1. By contracts of sale made, through a sales office in the City
of New York, with public utility and steamship companies in that
city, a Pennsylvania corporation agreed to sell and deliver to them
large quantities of coal of specified grades (said to possess
unique qualities) produced at its Pennsylvania mines. The coal
moved by rail to Jersey City and thence by barge to the City of New
York, and was there delivered to the purchasers' plants or
steamships.
Held, that the imposition of a tax by New York
City on the purchasers of the coal, measured by the sales price,
and the requirement that the tax be collected by the seller, do not
infringe the commerce clause of the Federal Constitution. Pp.
309 U. S. 42
et seq.
The tax is 2% of the receipts upon every sale, for consumption,
of tangible personal property in the city, "sale" being defined as
"any transfer of title or possession or both . . . in any manner or
by any means whatsoever for a consideration or any agreement
therefor." The tax is upon the buyer, the seller being liable only
if he fails to collect and pay over. It is conditioned upon
transfer of title or possession or an agreement therefor,
consummated in the State.
2. Considering the necessity of reconciling the competing
constitutional demands, that commerce between the States shall not
be unduly impeded by state action, and that the power to lay taxes
for the support of state government shall not be unduly curtailed,
the Court finds no adequate ground for saying that this tax is a
regulation which, in the absence of Congressional action, the
commerce clause forbids. P.
309 U. S.
49.
3. The tax as here applied is not open to the objections that it
is aimed at or discriminates against interstate commerce, or that
it is laid upon the privilege of interstate commerce, or that it is
a tax upon interstate transportation or its gross earnings, or upon
merchandise in the course of an interstate journey. P.
309 U. S.
48.
The only relation of the tax to interstate commerce arises from
the fact that, immediately preceding transfer of possession to the
purchaser within the State, the merchandise has been
transported
Page 309 U. S. 34
in interstate commerce. In its effect upon interstate commerce
it does not differ from taxes on the "use" of property which has
just been moved in interstate commerce, or on storage or withdrawal
for use, or a property tax on goods after arrival.
4. There is no valid distinction in this relationship between a
tax on property -- the sum of all the rights and powers incident to
ownership -- and a tax on the exercise of some of its constituent
elements. P.
309 U. S.
52.
5. The burden and effect of the tax are no greater when the
purchase order or contract precedes, than when it follows, the
interstate shipment. P.
309 U. S.
54.
6.
Robbins v. Shelby County Taxing District,
120 U. S. 489, has
been narrowly limited to fixed-sum license taxes imposed only on
the business of soliciting orders for the purchase of goods to be
shipped interstate. P.
309 U. S.
57.
7. The tax, being conditioned upon a local activity -- delivery
of goods within the State upon their purchase for consumption -- is
not subject to the objection applicable to a tax on gross receipts
from interstate commerce, which exacts.tribute for the commerce
carried on both within and without the State.
Adams
Manufacturing Co. v. Storen, 304 U. S. 307,
distinguished. P.
309 U. S.
57.
8. The question whether the taxing statute is intended to apply
where contracts for purchase made in New York City call for
delivery outside of the State is a question for the state court. P.
309 U. S.
58.
281 N.Y. 610, 670; 22 N.E.2d 173, 764, reversed.
Certiorari, 308 U.S. 546, to review the affirmance of a judgment
sustaining a sales tax assessed by the Comptroller of the City of
New York.
Page 309 U. S. 41
MR. JUSTICE STONE delivered the opinion of the Court.
The question for decision is whether the New York City tax laid
upon sales of goods for consumption, as applied to respondent,
infringes the commerce clause of the Federal Constitution.
Upon certiorari to review a determination by the Comptroller of
the City of New York that respondent was subject to New York City
sales tax in the sum of $176,703, the Appellate Division of the New
York Supreme Court held that the taxing statute, as applied to
respondent, does so infringe, 255 App.Div. 961, 8 N.Y.S.2d 668, on
the authority of
Matter of National Cash Register Co.
v.
Page 309 U. S. 42
Taylor, 276 N.Y. 208, 11 N.E.2d 881,
cert.
denied, 303 U.S. 656;
Matter of Compagnie Generale
Transatlantique v. McGoldrick, 279 N.Y. 192, 18 N.E.2d 28. The
New York Court of Appeals affirmed without opinion, 281 N.Y. 670,
22 N.E.2d 764, but its amended remittitur declared that the
affirmance was upon the sole ground that the taxing statute as
applied violated the commerce clause. We granted certiorari, 308
U.S. 546, the question presented being of public importance, upon a
petition which challenged the decision of the state court as not in
accord with applicable decisions of this Court in
Banker
Brothers v. Pennsylvania, 222 U. S. 210;
Wiloil Corp. v. Pennsylvania, 294 U.
S. 169.
Chapter 815 of the New York Laws of 1933, Ex.Sess., as amended
by Chapter 873 of the New York Laws of 1934, Ex.Sess., authorized
the City of New York, for a limited period within which the present
tax was laid, "to adopt and amend local laws imposing in . . .
[the] city . . . any tax which the legislature has or would have
power and authority to impose." It directed that "a tax imposed
hereunder shall have application only within the territorial
limits" of the city, and that
"this act shall not authorize the imposition of a tax on any
transaction originating and/or consummated outside of the
territorial limits of . . . [the] city, notwithstanding that some
act be necessarily performed with respect to such transaction
within such limits."
It required the revenues from the tax to be used exclusively for
unemployment relief.
Pursuant to this authority, the municipal assembly of the City
of New York Adopted Local Law No. 24 of 1934, p. 164 (published as
Local Law No. 25), since, annually renewed, which laid a tax upon
purchasers for consumption of tangible personal property generally
(except foods and drugs furnished on prescription), of utility
services in supplying gas, electricity, telephone service, etc.,
and of meals consumed in restaurants. By § 2, the tax was fixed at
"two percentum upon the amount of the receipts from
Page 309 U. S. 43
every sale in the city of New York," "sale" being defined by §
1(e) as "any transfer of title or possession, or both . . . in any
manner or by any means whatsoever for a consideration, or any
agreement therefor." Another clause of § 2 [
Footnote 1] commands that the tax "shall be paid by the
purchaser to the vendor, for and on account of the city of New
York." By the same clause, the vendor, who is authorized to collect
the tax, is required to charge it to the purchaser, separately from
the sales price, and is made liable, as an insurer, for its payment
to the city. By §§ 4 and 5, the vendor is required to keep records
and file returns showing the amount of the receipts from sales and
the amount of the tax. In event of its nonpayment to the seller,
the buyer is required, within fifteen days after his purchase, to
file a tax return and to pay the tax to the Comptroller, who is
authorized by § 2 to set up a procedure for the collection of the
tax from the purchaser. Purchases for resale are exempt from the
tax, and a purchaser who pays the tax and later resells is entitled
to a refund.
The ultimate burden of the tax, both in form and in substance,
is thus laid upon the buyer, for consumption, of tangible personal
property, and measured by the sales price. Only in event that the
seller fails to pay over to the city the tax collected or to charge
and collect it as the statute requires is the burden cast on him.
It is conditioned upon events occurring within the state,
either
Page 309 U. S. 44
transfer of title or possession of the purchased property, or an
agreement within the state, "consummated" there, for the transfer
of title, or possession. The duty of collecting the tax and paying
it over to the Comptroller is imposed on the seller in addition to
the duty imposed upon the buyer to pay the tax to the Comptroller
when not so collected. Such, in substance, has been the
construction of the statute by the state courts.
