Georgia's assessment of a nondiscriminatory
ad valorem
property tax against petitioner's inventory of imported tires
maintained at its wholesale distribution warehouse in the State
held not to be within the Import-Export Clause's
prohibition against States laying "any Imposts or Duties on
Imports."
Low v. Austin,
13 Wall. 29, overruled. Pp.
423 U. S.
281-302.
(a) In the history of the Import-Export Clause, whose purposes
were to commit to the Federal Government the exclusive power to
regulate foreign commerce and the exclusive right to all revenues
from imposts and duties on imports, and to assure the free flow of
imported goods among the States by prohibiting the taxing of goods
merely flowing through seaboard States to other States, there is
nothing to suggest that a nondiscriminatory
ad valorem
property tax imposed on imported goods that are no longer in import
transit was the type of exaction that was regarded as objectionable
by the Framers of the Constitution. Pp.
423 U. S.
283-286.
(b) Such nondiscriminatory property taxation cannot affect the
Federal Government's exclusive regulation of foreign commerce,
since such a tax does not fall on imports as such because of their
place of origin, and it cannot be used to create special protective
tariffs or particular preferences for certain domestic goods or be
applied selectively to encourage or discourage any importation in a
manner inconsistent with federal regulation. P.
423 U. S.
286.
(c) Nor will such taxation deprive the Federal Government of its
exclusive right to all revenues from imposts and duties on imports,
since that right, by definition, only extends to revenues from
exactions of a particular category. Unlike imposts and duties,
which are essentially taxes on the commercial privilege of bringing
goods into a country, such property taxes are taxes by which a
State apportions the cost of such services as police and fire
protection among the beneficiaries according to their respective
wealth, and there is no reason why an importer should not share
Page 423 U. S. 277
these costs with his competitors handling domestic goods. Pp.
423 U. S.
286-288.
(d) Nor does such nondiscriminatory property taxation interfere
with the free flow of imported goods among the States. Importers of
goods destined for inland States can easily avoid such taxes by
using modern transportation methods, and to the extent such
taxation may increase the cost of goods purchased by "inland"
consumers, the cost, which is the
quid pro quo for
benefits actually conferred by the taxing State, is one that
ultimate consumers should pay for. The prevention of exactions that
are no more than transit fees that could otherwise be imposed due
to the peculiar geographical situation of certain States may be
secured by prohibiting the assessment of even nondiscriminatory
property taxes on goods that are still in import transit. Pp.
423 U. S.
288-290.
(e) The Import-Export Clause, while not in terms excepting
nondiscriminatory taxes with some impact on imports or exports, is
not couched in terms of a broad prohibition of every "tax," but
only prohibits States from laying "Imposts or Duties," which
historically connoted exactions directed only at imports or
commercial activity as such. Pp.
423 U. S.
290-293.
(f) Since prohibition of nondiscriminatory
ad valorem
property taxation would not further the objectives of the
Import-Export Clause, only the clearest constitutional mandate
should lead to a condemnation of such taxation, and the Clause's
terminology -- "Imposts or Duties" -- is sufficiently ambiguous as
not to warrant a presumption that it was intended to embrace
taxation that does not create the evils the Clause was specifically
intended to eliminate. Pp.
423 U. S. 293-294.
233 Ga. 712,
214 S.E.2d
349, affirmed.
BRENNAN, J., delivered the opinion of the Court, in which
BURGER, C.J., and STEWART, MARSHALL, BLACKMUN, POWELL, and
REHNQUIST, JJ., joined. WHITE, J., filed an opinion concurring in
the judgment,
post, p.
423 U. S. 302.
STEVENS, J., took no part in the consideration or decision of the
case.
Page 423 U. S. 278
MR. JUSTICE BRENNAN delivered the opinion of the Court.
Respondents, the Tax Commissioner and Tax Assessors of Gwinnett
County, Ga. assessed
ad valorem property taxes against
tires and tubes imported by petitioner from France and Nova Scotia
that were included on the assessment dates in an inventory
maintained at its wholesale distribution warehouse in the county.
Petitioner brought this action for declaratory and injunctive
relief in the Superior Court of Gwinnett County, alleging that,
with the exception of certain passenger tubes that had been removed
from the original shipping cartons, [
Footnote 1] the
ad valorem property taxes
assessed against
Page 423 U. S. 279
its inventory of imported tires and tubes were prohibited by
Art. I, § 10, cl. 2, of the Constitution, which provides in
pertinent part:
"No State shall, without the Consent of the Congress, lay any
Imposts or Duties on Imports or Exports, except what may be
absolutely necessary for executing its inspection Laws. . . ."
After trial, the Superior Court granted the requested
declaratory and injunctive relief. On appeal, the Supreme Court of
Georgia affirmed in part and reversed in part, agreeing that the
tubes in the corrugated shipping cartons were immune from
ad
valorem taxation, but holding that the tires had lost their
status as imports and had become subject to such taxation because
they had been mingled with other tires imported in bulk, sorted,
and arranged for sale. 233 Ga. 712,
214 S.E.2d 349
(1975). We granted certiorari, 422 U.S. 1040 (1975). The only
question presented is whether the Georgia Supreme Court was correct
in holding that the tires were subject to the
ad valorem
property tax. [
Footnote 2] We
affirm without addressing the question whether the Georgia Supreme
Court was correct in holding that the tires had lost their status
as imports. We hold that, in any event, Georgia's assessment of a
nondiscriminatory
ad valorem property tax against the
imported tires is not within the constitutional prohibition against
laying "any Imposts or Duties on Imports . . . ," and that, insofar
as
Low v. Austin,
13 Wall. 29 (1872), is to the contrary, that decision is
overruled.
