Under this statute, the accounting officers of Pennsylvania stated an account between the Commonwealth and the Reading Railroad Company for tax on the gross receipts of the company for the half year ending December 31, 1867. The company, as stated in a preceding case, [Footnote 1] was a corporation created by the state of Pennsylvania. Its road was between Philadelphia and the coal regions of Pennsylvania, and one large source of the company's profit was the transportation on the road of coal from the coal regions to a place near Philadelphia called Port Richmond, or to the Schuylkill Canal, from both which places most of it went to states other than Pennsylvania.

The account, as stated by the accounting officers of the Commonwealth, was based on returns made by the company, which discriminated between receipts from freight transported to points within, and receipts from freight exported to points without, the State of Pennsylvania. The latter were returned under protest against their liability to taxation, and the tax assessed against these receipts made the subject of the present controversy. The company, in refusing to pay, alleged that the Act of February 23, 1866 -- so far as it taxed that portion of the gross receipts which were derived from transportation from the state to another state or into the state from another -- was unconstitutional and void because, among other reasons, it was in conflict with the fourth paragraph of the eighth section of the first article of the Constitution of the United States, which ordains that:

"Congress shall have power to regulate commerce with foreign nations and among the several states."

and with the second paragraph of the tenth section of the same article, which ordains that:

"No state shall, without the consent of Congress, lay any imposts or duties on imports or exports except what may be absolutely necessary for executing its inspection laws. "

Page 82 U. S. 286

The Supreme Court of Pennsylvania adjudged that the act was not in conflict with either of the clauses of the Constitution relied on, and to this, its judgment, the present writ of error was taken.

Page 82 U. S. 292

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