Matter of
Atlas Television Co., Inc., 273 N.Y. 51, 6 N.E.2d 94;
Matter of Merchants Refrigerating Co. v. Taylor, 275 N.Y.
113, 9 N.E.2d 799;
Matter of Kesbec, Inc. v. McGoldrick,
278 N.Y. 293, 16 N.E.2d 288.
Respondent, a Pennsylvania corporation, is engaged in the
production of coal of specified grades, said to possess unique
qualities, from its mines within that state and in selling it to
consumers and dealers. It maintains a sales office in New York
City, and sells annually to its customers 1,500,000 tons of its
product, of which approximately 1,300,000 tons are delivered by
respondent to some twenty public utility and steamship companies.
The coal moves by rail from mine to dock in Jersey City, thence in
most instances by barge to the point of delivery. All the sales
contracts with the New York customers in question were entered into
in New York City, and, with two exceptions, presently to be
considered separately, call for delivery of the coal by respondent
by barge, alongside the purchasers' plants or steamships. In many
instances, the price of the coal was stated to be subject to any
increase or decrease of mining costs, including wages, and of
railroad rates between the mines and the Jersey City terminal to
which the coal was to be shipped. All the deliveries, with the
exceptions already noted, were made within New York City, and all
such are concededly subject to the tax except insofar as it
infringes the commerce clause.
Page 309 U. S. 45
Section 8, clause 3, article 1, of the Constitution declares
that "Congress shall have Power . . . To regulate Commerce with
foreign Nations, and among the several States. . . ." In imposing
taxes for state purposes, a state is not exercising any power which
the Constitution has conferred upon Congress. It is only when the
tax operates to regulate commerce between the states or with
foreign nations to an extent which infringes the authority
conferred upon Congress that the tax can be said to exceed
constitutional limitations.
See Gibbons v.
Ogden, 9 Wheat. 1,
22 U. S. 187;
South Carolina State Highway Dept. v. Barnwell Bros.,
303 U. S. 177,
303 U. S. 185.
Forms of state taxation whose tendency is to prohibit the commerce
or place it at a disadvantage as compared or in competition with
intrastate commerce, and any state tax which discriminates against
the commerce, are familiar examples of the exercise of state taxing
power in an unconstitutional manner because of its obvious
regulatory effect upon commerce between the states. [
Footnote 2]
Page 309 U. S. 46
But it was not the purpose of the commerce clause to relieve
those engaged in interstate commerce of their just share of state
tax burdens, merely because an incidental or consequential effect
of the tax is an increase in the cost of doing the business,
Western Live Stock v. Bureau of Revenue, 303 U.
S. 250,
303 U. S. 254.
Not all state taxation is to be condemned because, in some manner,
it has an effect upon commerce between the states, and there are
many forms of tax whose burdens, when distributed through the play
of economic forces, affect interstate commerce,
Page 309 U. S. 47
which nevertheless falls short of the regulation of the commerce
which the Constitution leaves to Congress. A tax may be levied on
net income wholly derived from interstate commerce. [
Footnote 3] Nondiscriminatory taxation of the
instrumentalities of interstate commerce is not prohibited.
[
Footnote 4] The like taxation
of property, shipped interstate, before its movement begins,
[
Footnote 5] or after it ends,
[
Footnote 6] is not a forbidden
regulation. An excise for the warehousing of merchandise
preparatory to its interstate shipment or upon its use, [
Footnote 7] or withdrawal for use,
[
Footnote 8] by the consignee
after the interstate journey has ended is not precluded. Nor is
taxation of a local business or occupation which is separate and
distinct from the transportation or intercourse which is interstate
commerce forbidden merely because, in the ordinary course, such
transportation or intercourse is induced or occasioned by such
business, or is prerequisite to it.
Western Live Stock v.
Bureau of Revenue, supra, 303 U. S. 253,
and cases cited.
Page 309 U. S. 48
In few of these cases could it be said with assurance that the
local tax does not in some measure affect the commerce or increase
the cost of doing it. But in them, as in other instances of
constitutional interpretation so as to insure the harmonious
operation of powers reserved to the states with those conferred
upon the national government, courts are called upon to reconcile
competing constitutional demands that commerce between the states
shall not be unduly impeded by state action, and that the power to
lay taxes for the support of state government shall not be unduly
curtailed.
See Woodruff v.
Parham, 8 Wall. 123,
75 U. S. 131;
Brown v. Houston, 114 U. S. 622;
Galveston, H. & S.A. R. Co. v. Texas, 210 U.
S. 217,
210 U. S. 225,
210 U. S. 227;
South Carolina Highway Dept. v. Barnwell Bros., supra; Ford
Motor Co. v. Beauchamp, 308 U. S. 331;
cf. Metcalf & Eddy v. Mitchell, 269 U.
S. 514,
269 U. S. 523,
et seq.; Board of County Comm'rs Jackson County v. United
States, 308 U. S. 343.
Certain types of tax may, if permitted at all, so readily be
made the instrument of impeding or destroying interstate commerce
as plainly to call for their condemnation as forbidden regulations.
Such are the taxes already noted which are aimed at or discriminate
against the commerce or impose a levy for the privilege of doing
it, or tax interstate transportation or communication or their
gross earnings, or levy an exaction on merchandise in the course of
its interstate journey. Each imposes a burden which intrastate
commerce does not bear, and merely because interstate commerce is
being done places it at a disadvantage in comparison with
intrastate business or property in circumstances such that, if the
asserted power to tax were sustained, the states would be left free
to exert it to the detriment of the national commerce.
The present tax, as applied to respondent, is without the
possibility of such consequences. Equality is its theme,
Page 309 U. S. 49
cf. Henneford v. Silas Mason Co., 300 U.
S. 577,
300 U. S. 583.
It does not aim at or discriminate against interstate commerce. It
is laid upon every purchaser, within the state, of goods for
consumption, regardless of whether they have been transported in
interstate commerce. Its only relation to the commerce arises from
the fact that, immediately preceding transfer of possession to the
purchaser within the state, which is the taxable event regardless
of the time and place of passing title, the merchandise has been
transported in interstate commerce and brought to its journey's
end. Such a tax has no different effect upon interstate commerce
than a tax on the "use" of property which has just been moved in
interstate commerce sustained in
Monamotor Oil Co. v.
Johnson, 292 U. S. 86;
Henneford v. Silas Mason Co., supra; Felt & Tarrant Mfg.
Co. v. Gallagher, 306 U. S. 62;
Southern Pacific Co. v. Gallagher, 306 U.
S. 167, or the tax on storage or withdrawal for use by
the consignee of gasoline, similarly sustained in
Gregg Dyeing
Co. v. Query, 286 U. S. 472;
Nashville, C. & St.L. Ry. Co. v. Wallace, 288 U.
S. 249;
Edelman v. Boeing Air Transport Co.,
289 U. S. 249, or
the familiar property tax on goods by the state of destination at
the conclusion of their interstate journey.
Brown v. Houston,
supra; American Steel & Wire Co. v. Speed, 192 U.
S. 500.
If, as guides to decision, we look to the purpose of the
commerce clause to protect interstate commerce from discriminatory
or destructive state action, and at the same time to the purpose of
the state taxing power under which interstate commerce admittedly
must bear its fair share of state tax burdens, and to the necessity
of judicial reconciliation of these competing demands, we can find
no adequate ground for saying that the present tax is a regulation
which, in the absence of Congressional action,
Page 309 U. S. 50
the commerce clause forbids. [
Footnote 9] This Court has uniformly sustained a tax
imposed by the state of the buyer upon a sale of goods, in several
instances in the "original package," effected by delivery to the
purchaser upon arrival at destination after an interstate journey,
both when the local seller has purchased the goods extra-state for
the purpose of resale,
Woodruff v. Parham, supra; 75 U.