I
Petitioner, a New York corporation qualified to do business in
Georgia, operates as an importer and wholesale
Page 423 U. S. 280
distributor in the United States of automobile and truck tires
and tubes manufactured in France and Nova Scotia by Michelin Tires,
Ltd. The business is operated from distribution warehouses in
various parts of the country. Distribution and sale of tires and
tubes from the Gwinnett County warehouse is limited to the 250-300
franchised dealers with whom petitioner does all of its business in
six southeastern States. Some 25% of the tires and tubes are
manufactured in and imported from Nova Scotia, and are brought to
the United States in tractor-driven, over-the-road trailers packed
and sealed at the Nova Scotia factory. The remaining 75% of the
imported tires and tubes are brought to the United States by sea
from France and Nova Scotia in sea vans packed and sealed at the
foreign factories. Sea vans are essentially over-the-road trailers
from which the wheels are removed before being loaded aboard ship.
Upon arrival of the ship at the United States port of entry, the
vans are unloaded, the wheels are replaced, and the vans are
tractor-hauled to petitioner's distribution warehouse after
clearing customs upon payment of a 4% import duty.
The imported tires, each of which has its own serial number, are
packed in bulk into the trailers and vans, without otherwise being
packaged or bundled. They lose their identity as a unit, however,
when unloaded from the trailers and vans at the distribution
warehouse. When unloaded, they are sorted by size and style,
without segregation by place of manufacture, stacked on wooden
pallets each bearing four stacks of five tires of the same size and
style, and stored in pallet stacks of three pallets each. This is
the only processing required or performed to ready the tires for
sale and delivery to the franchised dealers.
Sales of tires and tubes from the Gwinnett County
Page 423 U. S. 281
distribution warehouse to the franchised dealers average
4,000-5,000 pounds per sale. Orders are filled without regard to
the shipments in which the tires and tubes arrived in the United
States or the place of their manufacture. Delivery to the
franchised dealers is by common carrier or customer pickup.
II
Both Georgia courts addressed the question whether, without
regard to whether the imported tires had lost their character as
imports, Georgia's nondiscriminatory
ad valorem tax fell
within the constitutional prohibition against the laying by States
of "any Imposts or Duties on Imports. . . ." The Superior Court
expressed strong doubts that the
ad valorem tax fell
within the prohibition, but concluded that it was bound by this
Court's decisions to the contrary. The Superior Court stated:
"While it would seem that, where said tires and tubes have been
placed in [petitioner's] general inventory for the purpose of sale
to its customers, . . . such inventory should be taxed to the same
extent as any other inventory of any other business in Gwinnett
County, and the Court would so hold if supported by the law, it is
clear that, where the property is imported for resale, it retains
its import exemption from
ad valorem taxes until after
such sale,"
"[for] [t]he immunity of imported goods from local taxation
includes immunity from local
ad valorem property taxes;
Hooven & Allison Company v. Evatt, 324 U. S.
652;
Low v. Austin, 80 U. S.
29."
Pet. for Cert., App. A-4, A-3. Similarly, the Georgia Supreme
Court stated, 233 Ga. at 722, 214 S.E.2d at 355:
"[Petitioners] argue that an annual
ad valorem tax is
not a tax on imports within the meaning of
Page 423 U. S. 282
the federal constitutional provision. We reject this argument on
the basis of the above-cited authority. [
E.g., Low v.
Austin.]"
Low v. Austin, supra, is the leading decision of this
Court holding that the States are prohibited by the Import-Export
Clause from imposing a nondiscriminatory
ad valorem
property tax on imported goods until they lose their character as
imports and become incorporated into the mass of property in the
State. The Court there reviewed a decision of the California
Supreme Court that had sustained the constitutionality of
California's nondiscriminatory
ad valorem tax on the
ground that the Import-Export Clause only prohibited taxes upon the
character of the goods as imports, and therefore did not prohibit
nondiscriminatory taxes upon the goods as property.
See 13
Wall. at 331. This Court reversed on its reading of the seminal
opinion construing the Import-Export Clause,
Brown v.
Maryland, 12 Wheat. 419 (1827), as holding that
"[w]hilst retaining their character as imports, a tax upon them, in
any shape, is within the constitutional prohibition." 13 Wall. at
80 U. S. 34.
Scholarly analysis has been uniformly critical of
Low v.
Austin. It is true that Mr. Chief Justice Marshall, speaking
for the Court in
Brown v. Maryland, supra at
25 U. S. 442,
said that
"while [the thing imported remains] the property of the
importer, in his warehouse, in the original form or package in
which it was imported, a tax upon it is too plainly a duty on
imports to escape the prohibition in the constitution."
Commentators have uniformly agreed that
Low v. Austin
misread this dictum in holding that the Court in
Brown
included nondiscriminatory
ad valorem property taxes among
prohibited "imposts" or "duties," for the contrary conclusion is
plainly to be inferred from consideration of the specific abuses
which led the Framers to include the Import-Export
Page 423 U. S. 283
Clause in the Constitution.
See, e.g., Powell, State
Taxation of Imports -- When Does an Import Cease to Be an Import?,
58 Harv.L.Rev. 858 (1945); Note, The Supreme Court, 1958 Term, 73
Harv.L.Rev. 126, 176 (1959); Early & Weitzman, A Century of
Dissent: The Immunity of Goods Imported for Resale From
Nondiscriminatory State Personal Property Taxes, 7 Sw.U.L.Rev. 247
(1975); Dakin, The Protective Cloak of the Export-Import Clause:
Immunity for the Goods or Immunity for the Process?, 19 La.L.Rev.
747 (1959).
