A Maryland franchise tax on railroads, measured by gross
receipts apportioned according to mileage within the State, was
challenged as invalid under the Import-Export Clause, Art. I, § 10,
cl. 2, of the Federal Constitution, to the extent that the gross
receipts by which the tax is measured include revenues derived from
the transportation of goods moving in foreign trade.
Held:
the tax is sustained.
Canton R. Co. v. Rogan, ante, p.
340 U. S. 511.
___ Md. ___, 73 A.2d 12, affirmed.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This is a companion case to
Canton R. Co. v. Rogan,
ante, p.
340 U. S. 511.
This appellant likewise challenges the validity under Art. I, § 10,
cl. 2 of the Constitution of the application of the Maryland
franchise tax
* to the
extent
Page 340 U. S. 521
that the gross receipts by which the tax is measured include
revenues derived from the transportation of goods moving in foreign
trade.
Western Maryland Railway Company is an interstate common carrier
by rail with lines in Maryland, West Virginia, and Pennsylvania. It
operates several piers in the port of Baltimore for handling
cargoes of coal, ores, and general merchandise, as well as a grain
elevator. A substantial proportion of Western Maryland's freight
traffic from and to these facilities consists of the transportation
of goods imported into or to be exported from the United
States.
The present case concerns the taxable years 1945 and 1946. For
1945, Western Maryland reported gross receipts of $33,156,236.74,
of which the State Tax Commission, pursuant to the statutory
formula, apportioned $13,219,822.62 to Maryland. For 1946, the
amounts were $30,844,132.74 and $12,322,817.41, respectively. In
subsequent amended returns, Western Maryland excluded from taxable
receipts the sums of $2,505,322.58 for 1945 and.$5,405,559.44 for
1946. It claimed that these amounts represented revenues from the
transportation over its lines of exports and imports, and were
therefore beyond the state's power to tax. After a hearing, the
Commission rejected this contention. Its assessment was sustained,
and the case is here on appeal.
What we have said in
Canton R. Co. v. Rogan, supra, is
dispositive of this case. The present facts illustrate how wide a
zone of tax immunity would be created if the contrary holding were
made in the
Canton R. Co. case. There, we were dealing
with the handling of exports and imports within a port. Here, we
have transportation of exports and imports to and from the port. If
Maryland were required to grant tax immunity to the services
involved in getting the exports to the port and the imports to
their destination, so would any other
Page 340 U. S. 522
State. The ultimate impact of such a holding is difficult to
measure, since manifold services are involved in the movement of
exports and imports within the country. Problems of this nature,
like many problems in the law, involve the drawing of lines. So far
as taxes on activities connected with bringing exports to or
imports from the ship are concerned, we think the line must be
drawn at the water's edge. Whether loading and unloading would be
exempt is a question we reserve.
Affirmed.
THE CHIEF JUSTICE took no part in the consideration or decision
of this case.
[For opinion of MR. JUSTICE JACKSON, joined b y MR. JUSTICE
FRANKFURTER, reserving judgment in this case and in No. 96,
Canton R. Co. v. Rogan, see ante, p.
340 U. S.
511.]
* Art. 81, §§ 94 1/2 and 95; Md.Ann.Code 1943 Supp.