S. Lott, 8 Wall. 148;
Banker Bros. v.
Pennsylvania, supra; Wiloil Corp. v. Pennsylvania, supra; Graybar
Electric Co. v. Curry, 308 U.S. 513; 189 So. 186, and when the
extrastate seller has shipped them into the taxing state for sale
there.
Hinson v. Lott, supra; Sonneborn Bros. v. Cureton,
262 U. S. 506. It
has likewise sustained a fixed-sum license tax imposed on the agent
of the interstate seller for the privilege of selling merchandise
brought into the taxing state for the purpose of sale.
Howe
Machine Co. v. Gage, 100 U. S. 676;
Ement v. Missouri, 156 U. S. 296;
Kehrer v. Stewart, 197 U. S. 60;
Baccus v. Louisiana, 232 U. S. 334;
Wagner v. Covington, 251 U. S. 95,
251 U. S. 104.
The only challenge made to these controlling authorities is by
reference to unconstitutional "burdens" on interstate commerce made
in general statements which are inapplicable here because they are
torn from their setting in judicial opinions, and speak of state
regulations or taxes of a different kind laid in different
circumstances from those with which we are now concerned.
See
for example, Galveston, H. & S.A. R. Co. v. Texas, supra;
Cooney v. Mountain States Telephone Co., 294 U.
S. 384;
Fisher's Blend Station v. Tax
Commission, 297 U. S. 650.
Others will presently be discussed. But unless we are now to reject
the plain teaching of this line of sales tax
Page 309 U. S. 51
decisions, extending back for more than seventy years from
Graybar Electric Co. v. Curry, supra, decided this term,
to
Woodruff v. Parham, supra, the present tax must be
upheld. As we have seen, the ruling of these decisions does not
rest on precedent alone. It has the support of reason and of a due
regard for the just balance between national and state power. In
sustaining these taxes on sales, emphasis was placed on the
circumstances that they were not so laid, measured, or conditioned
as to afford a means of obstruction to the commerce or of
discrimination against it, and that the extension of the immunity
of the commerce clause contended for would be at the expense of
state taxing power by withholding from taxation property and
transactions within the state without the gain of any needed
protection to interstate commerce.
Woodruff v. Parham,
supra, 75 U. S. 137,
75 U. S. 140;
Hinson v. Lott, supra, 75 U. S. 152;
Sonneborn Bros. v. Cureton, supra, 262 U. S.
513-514,
262 U. S. 521;
Wiloil Corp. v. Pennsylvania, supra, 294 U. S. 174;
cf. Brown v. Houston, supra; Henneford v. Silas Mason Co.,
supra, 300 U. S. 583.
[
Footnote 10]
Page 309 U. S. 52
Apart from these more fundamental considerations which we think
are of controlling force in the application of the commerce clause,
we can find no adequate basis for distinguishing the present tax
laid on the sale or purchase of goods upon their arrival at
destination at the end of an interstate journey from the tax which
may be laid in like fashion on the property itself. That the latter
is a permissible tax has long been established by an unwavering
line of authority.
Brown v. Houston, supra; Coe v. Errol,
116 U. S. 517;
Pittsburgh & So. Coal Co. v. Bates, 156 U.
S. 577;
American Steel & Wire Co. v. Speed,
supra, 192 U. S. 520;
General Oil Co. v. Crain, 209 U.
S. 211;
Bacon v. Illinois, 227 U.
S. 504. As we have often pointed out, there is no
distinction in this relationship between a tax on property, the sum
of all the rights and powers incident to ownership, and the
taxation of the exercise of some of its constituent elements.
Nashville, C. & St.L. Ry. Co. v. Wallace, supra,
288 U. S.
267-268;
Henneford v. Silas Mason Co., supra,
300 U. S. 582;
cf. 280 U. S.
McCaughn,
Page 309 U. S. 53
280 U. S. 124,
280 U. S.
136-138. If coal situated as that in the present case
was, before its delivery, subject to a state property tax,
see
Brown v. Houston, supra; Pittsburgh & So. Coal Co. v. Bates,
supra, transfer of possession of the coal upon a sale is
equally taxable,
see Wiloil Corp. v. Pennsylvania, supra,
293 U. S. 175,
just as was the storage or use of the property in similar
circumstances held taxable in
Nashville, C. & St.L. Ry. Co.
v. Wallace, supra; Henneford v. Silas Mason Co., supra.
Respondent, pointing to the course of its business and to its
contracts which contemplate the shipment of the coal interstate
upon orders of the New York customers, insists that a distinction
is to be taken between a tax laid on sales made, without previous
contract, after the merchandise has crossed the state boundary, and
sales the contracts for which, when made, contemplate or require
the transportation of merchandise interstate to the taxing
Page 309 U. S. 54
state. Only the sales in the state of destination in the latter
class of cases, it is said, are protected from taxation by the
commerce clause, a qualification which respondent concedes is a
salutary limitation upon the reach of the clause, since its use is
thus precluded as a means of avoiding state taxation of merchandise
transported to the state in advance of the purchase order or
contract of sale.
But we think this distinction is without the support of reason
or authority. A very large part, if not most, of the merchandise
sold in New York City is shipped interstate to that market. In the
case of products like cotton, citrus fruits, and coal, not to
mention many others which are consumed there in vast quantities,
all have crossed the state line to seek a market, whether in
fulfillment of a contract or not. That is equally the case with
other goods sent from without the state to the New York market,
whether they are brought into competition with like goods produced
within the state or not. We are unable to say that the present tax,
laid generally upon all sales to consumers within the state,
subjects the commerce involved where the goods sold are brought
from other states to any greater burden or affects it more, in any
economic or practical way, whether the purchase order or contract
precedes or follows the interstate shipment. Since the tax applies
only if a sale is made, and in either case the object of interstate
shipment is a sale at destination, the deterrent effect of the tax
would seem to be the same on both. Restriction of the scope of the
commerce clause so as to prevent recourse to it as a means of
curtailing state taxing power seems as salutary in the one case as
in the other.
True, the distinction has the support of a statement
obiter in
Sonneborn Bros. v. Cureton, supra,
262 U. S. 515,
and seems to have been tacitly recognized in
Ware & Leland
v. Mobile County, 209 U. S. 405,
209 U. S. 412,
and
Banker Bros.
Page 309 U. S. 55
Co. v. Pennsylvania, supra, although in each case a tax
on the sale of goods brought into the state for sale was upheld.
But we have sustained the tax where the course of business and the
agreement for sale plainly contemplated the shipment interstate in
fulfillment of the contract.
Wiloil Corp. v. Pennsylvania,
supra, 294 U. S. 173;
Graybar Electric Co. v. Curry, supra. In the same
circumstances, the Court has upheld a property tax on the
merchandise transported,
American Steel & Wire Co. v.
Speed, supra; General Oil Co. v. Crain, supra; see Bacon v.
Illinois, supra, 227 U. S.