Our independent study persuades us that a nondiscriminatory
ad valorem property tax is not the type of state exaction
which the Framers of the Constitution or the Court in
Brown had in mind as being an "impost" or "duty," and that
Low v. Austin's reliance upon the
Brown dictum to
reach the contrary conclusion was misplaced.
III
One of the major defects of the Articles of Confederation, and a
compelling reason for the calling of the Constitutional Convention
of 1787, was the fact that the Articles essentially left the
individual States free to burden commerce both among themselves and
with foreign countries very much as they pleased. Before 1787, it
was commonplace for seaboard States with port facilities to derive
revenue to defray the costs of state and local governments by
imposing taxes on imported goods destined for customers in other
States. At the same time, there was no secure source of revenue for
the central government. James Madison, in his Preface to Debates in
the Convention of 1787, 3 M. Farrand, The Records of the Federal
Convention of 1787, p. 542 (1911) (hereafter Farrand), provides a
graphic description of the situation:
"The other source of dissatisfaction was the peculiar situation
of some of the States which, having no
Page 423 U. S. 284
convenient ports for foreign commerce, were subject to be taxed
by their neighbors, thro whose ports, their commerce was carryed
on. New Jersey, placed between Phila. & N. York, was likened to
a Cask tapped at both ends, and N. Carolina between Virga. & S.
Carolina to a patient bleeding at both Arms. The Articles of
Confederation provided no remedy for the complaint, which produced
a strong protest on the part of N. Jersey and never ceased to be a
source of dissatisfaction & discord until the new Constitution
superseded the old. [
Footnote
3]"
And further,
id. at 546-548:
"Rh. I. was the only exception to a compliance with the
recommendation from Annapolis [to have a Const. Convention], well
known to have been swayed by an obdurate adherence to an advantage
which her position gave her of taxing her neighbors thro' their
consumption of imported supplies, an advantage which it was
foreseen would be taken from her by a revisal of the Articles of
Confederation."
"
* * * *"
"The same want of a general power over Commerce
Page 423 U. S. 285
led to an exercise of this power separately by the States, wch
not only proved abortive, but engendered rival, conflicting and
angry regulations. Besides the vain attempts to supply their
respective treasuries by imposts, which turned their commerce into
the neighbouring ports, and to coerce a relaxation of the British
monopoly of the W. Indn. navigation, which was attempted by Virga.
. . . the States having ports for foreign commerce, taxed irritated
the adjoining States, trading thro' them, as N.Y. Pena. Virga.
& S-Carolina."
The Framers of the Constitution thus sought to alleviate three
main concerns by committing sole power to lay imposts and duties on
imports in the Federal Government, with no concurrent state power:
the Federal Government must speak with one voice when regulating
commercial relations with foreign governments, and tariffs, which
might affect foreign relations, could not be implemented by the
States consistently with that exclusive power; [
Footnote 4] import revenues were to be the major
source of revenue of the Federal Government, and should not be
diverted to the States; [
Footnote
5] and harmony among the States might be disturbed unless
seaboard States, with their crucial ports of entry, were prohibited
from levying taxes on citizens of other States by taxing goods
merely
Page 423 U. S. 286
flowing through their ports to the other States not situated as
favorably geographically. [
Footnote
6]
Nothing in the history of the Import-Export Clause even remotely
suggests that a nondiscriminatory
ad valorem property tax
which is also imposed on imported goods that are no longer in
import transit was the type of exaction that was regarded as
objectionable by the Framers of the Constitution. For such an
exaction, unlike discriminatory state taxation against imported
goods as imports, was not regarded as an impediment that severely
hampered commerce or constituted a form of tribute by seaboard
States to the disadvantage of the other States.
It is obvious that such nondiscriminatory property taxation can
have no impact whatsoever on the Federal Government's exclusive
regulation of foreign commerce, probably the most important purpose
of the Clause's prohibition. By definition, such a tax does not
fall on imports as such because of their place of origin. It cannot
be used to create special protective tariffs or particular
preferences for certain domestic goods, and it cannot be applied
selectively to encourage or discourage any importation in a manner
inconsistent with federal regulation.
Nor will such taxation deprive the Federal Government of the
exclusive right to all revenues from imposts and duties on imports
and exports, since that right, by definition, only extends to
revenues from exactions of a particular category; if
nondiscriminatory
ad valorem taxation is not in that
category, it deprives the Federal
Page 423 U. S. 287
Government of nothing to which it is entitled. Unlike imposts
and duties, which are essentially taxes on the commercial privilege
of bringing goods into a country, such property taxes are taxes by
which a State apportions the cost of such services as police and
fire protection among the beneficiaries according to their
respective wealth; there is no reason why an importer should not
bear his share of these costs along with his competitors handling
only domestic goods. The Import-Export Clause clearly prohibits
state taxation based on the foreign origin of the imported goods,
but it cannot be read to accord imported goods preferential
treatment that permits escape from uniform taxes imposed without
regard to foreign origin for services which the State supplies.
See, e.g., May v. New Orleans, 178 U.
S. 496,
178 U. S.
502-504,
178 U. S.
507-509 (1900). It may be that such taxation could
diminish federal impost revenues to the extent its economic burden
may discourage purchase or importation of foreign goods. The
prevention or avoidance of this incidental effect was not, however,
even remotely an objective of the Framers in enacting the
prohibition. Certainly the Court in
Brown did not think
so.
See 12 Wheat. at
25 U. S.
443-444. Taxes imposed after an initial sale, after the
breakup of the shipping packages, or the moment goods imported for
use are committed to current operational needs are also all likely
to have an incidental effect on the volume of goods imported; yet
all are permissible.
