The Sixteenth Amendment does not extend the power of taxation to
new or excepted subjects, but merely removes occasion for
apportioning taxes on income among the states.
Net income of a corporation derived from exporting goods from
the states and selling them abroad is subject to be taxed under §
II of the Income Tax Law of October 3, 1913, c. 16, 38 Stat. 166,
Page 247 U. S. 166
as part of the "entire net income arising or accruing from all
Such a tax, general and in no way discriminating against exports
and affecting the export business, at most, only indirectly, is not
contrary to the constitutional provision that "no tax or duty shall
be laid on articles exported from any state." Art. I, § 9, cl.
234 F. 125 affirmed.
The case is stated in the opinion.
Page 247 U. S. 171
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This was an action to recover a tax paid under protest and
alleged to have been imposed contrary to the constitutional
Page 247 U. S. 172
provision (Art. I, § 9, cl. 5) that "no tax or duty shall be
laid on articles exported from any state." The judgment below was
for the defendant. 234 F. 125.
The plaintiff is a domestic corporation chiefly engaged in
buying goods in the several states, shipping them to foreign
countries, and there selling them. In 1914, its net income from
this business was $30,173.66, and from other sources $12,436.24. An
income tax for that year, computed on the aggregate of these sums,
was assessed against it and paid under compulsion. It is conceded
that so much of the tax as was based on the income from other
sources was valid, and the controversy is over so much of it as was
attributable to the income from shipping goods to foreign countries
and there selling them.
The tax was levied under the Act of October 3, 1913, c. 16, §
11, 38 Stat. 166, 172, which provided for annually subjecting every
domestic corporation to the payment of a tax of a specified
percentum of its "entire net income arising or accruing from all
sources during the preceding calendar year." Certain fraternal and
other corporations, as also income from certain enumerated sources,
were specifically excepted, but none of the exceptions included the
plaintiff or any part of its income. So, tested merely by the terms
of the act, the tax collected from the plaintiff was rightly
computed on its total net income. But, as the act obviously could
not impose a tax forbidden by the Constitution, we proceed to
consider whether the tax, or rather the part in question, was
forbidden by the constitutional provision on which the plaintiff
The Sixteenth Amendment, although referred to in argument, has
no real bearing, and may be put out of view. As pointed out in
recent decisions, it does not extend the taxing power to new or
excepted subjects, but merely removes all occasion which otherwise
might exist for an apportionment among the states of taxes
Page 247 U. S. 173
laid on income, whether it be derived from one source or
another. Brushaber v. Union Pacific R. Co., 240 U. S.
, 240 U. S. 17
Stanton v. Baltic Mining Co., 240 U. S.
03, 240 U. S.
The Constitution broadly empowers Congress not only "to lay and
collect taxes, duties, imposts, and excises," but also "to regulate
commerce with foreign nations." So, if the prohibitory clause
invoked by the plaintiff be not in the way, Congress undoubtedly
has power to lay and collect such a tax as is here in question.
That clause says "no tax or duty shall be laid on articles exported
from any state." Of course, it qualifies and restricts the power to
tax as broadly conferred. But to what extent? The decisions of this
Court answer that it excepts from the range of that power articles
in course of exportation, Turpin v. Burgess, 117 U.
, 117 U. S. 507
the act or occupation of exporting, Brown v.
12 Wheat. 419, 25 U. S. 445
bills of lading for articles being exported, Fairbank v. United
States, 181 U. S. 283
charter parties for the carriage of cargoes from state to foreign
ports, United States v. Hvoslef, 237 U. S.
, and policies of marine insurance on articles being
exported, such insurance being uniformly regarded as "an integral
part of the exportation" and the policy as "one of the ordinary
shipping documents," Thames & Mersey Ins. Co. v. United
States, 237 U. S. 1
short, the Court has interpreted the clause as meaning that
exportation must be free from taxation, and therefore as requiring
"not simply an omission of a tax upon the articles exported, but
also a freedom from any tax which directly burdens the
exportation." Fairbank v. United States, supra,
181 U. S.
-293. And the Court has indicated that, where the tax
is not laid on the articles themselves while in course of
exportation, the true test of its validity is whether it "so
directly and closely" bears on the "process of exporting" as to be
in substance a tax on the exportation. Thames & Mersey
Page 247 U. S. 174
Co. v. United States, supra,
p. 237 U. S. 25
this view, it has been held that the clause does not condemn or
invalidate charges or taxes, not laid on property while being
exported merely because they affect exportation indirectly or
remotely. Thus, a charge for stamps which each package of
manufactured tobacco intended for export was required to bear
before removal from the factory was upheld in Pace v.
Burgess, 92 U. S. 372
Turpin v. Burgess, 117 U. S. 504
the application of a manufacturing tax on all filled cheese to
cheese manufactured under contract for export, and actually
exported, was upheld in Cornell v. Coyne, 192 U.
, 192 U. S. 427
In that case, it was said:
"The true construction of the constitutional provision is that
no burden by way of tax or duty can be cast upon the exportation of
articles, and does not mean that articles exported are relieved
from the prior ordinary burdens of taxation which rest upon all
property similarly situated. The exemption attaches to the export
and not to the article before its exportation."
While fully assenting and adhering to the interpretation which
has been put on the clause in giving effect to its spirit as well
as its letter, we are of opinion that to broaden that
interpretation would be to depart from both the spirit and
The tax in question is unlike any of those heretofore condemned.
It is not laid on articles in course of exportation or on anything
which inherently or by the usages of commerce is embraced in
exportation or any of its processes. On the contrary, it is an
income tax laid generally on net incomes. And while it cannot be
applied to any income which Congress has no power to tax (see
Stanton v. Baltic Mining Co., supra,
p. 240 U. S.
), it is both nominally and actually a general tax.
It is not laid on income from exportation because of its source, or
in a discriminative way, but just as it is laid on other income.
The words of the act are "net income arising or accruing
Page 247 U. S. 175
from all sources." There is no discrimination. At most,
exportation is affected only indirectly and remotely. The tax is
levied after exportation is completed, after all expenses are paid
and losses adjusted, and after the recipient of the income is free
to use it as he chooses. Thus, what is taxed -- the net income --
is as far removed from exportation as are articles intended for
export before the exportation begins. If articles manufactured and
intended for export are subject to taxation under general laws up
to the time they are put in course of exportation, as we have seen
they are, the conclusion is unavoidable that the net income from
the venture when completed -- that is to say, after the exportation
and sale are fully consummated -- is likewise subject to taxation
under general laws. In that respect, the status of the income is
not different from that of the exported articles prior to the
For these reasons, we hold that the objection urged against the
tax is not well grounded.