515-516; upon its use,
Monamotor Oil Co. v. Johnson,
supra; Felt & Tarrant Co. v. Gallagher, supra, and upon
its storage;
cf. Gregg Dyeing Co. v. Query, supra; Nashville,
C. & St.L. Ry. Co. v. Wallace, supra. Taxation of property
or the exercise of a power over it immediately preceding its
previously contemplated shipment interstate has been similarly
sustained.
Coe v. Errol; Bacon v. Illinois, supra; Federal
Compress & Warehouse Co. v. McLean, 291 U. S.
17. For reasons already indicated, all such taxes upon
property or the exercise of the powers of ownership stand in no
different relation to interstate commerce and have no different
effect upon it than has the present sales tax upon goods whose
shipment interstate into the taxing state was contemplated when the
contract was entered into.
It is also urged that the conclusion which we reach is
inconsistent with the long line of decisions of this Court
following
Robbins v. Shelby County Taxing District,
120 U. S. 489,
which have held invalid license taxes to the extent that they have
sought to tax the occupation of soliciting orders for the purchase
of goods to be shipped into the taxing state. In some instances,
the tax appeared to be aimed at suppression or placing at a
disadvantage this type of business when brought into competition
with competing intrastate sales.
See Robbins v. Shelby
County
Page 309 U. S. 56
Taxing District, supra, 120 U. S. 498;
Caldwell v. North Carolina, 187 U.
S. 622,
187 U. S. 632.
[
Footnote 11] In all, the
statute, in its practical operation, was capable of use, through
increase in the tax, and in fact operated to some extent to place
the merchant thus doing business interstate at a disadvantage in
competition with untaxed sales at retail stores within the state.
While a state in some circumstances may, by taxation, suppress or
curtail one type of intrastate business to the advantage of another
type of competing business which is left untaxed,
see Puget
Sound Power & Light Co. v. Seattle, 291 U.
S. 619,
291 U. S. 625,
and cases cited, it does not follow that interstate commerce may be
similarly affected by the practical operation of a state taxing
statute.
Compare Hammond Packing Co. v. Montana,
233 U. S. 331,
Magnano Co. v. Hamilton, 292 U. S. 40,
with Schollenberger v. Pennsylvania, 171 U. S.
1;
Robbins v. Shelby County Taxing District supra;
Sprout v. South Bend, 277 U. S. 163. It
is enough for present purposes
Page 309 U. S. 57
that the rule of
Robbins v. Shelby County Taxing District,
supra, has been narrowly limited to fixed-sum license taxes
imposed on the business of soliciting orders for the purchase of
goods to be shipped interstate.
Compare Robbins v. Shelby
County Taxing District, supra, with Ficklen v. Shelby County Taxing
District, 145 U. S. 1,
see
Howe Machine Co. v. Gage, supra; Wagner v. Covington, supra,
and that the actual and potential effect on the commerce of such a
tax is wholly wanting in the present case.
Finally, it is said that the vice of the present tax is that it
is measured by the gross receipts from interstate commerce, and
thus in effect reaches for taxation the commerce carried on both
within and without the taxing state.
Adams Manufacturing Co. v.
Storen, 304 U. S. 307;
Gwin, White & Prince v. Henneford, supra; cf. Western Live
Stock v. Bureau, supra, 303 U. S. 260.
It is true that a state tax upon the operations of interstate
commerce measured either by its volume or the gross receipts
derived from it has been held to infringe the commerce clause
because the tax, if sustained, would exact tribute for the commerce
carried on beyond the boundaries of the taxing state, and would
leave each state through which the commerce passes free to subject
it to like burden not borne by intrastate commerce.
See Western
Live Stock v. Bureau of Revenue, supra, 303 U. S. 255;
Gwin, White & Prince v. Henneford, supra, 305 U. S.
439.
In
Adams Manufacturing Co. v. Storen, supra,
304 U. S.
311-312, a tax on gross receipts, so far as laid by the
state of the seller upon the receipts from sales of goods
manufactured in the taxing state and sold in other states, was held
invalid because there the court found the receipts derived from
activities in interstate commerce, as distinguished from the
receipts from activities wholly intrastate, were included in the
measure of the tax, the sales price, without segregation or
apportionment. It was pointed out,
Page 309 U. S. 58
pages
304 U. S.
310-312, that, had the tax been conditioned upon the
exercise of the taxpayer's franchise or its privilege of
manufacturing in the taxing state, it would have been sustained,
despite its incidental effect on interstate commerce, since the
taxpayer's local activities or privileges were sufficient to
support such a tax, and that it could fairly be measured by the
sales price of the goods.
Compare American Manufacturing Co. v.
St. Louis, 250 U. S. 459,
with Crew Levick Co. v. Pennsylvania, 245 U.
S. 292.
See Western Live Stock v. Bureau,
supra, 303 U. S.
257-259;
cf. Bass, Ratcliff & Gretton v. State
Tax Commission, 266 U. S. 271,
266 U. S. 280;
Educational Films Corp. v. Ward, 282 U.
S. 379,
282 U. S.
387-388;
Pacific Co., Ltd. v. Johnson,
285 U. S. 480.
The rationale of the
Adams Manufacturing Co. case does
not call for condemnation of the present tax. Here, the tax is
conditioned upon a local activity delivery of goods within the
state upon their purchase for consumption. It is an activity which,
apart from its effect on the commerce, is subject to the state
taxing power. The effect of the tax, even though measured by the
sales price, as has been shown, neither discriminates against nor
obstructs interstate commerce more than numerous other state taxes
which have repeatedly been sustained as involving no prohibited
regulation of interstate commerce.
In two instances already noted, respondent's contracts with
Austin, Nichols & Co., and with the New England Steamship
Company call for delivery of the coal at points outside of New
York, in the one case f.o.b. at the mines in Pennsylvania, and in
the other at the pier in Jersey City, New Jersey, and deliveries
were made accordingly.
Respondent asked the state courts to rule that the taxing act
did not apply to these transactions, particularly because the
enabling statute expressly prohibits the city from imposing a tax
upon "any transaction originating and/or consummated outside of the
territorial limits of [the] city."
See Matter of Gunther's Sons
v. McGoldrick,
Page 309 U. S. 59
279 N.Y. 148, 18 N.E.2d 12. This question the state courts left
unanswered, the Court of Appeals resting its decision wholly on the
constitutional ground.
Upon the remand of this cause for further proceedings not
inconsistent with this decision, the state court will be free to
decide the state question, and the remand will be without prejudice
to the further presentation to this Court of any federal question
remaining undecided here if the state court shall determine that
the taxing statute is applicable.
Reversed and remanded.
[
Footnote 1]
"Upon each taxable sale or service, the tax to be collected
shall be stated and charged separately from the sale price or
charge for service and shown separately on any record thereof at
the time when the sale is made or evidence of sale issued or
employed by the vendor and shall be paid by the purchaser to the
vendor, for and on account of the city of New York, and the vendor
shall be liable for the collection or the service rendered, and the
vendor shall have the same right in respect to collecting the tax
from the purchaser, or in respect to nonpayment of the tax by the
purchaser, as if the tax were a part of the purchase price of the
property or service and payable at the time of the sale."
[
Footnote 2]
Despite mechanical or artificial distinctions sometimes taken
between the taxes deemed permissible and those condemned, the
decisions appear to be predicated on a practical judgment as to the
likelihood of the tax's being used to place interstate commerce at
a competitive disadvantage.
See Galveston, H. & S.A. R. Co.
v. Texas, 210 U. S. 217,
210 U. S. 227.
License taxes requiring a corporation engaged in interstate
commerce to pay a fee of a certain percentage of its capital stock
have been rejected because of the danger that each state in which
the corporation does business may impose a similar tax, measured by
its interstate business in all,
Western Union Tel. Co. v.