See, e.g., 75 U. S. The
Mayor, 8 Wall. 110 (1869) (taxation after initial sale);
May v. New Orleans, supra, (taxation after breakup of
shipping packages);
Youngstown Sheet & Tube Co. v.
Bowers, 358 U. S. 534
(1959) (taxation of goods committed to current operational needs by
manufacturer). What those taxes and nondiscriminatory
ad
valorem property taxes share, it should be emphasized, is
Page 423 U. S. 288
the characteristic that they cannot be selectively imposed and
increased so as substantially to impair or prohibit importation.
[
Footnote 7]
Finally, nondiscriminatory
ad valorem property taxes do
not interfere with the free flow of imported goods among the
States, as did the exactions by States under the Articles of
Confederation directed solely at imported goods. Indeed, importers
of goods destined for inland States can easily avoid even those
taxes in today's world. Modern transportation methods such as air
freight and containerized packaging, and the development of
railroads and the Nation's internal waterways, enable importation
directly into the inland States. Petitioner, for example, operates
other distribution centers from wholesale warehouses in inland
States. Actually, a quarter of the tires distributed from
petitioner's Georgia warehouse are imported interstate directly
from Canada. To be sure, allowance of nondiscriminatory
ad
valorem property taxation may increase the cost of goods
purchased by "inland" consumers. [
Footnote 8] But, as already noted,
Page 423 U. S. 289
such taxation is the
quid pro quo for benefits actually
conferred by the taxing State. There is no reason why local
taxpayers should subsidize the service used by the importer;
ultimate consumers should pay for such services as police and fire
protection accorded the goods just as much as they should pay
transportation costs associated with those goods. [
Footnote 9] An evil to be prevented
Page 423 U. S. 290
by the Import-Export Clause was the levying of taxes which could
only be imposed because of the peculiar geographical situation of
certain States that enabled them to single out goods destined for
other States. In effect, the Clause was fashioned to prevent the
imposition of exactions which were no more than transit fees on the
privilege of moving through a State. [
Footnote 10] A nondiscriminatory
ad valorem
property tax obviously stands on a different footing, and to the
extent there is any conflict whatsoever with this purpose of the
Clause, it may be secured merely by prohibiting the assessment of
even nondiscriminatory property taxes on goods which are merely in
transit through the State when the tax is assessed. [
Footnote 11]
Admittedly, the wording of the prohibition of the Import-Export
Clause does not, in terms, except nondiscriminatory taxes with some
impact on imports or exports. But just as clearly, the Clause is
not written in terms of a broad prohibition of every "tax." The
prohibition is only against States laying "Imposts or Duties" on
"Imports." By contrast, Congress is empowered to "lay and collect
Taxes, Duties, Imposts, and Excises," which plainly lends support
to a reading of the Import-Export Clause as not prohibiting every
exaction or "tax" which falls in some measure on imported goods.
Indeed, Professor Crosskey makes a persuasive demonstration
Page 423 U. S. 291
that the words "imposts" and "duties" as used in 1787 had
meanings well understood to be exactions upon imported goods as
imports. "Impost," were like customs duties, that is, charges
levied on imports at the time and place of importation. "Duties"
was a broader term embracing excises as well as customs duties, and
probably only capitation, land, and general property exactions were
known by the term "tax", rather than the term "duty." 1 W.
Crosskey, Politics and the Constitution in the History of the
United States 296-297 (1953). [
Footnote 12] The characteristic common to both
"imposts"
Page 423 U. S. 292
and "duties" was that they were exactions directed at imports or
commercial activity as such and, as imposed by the seaboard States
under the Articles of Confederation,
Page 423 U. S. 293
were purposefully employed to regulate interstate and foreign
commerce and tax States situated less favorably geographically.
In any event, since prohibition of nondiscriminatory
ad
valorem property taxation would not further the objectives of
the Import-Export Clause, only the clearest constitutional mandate
should lead us to condemn such taxation. The terminology employed
in the Clause -- "Imposts or Duties" -- is sufficiently ambiguous
that we decline to presume it was intended to embrace taxation
Page 423 U. S. 294
that does not create the evils the Clause was specifically
intended to eliminate.
IV
The Court in
Low v. Austin nevertheless expanded the
prohibition of the Clause to include nondiscriminatory
ad
valorem property taxes, and did so with no analysis, but with
only the statement that
Brown v. Maryland had marked the
line "where the power of Congress over the goods imported ends, and
that of the State begins, with as much precision as the subject
admits." 13 Wall. at
80 U. S. 32. But
the opinion in
Brown v. Maryland cannot properly be read
to propose such a broad definition of "imposts" or "duties." The
tax there held to be prohibited by the Import-Export Clause was
imposed under a Maryland statute that required importers of foreign
goods, and wholesalers selling the same by bale or package, to
obtain a license and pay a $50 fee therefor, subject to certain
forfeitures and penalties for noncompliance. The importers
contested the validity of the statute, arguing that the license was
a "palpable evasion" of the Import-Export Clause because it was
essentially equivalent to a duty on imports. They contended that
asserted differences between the license fee and a tax directly
imposed on imports were more formal than substantial: the privilege
of bringing the goods into the country could not realistically be
divorced from the privilege of selling the goods, since the power
to prohibit sale would be the power to prohibit importation, 12
Wheat. at 422 [argument of counsel -- omitted]; the payment of the
tax at the time of sale, rather than at the time of importation,
would be irrelevant, since it would still be a tax on the same
privilege at either time,
id. at 423 [argument of counsel
-- omitted]; and the fact that a license operates on the person of
the importer while the duty operates on the goods themselves is
irrelevant, in that either levy would directly increase the cost of
the goods,
ibid. Since the
Page 423 U. S. 295
power to impose a license on importers would also entail a power
to price them out of the market or prohibit them entirely, the
importers concluded that such a power must be repugnant to the
exclusive federal power to regulate foreign commerce,
id.
at 423-425 [argument of counsel -- omitted].
The Attorney General of Maryland, Roger Taney, later Chief
Justice, defended the constitutionality of Maryland's law. He
argued that the fee was not a prohibited "impost" or "duty,"
because the license fee was not a tax upon the imported goods, but
on the importers, a tax upon the occupation, and nothing more, and
the Import-Export Clause prohibited only exactions on the right of
importation, and not an exaction upon the occupation of importers.
He contended that, in any event, the Clause, if not read as
prohibiting only exactions on the right of importation, but, more
broadly, as also prohibiting exactions on goods imported, would
necessarily immunize imports from all state taxation at any time.
Moreover, if the privilege of selling is a concomitant of the
privilege of importing, the argument proved too much; the importer
could sell free of regulation by the States in any place and in any
manner, even importing free of regulations concerning the bringing
of noxious goods into the city, or auctioning the goods in public
warehouses, or selling at retail or as a traveling peddler,
activities that had traditionally been subject to state regulation
and taxation.
The Court in
Brown refused to define "imposts" or
"duties" comprehensively, since the Maryland statute presented only
the question
"whether the legislature of a State can constitutionally require
the importer of foreign articles to take out a license from the
State, before he shall be permitted to sell a bale or package so
imported."
12 Wheat. at
25 U. S. 436.
However, in holding that the Maryland license fee was within
prohibited "imposts,
Page 423 U. S. 296
or duties on imports . . . ," the Court significantly
characterized an impost or duty as "a custom or a tax levied on
articles brought into a country,"
id. at
25 U. S. 437,
although also holding that, while normally levied before the
articles are permitted to enter, the exactions are no less within
the prohibition if levied upon the goods as imports after entry;
since "imports" are the goods imported, the prohibition of imposts
or duties on "imports" was more than a prohibition of a tax on the
act of importation; it "extends to a duty levied after [the thing
imported] has entered the country,"
id. at
25 U. S. 438.
And since the power to prohibit sale of an article is the power to
prohibit its introduction into the country, the privilege of sale
must be a concomitant of the privilege of importation, and licenses
on the right to sell must therefore also fall within the
constitutional prohibition.
Id. at
25 U. S.
439.
Taney's argument was persuasive, however, to the extent that the
Court was prompted to declare that
"the words of the prohibition ought not to be pressed to their
utmost extent; . . . in our complex system, the object of the
powers conferred on the government of the Union, and the nature of
the often conflicting powers which remain in the States, must
always be taken into view. . . . [T]here must be a point of time
when the prohibition ceases, and the power of the State to tax
commences. . . ."
Id. at
25 U. S.
441.
The Court stated that there were two situations in which the
prohibition would not apply. One was the case of a state tax levied
after the imported goods had lost their status as imports. The
Court devised an evidentiary tool, the "original package" test, for
use in making that determination. The formula was:
"It is sufficient for the present to say, generally, that, when
the importer has so acted upon the thing imported,
Page 423 U. S. 297
that it has become incorporated and mixed up with the mass of
property in the country, it has, perhaps, lost its distinctive
character as an import, and has become subject to the taxing power
of the State; but while remaining the property of the importer, in
his warehouse, in the original form or package in which it was
imported, a tax upon it is too plainly a duty on imports to escape
the prohibition in the constitution."
Id. at
25 U. S.
441-442.
"It is a matter of hornbook knowledge that the original package
statement of Justice Marshall was an illustration, rather than a
formula, and that its application is evidentiary, and not
substantive. . . ."
Galveston v. Mexican Petroleum Corp., 15 F.2d 208
(SD Tex.1926).
The other was the situation of particular significance to our
decision of this case, that is, when the particular state exaction
is not a prohibited "impost" or "duty." The Court first stated its
view of the characteristics of prohibited state levies. It said
that the obvious clue was the express exception of the
Import-Export Clause authorizing "imposts or duties" that "may be
absolutely necessary for executing [the State's] inspection Laws."
"[T]his exception," said the Court,
"in favour of duties for the support of inspection laws goes far
in proving that the framers of the constitution classed taxes of
a similar character with those imposed for the purposes of
inspection, with duties on imports and exports, and supposed them
to be prohibited."
12 Wheat. at
25 U. S. 438
(emphasis supplied). The characteristic of the prohibited levy, the
Court said later in the opinion -- illustrated by the Maryland
license tax -- was that
"the tax intercepts the import,
as an import, in its
way to become incorporated with the general mass of property, and
denies it the privilege of becoming so incorporated until it shall
have contributed to the revenue of the State."
Id. at
25 U. S. 443
(emphasis
Page 423 U. S. 298
supplied). The Court illustrated the kinds of state exactions
that, in its view, fell without the prohibition as examples of
neutral and nondiscriminatory taxation: a tax on itinerant
peddlers, a service charge for the use of a public auctioneer, a
property tax on plate or furniture personally used by the importer.
These could not be considered within the constitutional
prohibition, because they were imposed without regard to the origin
of the goods taxed.
Id. at
25 U. S. 443,
25 U. S. 444.
In contrast, the Maryland exaction in question was a license fee
which singled out imports, and therefore was prohibited b cause
"the tax intercepts the import,
as an import, in its way
to become incorporated with the general mass of property."
Id. at
25 U. S. 443.
(Emphasis supplied.)
Thus, it is clear that the Court's view in
Brown was
that merely because certain actions taken by the importer on his
imported goods would so mingle them with the common property within
the State as to "lose their distinctive character as imports" and
render them subject to the taxing power of the State, did not mean
that, in the absence of such action, no exaction could be imposed
on the goods. Rather, the Court clearly implied that the
prohibition would not apply to a state tax that treated imported
goods in their original packages no differently from the "common
mass of property in the country"; that is, treated it in a manner
that did not depend on the foreign origins of the goods.