Kansas, 216 U. S. 1;
Atchison, T. & S.F. Ry. Co. v. O'Connor, 223 U.
S. 280;
Looney v. Crane, 245 U.
S. 178;
International Paper Co. v.
Massachusetts, 246 U. S. 135, and
have only been sustained when apportioned to that part of the
capital thought to be attributable to an intrastate activity.
National Leather Co. v. Massachusetts, 277 U.
S. 413;
International Shoe Co. v. Shartel,
279 U. S. 429;
Ford Motor Co. v. Beauchamp, 308 U.
S. 331. Privilege taxes requiring a percentage of the
gross receipts from interstate transportation or from other
activities in carrying on the movement of that commerce, which if
sustained, could be imposed wherever the interstate activity
occurs, have been struck down for similar reasons.
Fargo v.
Michigan, 121 U. S. 230;
Philadelphia & S. Steamship Co. v. Pennsylvania,
122 U. S. 326;
Leloup v. Mobile, 127 U. S. 640;
Galveston, H. & S.A. R. Co. v. Texas, 210 U.
S. 217;
cf. Gwin, White & Prince v.
Henneford, 305 U. S. 434.
Fixed-sum license fees, regardless of the amount, for the privilege
of carrying on the commerce, have been thought likely to be used to
overburden the interstate commerce,
McCall v. California,
136 U. S. 104;
Crutcher v. Kentucky, 141 U. S. 47;
Barrett v. New York, 232 U. S. 14;
Texas Transportation & Terminal Co. v. New Orleans,
264 U. S. 150.
Taxation of articles in course of their movement in interstate
commerce is similarly foreclosed.
Case of
State Freight Tax, 15 Wall. 232;
Champlain
Realty Co. v. Brattleboro, 260 U. S. 366;
Hughes Bros. Co. v. Minnesota, 272 U.
S. 469;
Carson Petroleum Co. v. Vial,
279 U. S. 95.
See Henderson, The Position of Foreign Corporations in
American Constitutional Law, 117; Powell, Indirect Encroachment on
Federal Authority by the Taxing Power of the States, 31 Harv.L.Rev.
321, 572, 721, 932; 32 Harv.L.Rev. 234, 374, 634, 902. Lying back
of these decisions is the recognized danger that, to the extent
that the burden falls on economic interests without the state, it
is not likely to be alleviated by those political restraints which
are normally exerted on legislation where it affects adversely
interests within the state.
See Robbins v. Shelby County Taxing
District, 120 U. S. 489,
120 U. S. 499;
South Carolina Highway Dept. v. Barnwell Bros.,
303 U. S. 177,
303 U. S. 185,
Note 2;
cf. 17 U. S.
Maryland, 4 Wheat. 316;
Helvering v. Gerhardt,
304 U. S. 405,
304 U. S.
412.
[
Footnote 3]
United States Glue Co. v. Oak Creek, 247 U.
S. 321;
Underwood Typewriter Co. v.
Chamberlain, 254 U. S. 113;
Atlantic Coast Line R. Co. v. Doughton, 262 U.
S. 413;
Matson Navigation Co. v. State Board,
297 U. S. 441.
[
Footnote 4]
Adams Express Co. v. Ohio State Auditor, 165 U.
S. 194;
Wells, Fargo & Co. v. Nevada,
248 U. S. 165;
St. Louis & E. St.L. Ry. Co. v. Missouri, 256 U.
S. 314;
Southern Ry. Co. v. Watts, 260 U.
S. 519.
[
Footnote 5]
Coe v. Errol, 116 U. S. 517;
Bacon v. Illinois, 227 U. S. 504;
Heisler v. Thomas Colliery Co., 260 U.
S. 245;
Minnesota v. Blasius, 290 U. S.
1.
Cf. Hope Natural Gas Co. v. Hall,
274 U. S. 284.
[
Footnote 6]
Brown v. Houston, 114 U. S. 622;
Pittsburgh & So. Coal Co. v. Bates, 156 U.
S. 577;
American Steel & Wire Co. v. Speed,
192 U. S. 500;
General Oil Co. v. Crain, 209 U.
S. 211.
[
Footnote 7]
Federal Compress & Warehouse Co. v. McLean,
291 U. S. 17;
Chassaniol v. Greenwood, 291 U. S. 584.
[
Footnote 8]
Eastern Air Transport, Inc. v. South Carolina Tax
Comm'n, 285 U. S. 147;
Gregg Dyeing Co. v. Query, 286 U.
S. 472;
Nashville, C. & St.L. Ry. Co. v.
Wallace, 288 U. S. 249;
Edelman v. Boeing Air Transport, Inc., 289 U.
S. 249.
[
Footnote 9]
The imposition on the seller of the duty to insure collection of
the tax from the purchaser does not violate the commerce clause.
See Monamotor Oil Co. v. Johnson, supra; Felt & Tarrant
Mfg. Co. v. Gallagher, supra.
[
Footnote 10]
In all of these cases except
Henneford v. Silas Mason Co.,
supra, the taxed sale was of merchandise in the "original
package," although the original package doctrine had been thought
to be a "positive and absolute" limitation on the exercise of state
power.
American Steel & Wire Co. v. Speed,
192 U. S. 500,
192 U. S. 521.
The doctrine originated in
Brown v.
Maryland, 12 Wheat. 419, where a discriminatory tax
on imports was involved. It was overthrown as to interstate
commerce when the court found that it would be unjust to permit the
merchant who engaged in interstate commerce to escape a tax which
the state had levied on the sale of goods after their interstate
shipment, but with equal justice on all merchants.
Woodruff
v. Parham, 8 Wall. 123;
Hinson v.
Lott, 8 Wall. 148. After its supposed recrudescence
in
Leisy v. Hardin, 135 U. S. 100, the
opinions of Justice Miller in
Woodruff v. Parham, supra,
and of Justice Bradley in
Brown v. Houston, 114 U.
S. 622, were explained by Chief Justice (then Justice)
White in
American Steel & Wire Co. v. Speed, supra, at
192 U. S. 521,
as the recognition by the court that the question was not whether
"interstate commerce was to be considered as having completely
terminated," but whether a particular exertion of taxing power by a
state "so operated upon interstate commerce as to amount to a
regulation thereof, in conflict with the paramount authority
conferred upon Congress." He pointed out that the Court in these
cases
"conceded that the goods which were taxed had not completely
lost their character as interstate commerce, since they had not
been sold in the original packages. As, however, they had arrived
at their destination, were at rest in the state, were enjoying the
protection which the laws of the state afforded, and were taxed
without discrimination, like all other property, it was held that
the tax did not amount to a regulation in the sense of the
Constitution, although its levy might remotely and indirectly
affect interstate commerce."
Cf. Cardozo, J., in
Baldwin v. G.A.F. Seelig,
Inc., 294 U. S. 511,
294 U. S.
526:
"The test of the 'original package,' which came into our law
with
Brown v. Maryland, 12 Wheat.
419, is not inflexible and final for the transactions of interstate
commerce, whatever may be its validity for commerce with other
countries.
Cf. Woodruff v. Parham, supra; Anglo-Chilean Nitrate
Sales Corp. v. Alabama, 288 U. S. 218,
288 U. S.
226. There are purposes for which merchandise,
transported from another state, will be treated as a part of the
general mass of property at the state of destination though still
in the original containers. This is so, for illustration, where
merchandise so contained is subjected to a nondiscriminatory
property tax which it bears equally with other merchandise produced
within the state.