Despite the language and objectives of the Import-Export Clause,
and despite the limited nature of the holding in
Brown v.
Maryland, the Court in
Low v. Austin ignored the
warning that the boundary between the power of States to tax
persons and property within their jurisdictions and the limitations
on the power of the States to impose imposts or duties with respect
to "imports" was a subtle and difficult line which
Page 423 U. S. 299
must be drawn as the cases arise.
Low v. Austin also
ignored the cautionary remark that, for those reasons, it "might be
premature to state any rule as being universal in its application."
12 Wheat. at
25 U. S. 441.
Although it was "sufficient" in the context of Maryland's license
tax on the right to sell imported goods to note that a tax imposed
directly on imported goods which have not been acted upon in any
way would clearly fall within the constitutional prohibition, that
observation did not apply, as the foregoing analysis indicates, to
a state tax which treated those same goods without regard to the
fact of their foreign origin.
Low v. Austin compounded the error in misreading the
Brown opinion by the further error of misreading the views
of Mr. Chief Justice Taney as expressed in his opinion in the
License Cases,
5 How. 504 (1847) (six Justices wrote separately in the cases). As
already observed, when the Chief Justice was Attorney General of
Maryland, he argued
Brown v. Maryland for the State. He
had argued that the Maryland license fee requirement fell upon the
importer, not the imported goods, and therefore fell without the
Import-Export Clause's prohibition against imposts or duties on
"imports." In the
License Cases, he observed that
"further and more mature reflection has convinced me that the
rule laid down [in
Brown v. Maryland] is a just and safe
one, and perhaps the best that could have been adopted for
preserving the right of the United States on the one hand, and of
the States on the other, and preventing collision between them. The
question, I have already said, was a very difficult one for the
judicial mind. In the nature of things, the line of division is in
some degree vague and indefinite, and I do not see how it could be
drawn more accurately and correctly, or more in harmony with the
obvious intention and object of this provision in the
Page 423 U. S. 300
constitution. Indeed, goods imported, while they remain in the
hands of the importer, in the form and shape in which they were
brought into the, country, can in no just sense be regarded as a
part of that mass of property in the State usually taxed for the
support of the State government."
5 How. at
46 U. S.
575.
Low v. Austin quoted this excerpt, 13 Wall. at
80 U. S. 33-34,
as supporting the holding,
id. at
80 U. S. 34, that
"a tax upon [imported goods], in any shape, is within the
constitutional prohibition." But Mr. Chief Justice Taney said much
more in his opinion in the
License Cases, and what he said
further makes crystal clear that the prohibition applied only to
state exactions upon imports as imports and did not apply to
nondiscriminatory
ad valorem property taxes. For,
continuing his analysis in the very paragraph from which
Low v.
Austin excerpted only a part, he concluded:
"A tax in any shape . . . cannot be done directly, in the shape
of a
duty on imports, for that is expressly prohibited.
And as it cannot be done directly, it could hardly be a just and
sound construction of the constitution which would enable a State
to accomplish precisely the same thing under another name, and in a
different form."
5 How. at
46 U. S. 576
(emphasis supplied). The Chief Justice then went on to distinguish
an exaction upon imports as imports from property taxes
indiscriminately applied to all owners of property, stating,
ibid.:
"Undoubtedly a State may impose a tax upon its citizens in
proportion to the amount they are respectively worth;
and the
importing merchant is liable to this assessment like any other
citizen, and is chargeable according to the amount of his property,
whether it consists of money engaged in trade, or of imported goods
which he proposes to sell, or any other property of which he
is the owner.
Page 423 U. S. 301
But a tax of this description stands upon a very different
footing from a tax on the thing imported while it remains a part of
foreign commerce and is not introduced into the general mass of
property in the State."
(Emphasis supplied.)
Thus, Mr. Chief Justice Taney's opinion is authority, precisely
contrary to the reading of
Low v. Austin, that
nondiscriminatory
ad valorem property taxes are not
prohibited by the Import-Export Clause.
It follows from the foregoing that
Low v. Austin was
wrongly decided. That decision therefore must be, and is,
overruled. [
Footnote 13]
Page 423 U. S. 302
V
Petitioner's tires in this case were no longer in transit. They
were stored in a distribution warehouse from which petitioner
conducted a wholesale operation, taking orders from franchised
dealers and filling them from a constantly replenished inventory.
The warehouse was operated no differently than would be a
distribution warehouse utilized by a wholesaler dealing solely in
domestic goods, and we therefore hold that the nondiscriminatory
property tax levied on petitioner's inventory of imported tires was
not interdicted by the Import-Export Clause of the Constitution.
The judgment of the Supreme Court of Georgia is accordingly
Affirmed.
MR. JUSTICE STEVENS took no part in the consideration or
decision of this case.
[
Footnote 1]
Petitioner's complaint conceded the taxability of certain
passenger tubes that had been removed from the original shipping
cartons. These had a value of $633.92 on the assessment date
January 1, 1972, and of $664.22 on the assessment date January 1,
1973. The tax for 1972 on the tubes was $8.03 and for 1973 was
$8.73.
[
Footnote 2]
The respondents did not cross-petition from the affirmance of
the holding of the Superior Court that the tubes in the corrugated
shipping cartons were immune from the tax, and that holding is
therefore not before us for review.
[
Footnote 3]
Madison noted the States' aversion to the transfer of power to a
central government
"notwithstanding the urgent demands of the Federal Treasury, the
glaring inadequacy of the authorized mode of supplying it, the
rapid growth of anarchy in the Fedl. System, and the animosity
kindled among its members by their conflicting regulations."
3 Farrand 544.
See also, e.g., 1
id. at 19
(Mr. Randolph's comments concerning defects of Articles of
Confederation);
id. at 462 (Mr. Ghorum, in explaining why
small States should not object to the formation of the Union,
notes: "Should a separation of the States take place, the fate of
N. Jersey wd. be worst of all. She has no foreign commerce &
can have but little. Pa. & N. York will continue to levy taxes
on her consumption"); 3
id. at 328-329 (Mr. Madison's
remarks during debate at the Virginia Convention).
[
Footnote 4]
See, e.g., 25 U. S.
Maryland, 12 Wheat. 419,
25 U. S. 439
(1827);
Cook v. Pennsylvania, 97 U. S.
566,
97 U. S. 574
(1878);
Youngstown Sheet & Tube Co. v. Bowers,
358 U. S. 534,
358 U. S.
555-556 (1959) (Frankfurter, J., dissenting); The
Federalist Nos. 11 (Hamilton), 12 (Hamilton), 42 (Madison), 44
(Madison); 2 Farrand 135, 157-158, 169 (notes of Committee of
Detail);
id. at 441; 3
id. at 520-521 (letter of
James Madison to Professor Davis);
id. at 547-548.
[
Footnote 5]
See, e.g., Brown v. Maryland, supra at
25 U. S. 439;
Youngstown Sheet & Tube Co. v. Bowers, supra at
358 U. S. 556
(Frankfurter, J., dissenting); The Federalist No. 12.
[
Footnote 6]
See, e.g., Brown v. Maryland, supra at
25 U. S. 440;
Cook v. Pennsylvania, supra at 574;
Youngstown Sheet
& Tube Co. v. Bowers, supra at 545;
id. at
97 U. S.
556-557 (Frankfurter, J., dissenting); 2 Farrand
441-442, 589; 3
id. at 519 (letter of James Madison to
Professor Davis).
[
Footnote 7]
Of course, discriminatory taxation in such circumstances is not
inconceivable. For example, a State could pass a law which only
taxed the retail sale of imported goods, while the retail sale of
domestic goods was not taxed. Such a tax, even though operating
after an "initial sale" of the imports would, of course, be
invalidated as a discriminatory imposition that was, in practical
effect, an impost. Nothing in the opinion in
Brown v.
Maryland should suggest otherwise. The Court in
Brown
merely presumed that at these later stages of commercial activity,
state impositions would not be discriminatory. But merely because
Brown would have authorized a nondiscriminatory charge on
even an importer's use of the services of a public auctioneer,
see 12 Wheat. at
25 U. S. 443,
does not mean that it would have disapproved the holding of
Cook v. Pennsylvania, 97 U. S. 66
(1878), which invalidated a tax on the sale of goods by auction
that discriminated against foreign goods.
[
Footnote 8]
Of course, depending on the relevant competition from domestic
goods, an importer may be forced to absorb some of these
ad
valorem property assessments, rather than passing them on to
consumers.
[
Footnote 9]
Cooley v. Board of Wardens of
Port of Philadelphia, 12 How. 299 (1852), upheld
pilotage fees imposed by the city of Philadelphia. It expressly
rejected the argument that these fees were prohibited "imposts or
duties,"
id. at
53 U. S.
314:
"[The Import-Export Clause] was intended to operate upon
subjects actually existing and well understood when the
constitution was formed. Imposts and duties on imports, exports,
and tonnage were then known to the commerce of a civilized world to
be as distinct from fees and charges for pilotage, and from the
penalties by which commercial States enforced their pilot laws, as
they were from charges for wharfage or towage, or any other local
port-charges for services rendered to vessels or cargoes; and to
declare that such pilot fees or penalties are embraced within the
words imposts or duties on imports, exports, or tonnage, would be
to confound things essentially different, and which must have been
known to be actually different by those who used this language. It
cannot be denied that a tonnage duty, or an impost on imports or
exports, may be levied under the name of pilot dues or penalties;
and certainly it is the thing, and not the name, which is to be
considered. But, having previously stated that, in this instance,
the law complained of does not pass the appropriate line which
limits laws for the regulation of pilots and pilotage, the
suggestion, that this law levies a duty on tonnage or on imports or
exports, is not admissible; and, if so, it also follows, that this
law is not repugnant to the first clause of the eighth section of
the first article of the constitution, which declares that all
duties, imposts, and excises shall be uniform throughout the United
States; for, if it is not to be deemed a law levying a duty,
impost, or excise, the want of uniformity throughout the United
States is not objectionable. Indeed, the necessity of conforming
regulations of pilotage to the local peculiarities of each port,
and the consequent impossibility of having its charges uniform
throughout the United States, would be sufficient of itself to
prove that they could not have been intended to be embraced within
this clause of the constitution; for it cannot be supposed
uniformity was required, when it must have been known to be
impracticable."
Such fees, of course, would nevertheless likely increase the
cost of the goods being imported. Thus, more than a mere cost
impact on imported goods is required before an exaction can be
deemed to fall within the Clause's prohibition.
[
Footnote 10]
See, e.g., 46 U. S. 5
How. 504,
46 U. S.
575-576 (1847) (Taney, C.J.).
[
Footnote 11]
Such an assessment would also be invalid under traditional
Commerce Clause analysis.
[
Footnote 12]
In 2 Farrand 305, the following is reported as having occurred
during the debate on the last draft of the Tax Clause submitted by
the Committee of Detail:
"Mr. L. Martin asked what was meant by the Committee of detail
(in the expression) '
duties' and '
imposts.' If
the meaning were the same, the former was unnecessary; if
different, the matter ought to be made clear."