Sonneborn Bros. v. Cureton, 262 U. S.
506;
Texas Co. v. Brown, 258 U. S.
466,
258 U. S. 475;
American
Steel & Wire Co. v. Speed, 192 U. S.
500. . . ."
"A state tax upon merchandise brought in from another state or
upon its sales, whether, in original packages or not, after it has
reached its destination and is in a state of rest, is lawful only
when the tax is not discriminating in its incidence against the
merchandise because of its origin in another state."
"
Sonneborn Bros. v. Cureton, supra at p.
262 U. S.
516.
Cf. Bowman v. Chicago & N.W. Ry. Co.,
125 U. S.
465,
125 U. S. 491. . . . In
brief, the test of the original package is not an ultimate
principle. It is an illustration of a principle.
Pennsylvania
Gas Co. v. Public Service Comm'n, 225 N.Y. 397, 403, 122 N.E.
260. It marks a convenient boundary, and one sufficiently precise
save in exceptional conditions. What is ultimate is the principle
that one state, in its dealings with another, may not place itself
in a position of economic isolation. Formulas and catchwords are
subordinate to this overmastering requirement."
[
Footnote 11]
When the
Robbins case was decided, sixteen states
required the payment of license taxes by some kinds of drummers.
For citations of the statutes,
see, Lockhart, Sales Tax in
Interstate Commerce, 52 Harv.L.Rev. 617, 621. More recently it has
been estimated that almost 800 municipal ordinances directed at
drummers were adopted for the purpose of embarrassing this
competition with local merchants. Hemphill, the House to House
Canvasser in Interstate Commerce, 60 Am.L.Rev. 641. The court was
cognizant of this trend,
see Robbins v. Shelby County Taxing
District, 120 U. S. 489,
120 U. S. 498.
Following this decision, 19 such taxes were declared invalid.
Corson v. Maryland, 120 U. S. 502;
Asher v. Texas, 128 U. S. 129;
Stoutenburgh v. Hennick, 129 U. S. 141;
Brennan v. Titusville, 153 U. S. 289;
Stockard v. Morgan, 185 U. S. 27;
Caldwell v. North Carolina, 187 U.
S. 622;
Crenshaw v. Arkansas, 227 U.
S. 389;
Rogers v. Arkansas, 227 U.
S. 401;
Stewart v. Michigan, 232 U.
S. 665;
Davis v. Virginia, 236 U.
S. 697;
Real Silk Hosiery Mills v. Portland,
268 U. S. 325.
Read in their proper historical setting, these cases may be said to
support the view that this kind of a tax is likely to be used as
"an instrument of discrimination against interstate or foreign
commerce,"
see DiSanto v. Pennsylvania, 273 U. S.
34,
273 U. S.
39.
MR. CHIEF JUSTICE HUGHES, dissenting.
The pressure of mounting outlays has led the States to seek new
sources of revenue, and we have gone far in sustaining state power
to tax property and transactions subject to their jurisdiction
despite incidental or indirect effects upon interstate commerce.
But hitherto we have also maintained the principle that the States
cannot lay a direct tax upon that commerce. In the instant case,
the Court of Appeals of New York has decided unanimously that the
tax as here applied is such a tax, and goes beyond the limit of
state power. 281 N.Y. 670, 22 N.E.2d 764.
See also Matter of
National Cash Register Co. v. Taylor, 276 N.Y. 208, 11 N.E.2d
881. I think that the judgment should be affirmed.
The case is one of interstate commerce in its most obvious form.
The Berwind-White Company is a Pennsylvania corporation engaged in
mining coal in that State. It has a sales office in New York. Its
coal is mined from two veins known as "B Seam" and "C Prime Seam."
The coal is sold to New York consumers for plants and steamships.
The contracts of sale call for coal from the seller's mines in
Pennsylvania, most of it being of the "B Seam" sort. The contracts
are generally for a specified period, orders being given as coal is
needed. The purchasers
Page 309 U. S. 60
notify the mining company of their requests, whereupon the coal
is mined to meet the orders, two days being allowed for mining and
five for transportation. The coal is transported from the mines by
railroad to a pier in Jersey City where the seller's barges take
the coal and bring it alongside the purchasers' plant or steamship
where delivery is made, the purchasers doing the unloading. There
were two purchasers who took delivery outside New York.
The tax is two percent of the entire purchase price. The Court
of Appeals has described the tax as "two percent upon receipts from
every sale of tangible personal property sold within the city."
Matter of Sears, Roebuck & Co. v. McGoldrick, 279 N.Y.
184, 197, 18 N.E.2d 25, 26. There can be no doubt as to the
incidence of the tax in this instance. The Comptroller of the City
has assessed the tax against the seller, the Berwind-White Company.
The statute requires the seller, under penalty, to file a return of
its sales and to pay the tax. To enforce the payment, the property
of the seller may be levied upon under a Comptroller's warrant. It
is the tax so laid that the City now demands. In the
Matter of
Atlas Television Co., 273 N.Y. 51, 57, 58, 6 N.E.2d 94, 96,
the Court of Appeals held that the contention that the seller was
required only to collect the tax as the agent of the City could not
be sustained, and hence it was decided that, in case of the
seller's insolvency, the City was entitled to priority of payment.
The court said:
"The duty of payment
to the city is laid upon the
vendor, not the purchaser. His liability is not measured by the
amount actually collected from the purchaser, but by the receipts
required to be included in such return. (§ 6.) He must pay the tax
even if failure to collect is due to no fault of his own."
This statement was repeated in
Matter of Merchants
Refrigerating Co. v. Taylor, 275 N.Y. 113, 118, 9 N.E.2d 799,
and, while it was there said that the
Page 309 U. S. 61
Atlas case did not hold that the sales tax was
"imposed" on the vendor, still the court again ruled that the
vendor "is under a duty to pay the tax to the city regardless of
whether or not the vendor collects it from the purchaser."
Id., p. 124. If the vendor must pay the tax whether or not
he can recoup the amount from the purchaser, and the tax, as here,
is assessed against the vendor, it would seem inadmissible to
defend the tax upon the ground that it is a tax upon the purchaser.
From any point of view, the tax now contested is laid upon
interstate sales.
In confiding to Congress the power to regulate interstate
commerce, the aim was to provide a free national market -- to pull
down and prevent the re-erection of state barriers to the free
intercourse between the people of the States. That free intercourse
was deemed, and has proved, to be essential to our national
economy. It should not be impaired. As we recently said in
Baldwin v. Seelig, 294 U. S. 511,
294 U. S.
522:
"Imposts and duties upon interstate commerce are placed beyond
the power of a state, without the mention of an exception, by the
provision committing commerce of that order to the power of the
Congress. . . . 'It is the established doctrine of this court that
a state may not, in any form or under any guise, directly burden
the prosecution of interstate business.'"
Undoubtedly the problem of maintaining the proper balance
between state and national power has been a most difficult one. We
have recognized the power of the State to meet local exigencies in
protecting health and safety and preventing fraud -- as, for
example, in the case of quarantine, pilotage and inspection laws --
although interstate or foreign commerce is involved; that is, until
Congress, in the exercise of its paramount authority displaces such
local requirements. [
Footnote 2/1]
We have also recognized the
Page 309 U. S. 62
power of the State to tax property subject to its jurisdiction,
although the property has come from another State, when it is found
that interstate commerce has ended and that the property has become
a part of the common mass within the State. We have sustained the
authority of the State to impose occupation taxes when they were
deemed to be so measured or apportioned as to relate appropriately
to the privilege of transacting an intrastate business. The
application of these principles has led to close distinctions.
[
Footnote 2/2] But that fact would
seem to present no good reason for sweeping away the protection of
interstate commerce where the State lays a direct tax upon that
commerce, as in this case.
We have said in a long line of decisions that the States cannot
tax interstate commerce either by laying the tax upon the business
which constitutes such commerce or the privilege of engaging in it,
or upon the receipts, as such, derived from it. [
Footnote 2/3] The same principle has been declared
in recent cases. In
Fisher's Blend Station v. Tax
Commission, 297 U. S. 650,
297 U. S. 655,
we said:
"As appellant's income is derived from interstate commerce, the
tax, measured by appellant's gross income, is of a type which
Page 309 U. S. 63
has long been held to be an unconstitutional burden on
interstate commerce."
There, a state occupation tax upon the gross receipts of the
owner of a radio station from broadcasting programs to listeners
within and beyond the State was held invalid. It was said to be
enough that the tax was levied on gross receipts from the
proprietor's "entire operations, which include interstate
commerce."
Id., p.
297 U. S. 656.
In
Western Live Stock v. Bureau of Revenue, 303 U.
S. 250, a tax on the gross receipts from the sale of
advertising by a trade journal was sustained because, in the last
analysis, the tax, like that upon the privilege of manufacturing
within the State, was upon the carrying on of a local business in
the preparing, printing, and publishing a magazine.
Id., p
303 U. S. 258.
Soon after, we held in
Adams Manufacturing Company v.
Storen, 304 U. S. 307,
304 U. S. 311,
that a state tax could not be constitutionally applied to the gross
receipts derived by an Indiana corporation in interstate commerce
through the sale of its products manufactured in Indiana to
customers in other States. And, but a year ago, in
Gwin, White
& Prince v. Henneford, 305 U. S. 434,
305 U. S. 436,
305 U. S. 438,
we held invalid a state tax measured by the gross receipts from the
business of marketing fruit shipped in interstate commerce from the
production to places in other States where the sales and deliveries
were made and the proceeds collected. If the question now before us
is controlled by precedent, the result would seem to be clear.
In relation to the present transaction, it would hardly be
contended that New York could tax the transportation of the coal
from Pennsylvania to New York or a contract for that
transportation. But the movement of the coal from the one State to
the other was definitely required by the contracts of sale, and
these sales must be regarded as an essential part of the commercial
intercourse
Page 309 U. S. 64
contemplated by the commerce clause.
Gibbons v.
Ogden, 9 Wheat. 1,
22 U. S. 188. The
tax on the gross receipts of the seller from these sales was
manifestly an imposition upon the sales themselves. Whether the tax
be small or large, it is plainly, to the extent of it, a burden
upon interstate commerce, and as it is imposed immediately upon the
gross receipts from that commerce, it is a direct burden. And, as
we have often said, where what is taxed is subject to the
jurisdiction of the State, the size of the tax lies within the
discretion of the State, and not of this Court.
A. Magnano
Company v. Hamilton, 292 U. S. 40,
292 U. S. 45.
See also Alaska Fish Salting & By-Products Co. v.
Smith, 255 U. S. 44,
255 U. S.
48.
How then can the laying of such a burden upon interstate
commerce be justified? It is urged that there is a taxable event
within the State. That event is said to be the delivery of the
coal. But how can that event be deemed to be taxable by the State?
The delivery is but the necessary performance of the contract of
sale. Like the shipment from the mines, it is an integral part of
the interstate transaction. It is said that title to the coal
passes to the purchaser on delivery. But the place where the title
passes has not been regarded as the test of the interstate
character of a sale. We have frequently decided that, where a
commodity is mined or manufactured in one State and, in pursuance
of contracts of sale, is delivered for transportation to purchasers
in another State, the mere fact that the sale is f.o.b. cars in the
seller's State and the purchaser pays the freight does not make the
sale other than interstate. [
Footnote
2/4] And when, as here, the buyer in an interstate sale takes
delivery in his own
Page 309 U. S. 65
State, that delivery in completion of the sale is as properly
immune from state taxation as is the transportation to the
purchaser's dock or vessel. Moreover, even if it were possible to
sustain a state tax by reason of such delivery within the State,
there would still be no ground for sustaining a tax upon the whole
of the interstate transaction of which the delivery is only a part,
as in the case of a tax upon the entire gross receipts.
Petitioner strongly insists that in substance the tax here
should be regarded as the same as a use tax the validity of which
this Court has sustained.
Henneford v. Silas Mason Co.,
300 U. S. 577;
Southern Pacific Company v. Gallagher, 306 U.
S. 167. But, in the
Henneford case, Mr. Justice
Cardozo, in speaking for the Court, was most careful to show that
the use tax was upheld because it was imposed after interstate
commerce had come to an end. In making this distinction, the Court
clearly recognized that a tax imposed directly upon interstate
commerce would be beyond the State's power, and the tax was
sustained as one upon property which had come to rest within the
State, and, like other property, was subject to its jurisdiction.
The Court said:
"The tax is not upon the operations of interstate commerce, but
upon the privilege of use after commerce is at an end. . . . The
privilege of use is only one attribute, among many, of the bundle
of privileges that make up property or ownership."
Id., p.
300 U. S. 582.
And later, in
Puget Sound Company v. State Tax Commission,
302 U. S. 90,
302 U. S. 92,
302 U. S. 94,
Mr. Justice Cardozo, in delivering the opinion of the Court, after
showing that the business of the company, so far as it consisted of
the loading and discharge of cargoes by longshoremen subject to its
own control, was interstate or foreign commerce, concluded that the
State was "not at liberty to tax the privilege of doing it by
exacting in return therefor a percentage of the gross receipts." He
observed that "Decisions
Page 309 U. S. 66
to that effect are many and controlling." The fact that a use
tax, sustained as a tax upon an attribute of property which is
subject to the jurisdiction of the State, may have an incidental or
indirect effect upon interstate commerce, and thus, in the opinion
of commentators, may tend to discourage interstate transactions, is
certainly no excuse for going further and upholding the action of
States which, looking with a jealous eye upon the freedom of
interstate commerce, attempt to lay a direct tax upon that
commerce.
The point was clearly brought out by Mr. Justice Holmes,
speaking for the Court in
Galveston, H. & S.A. Ry. Co. v.
Texas, 210 U. S. 217,
210 U. S. 227,
when he referred to the necessity of maintaining the distinction
between taxation of property within the State, which had long been
upheld, and taxation of interstate business, which had been
condemned. He observed that,
"When a legislature is trying simply to value property, it is
less likely to attempt or to effect injurious regulation than when
it is aiming directly at the receipts from interstate
commerce."
Accordingly, a state tax upon gross receipts which included
receipts from interstate business was held invalid.
The ground most strongly asserted for sustaining the tax in the
present case is that it is nondiscriminatory. Undoubtedly a state
tax may be bad because it is so laid as to involve a hostile
discrimination against interstate commerce. But does it follow that
a State may lay a direct tax upon interstate commerce because it is
free to tax its own commerce in a similar way? Thus, a State may
tax intrastate transportation, but it may not tax interstate
transportation. The State may tax intrastate sales, [
Footnote 2/5] but can the State tax
interstate sales in order to promote its local business? It would
seem to be extraordinary
Page 309 U. S. 67
if a State could escape the restriction against direct
impositions upon interstate commerce by first laying exactions upon
its own trade and then insistent that, in order to make its local
policy completely effective, it must be allowed to lay similar
exactions upon interstate trade. That would apparently afford a
simple method for extending state power into what has hitherto been
regarded as a forbidden field. Moreover, it may or may not be in
the interest of the State to promote domestic trade in a given
commodity. The State may seek by its taxing scheme to restrict such
trade, and the mere equivalency of a tax upon domestic business
would not prevent the injurious effect upon interstate
transactions.
See A. Magnano Company v. Hamilton,
supra.
So, while recognizing that a tax discriminating against
interstate commerce is necessarily invalid, it has long been held
by this Court, in the interest of the constitutional freedom of
that commerce, that a direct tax upon it is not saved because the
same or a similar tax is laid also upon intrastate commerce. The
Court dealt specifically with that question in
Robbins v.
Shelby County Taxing District, 120 U.
S. 489,
120 U. S. 497,
saying:
"Interstate commerce cannot be taxed at all, even though the
same amount of tax should be laid on domestic commerce, or that
which is carried on solely within the state."
See also Cooney v. Mountain States Telephone Co.,
294 U. S. 384,
294 U. S.
393-394. And very recently, in
Adams Manufacturing
Co. v. Storen, supra, p.
304 U. S. 312,
where a tax on the gross receipts derived from interstate sales was
held invalid, we said explicitly:
"The opinion of the State Supreme Court stresses the generality
and nondiscriminatory character of the exaction, but it is settled
that this will not save the tax if it directly burdens interstate
commerce."
We have directed attention to a vice in imposing direct taxes
upon interstate commerce in that such taxes might
Page 309 U. S. 68
be imposed with equal right by every State which the commerce
touches. This has been observed with respect to taxes upon gross
receipts from interstate transactions. In
Western Live Stock v.
Bureau of Revenue, supra, p.
303 U. S. 256,
we said:
"The multiplication of state taxes measured by the gross
receipts from interstate transactions would spell the destruction
of interstate commerce and renew the barriers to interstate trade
which it was the object of the commerce clause to remove."
See also Gwin, White & Prince v. Henneford, supra.
But petitioner has insisted that in the present case there is no
danger or multiple taxation, in that New York puts its tax upon an
event which cannot occur in any other State. Of course, the
delivery of the coal in New York is an event which cannot occur in
another State. Just as New York cannot tax the shipment of coal
from the mines in Pennsylvania or the transshipment of the coal in
New Jersey, so neither Pennsylvania nor New Jersey can tax the
delivery in New York. Petitioner's argument misses the point as to
the danger of multiple taxation in relation to interstate commerce.
The shipment, the transshipment, and the delivery of the coal are
but parts of a unitary interstate transaction. They are integral
parts of an interstate sale. If, because of the delivery in New
York, that State can tax the gross receipts from the sale, why
cannot Pennsylvania, by reason of the shipment of the coal in that
State, tax the gross receipts there? That would not be difficult,
as the seller is a Pennsylvania corporation, and, in fact, in many,
if not in most, instances, the purchase price of the goods shipped
to New York is there received. The point is not that the delivery
in New York is an event which cannot be taxed by other States, but
that the authority of New York to impose a tax on that delivery
cannot properly be recognized without also recognizing the
authority of other States to tax
Page 309 U. S. 69
the parts of the interstate transaction which take place within
their borders. If New York can tax the delivery, Pennsylvania can
tax the shipment, and New Jersey the transshipment. And the latter
States, respectively, would be as much entitled to tax the gross
receipts from the sales as would New York. Even if it were assumed
that the gross receipts from the interstate sales could be
apportioned so that each State could tax such portion of the
receipts as could be deemed to relate to the part of the
transaction within its territory, still this would not help New
York here, as there has been no attempt at apportionment. The
taxation of the gross receipts in New York, on any appropriate view
of what pertains to the interstate sales, would seem clearly to
involve the danger of multiple taxation to which we have adverted
in recent decisions.
Doubtless much can be said as to the desirability of a
comprehensive system of taxation through the cooperation of the
Union and the States so as to avoid the differentiations which
beset the application of the commerce clause, and thus to protect
both state and national governments by a just and general scheme
for raising revenues. However important such a policy may be, it is
not a matter for this Court. We have the duty of maintaining the
immunity of interstate commerce as contemplated by the
Constitution. That immunity still remains an essential buttress of
the Union, and a free national market, so far as it can be
preserved without violence to state power over the subjects within
state jurisdiction, is not less now than heretofore a vital concern
of the national economy.
The tax as here applied is open to the same objection as a
tariff upon the entrance of the coal into the New York, or a state
tax upon the privilege of doing an interstate business, and, in my
view, it cannot be sustained
Page 309 U. S. 70
without abandoning principles long established and a host of
precedents soundly based.
MR. JUSTICE McREYNOLDS and MR. JUSTICE ROBERTS join in this
opinion.
[
Footnote 2/1]
See cases collected in
Minnesota Rate Cases,
230 U. S. 352,
230 U. S.
403-411.
[
Footnote 2/2]
See Western Live Stock v. Bureau of Revenue,
303 U. S. 250,
303 U. S.
254-257.
[
Footnote 2/3]
Minnesota Rate Cases, 230 U. S. 352,
230 U. S. 400;
State Freight Tax
Case, 15 Wall. 232;
Robbins v. Shelby County
Taxing District, 120 U. S. 489;
Philadelphia & Southern Mail S.S. Co. v. Pennsylvania,
122 U. S. 326;
Leloup v. Mobile, 127 U. S. 640;
McCall v. California, 136 U. S. 104;
Brennan v. Titusville, 153 U. S. 289;
Galveston, H. & S.A. Ry. Co. v. Texas, 210 U.
S. 217;
Western Union Telegraph Co. v. Kansas,
216 U. S. 1;
Pullman Co. v. Kansas, 216 U. S. 56;
Meyer v. Wells, Fargo & Co., 223 U.
S. 298;
Crenshaw v. Arkansas, 227 U.
S. 389;
Crew-Levick Co. v. Pennsylvania,
245 U. S. 292;
Sonneborn v. Cureton, 262 U. S. 506,
262 U. S. 515;
Fisher's Blend Station v. Tax Commission, 297 U.
S. 650,
297 U. S. 655;
Puget Sound Co. v. State Tax Commission, 302 U. S.
90;
Adams Manufacturing Co. v. Storen,
304 U. S. 307,
304 U. S. 311;
Gwin, White & Prince v. Henneford, 305 U.
S. 434,
305 U. S.
439.
[
Footnote 2/4]
Savage v. Jones, 225 U. S. 501,
225 U. S. 520;
Pennsylvania, R. Co. v. Clark Coal Co., 238 U.
S. 456,
238 U. S. 465,
238 U. S. 468;
Carter v. Carter Coal Co., 298 U.
S. 238,
298 U. S. 320;
Santa Cruz Fruit Packing Co. v. Labor Board, 303 U.
S. 453,
303 U. S.
463.
[
Footnote 2/5]
Woodruff v.
Parham, 8 Wall. 123;
Sonneborn Bros. v.
Cureton, 262 U. S. 506,
262 U. S.
515-516;
Wiloil Corp. v. Pennsylvania,
294 U. S. 169,
294 U. S.
175.