"Mr. Wilson,
duties are applicable to many objects to
which the word
imposts does not relate. The latter are
appropriated to commerce; the former extend to a variety of
objects, as stamp duties &c."
Subsequently, Mr. Martin also stated in his "Genuine
Information" delivered to the Maryland Legislature,
see 3
Farrand 203-204:
"By the
eighth section of this article, Congress is to
have power to
lay and
collect taxes, duties,
imposts, and
excises. When we met in convention after
our adjournment, to receive the report of the committee of detail,
the members of that committee were requested to inform us what
powers were meant to be vested in Congress by the word
duties in this section, since the word
imposts
extended to duties on goods
imported, and by another part
of the system no duties on
exports were to be laid. In
answer to this inquiry, we were informed, that it was meant to give
the general government the power of laying
stamp duties on
paper, parchment, and vellum. . . . By the power to lay and collect
imposts, they may impose duties on
any or
every
article of
commerce imported into these States, to what
amount they please. By the power to lay
excises, a power
very
odious in its nature, since it authorizes officers to
go into your
houses, your
kitchens, your
cellars, and to examine into your
private
concerns, the Congress may impose
duties on every
article of
use or consumption -- on the
food that we
eat, on the
liquors we
drink, on the
clothes that we
wear, the
glass which
enlightens our
houses, or
the
hearths necessary for our
warmth and
comfort. By the power to lay and collect taxes, they may
proceed to
direct taxation on
every individual,
either by a
capitation tax on their
heads, or an
assessment on their
property. By this part of the
section therefore, the government has power to lay what duties they
please on
goods imported; to lay what duties they please,
afterwards, on whatever we
use or
consume; to
impose
stamp duties to what amount they please, and in
whatever case they please; afterwards to impose on the people
direct taxes, by capitation tax, or by assessment, to what
amount they choose. . . ."
A similar recognition that commercial "imposts" do not encompass
property "taxes" appears in The Federalist No. 12, pp. 881, 84
(Bourne ed.1947):
"It is evident from the state of the country, from the habits of
the people, from the experience we have had on the point itself,
that it is impracticable to raise any very considerable sums by
direct taxation. Tax laws have in vain been multiplied; new methods
to enforce the collection have in vain been tried; the public
expectation has been uniformly disappointed, and the treasuries of
the States have remained empty. The popular system of
administration inherent in the nature of popular government,
coinciding with the real scarcity of money incident to a languid
and mutilated state of trade, has hitherto defeated every
experiment for extensive collections, and has at length taught the
different legislatures the folly of attempting them."
"No person acquainted with what happens in other countries will
be surprised at this circumstance. In so opulent a nation as that
of Britain, where direct taxes from superior wealth must be much
more tolerable, and, from the vigor of the government, much more
practicable, than in America, far the greatest part of the national
revenue is derived from taxes of the indirect kind, from imposts,
and from excises. Duties on imported articles form a large branch
of this latter description."
"In America, it is evident that we must a long time depend for
�the means of revenue chiefly on such duties. In most parts of it,
excises must be confined within a narrow compass. The genius of the
people will ill brook the inquisitive and peremptory spirit of
excise laws. The pockets of the farmers, on the other hand, will
reluctantly yield but scanty supplies, in the unwelcome shape of
impositions on their houses and lands; and personal property is too
precarious and invisible a fund to be laid hold of in any other way
than by the imperceptible agency of taxes on consumption."
". . . A nation cannot long exist without revenues. Destitute of
this essential support, it must resign its independence, and sink
into the degraded condition of a province. This is an extremity to
which no government will of choice accede. Revenue, therefore, must
be had at all events. In this country, if the principal part be not
drawn from commerce, it must fall with oppressive weight upon land.
It has been already intimated that excises, in their true
signification, are too little in unison with the feelings of the
people, to admit of great use being made of that mode of taxation;
nor, indeed, in the States where almost the sole employment is
agriculture, are the objects proper for excise sufficiently
numerous to permit very ample collections in that way. Personal
estate (as has been before remarked), from - the difficulty in
tracing it, cannot be subjected to large contributions, by any
other means than by taxes on consumption."
See also, e.g., The Federalist Nos. 30, 32, 35, 36; T.
Cooley, The General Principles of Constitutional Law in the United
States c. V, § 3, c. VII, § 14 (Bruce ed.1931); 2 J. Story,
Commentaries on the Constitution of the United States §§ 946-950,
954, 1013-1014 (1833);
n 9,
supra.
[
Footnote 13]
In another context, this Court said that,
"[i]n view of the fact that the Constitution gives Congress
authority to consent to state taxation of imports, and hence to lay
down its own test for determining when the immunity ends, we see no
convincing practical reason for abandoning the test which has been
applied for more than a century. . . ."
Hooven & Allison Co. v. Evatt, 324 U.
S. 652,
324 U. S. 668
(1945). However, this overlooked the fact that the Import-Export
Clause contains a provision that "the net Produce of all Duties and
Imposts, laid by any State on Imports or Exports, shall he for the
Use of the Treasury of the United States. . . ."
Although the Constitutional Convention had refused to make the
Import-Export Clause's prohibition of state exactions absolute, it
immediately added that proviso, which Mr. Madison supported "as
preventing all State imposts." 2 Farrand 441-442.
See also,
e.g., 3
id. at 215-216 (Luther Martin's "Genuine
Information"). Of course, Congress presumably could enact other
legislation transferring the funds back to the States after they
were put to "the Use of the Treasury of the United States." But may
Congress consent to state exactions if they are not uniform
throughout the United States, since any congressional taxation must
conform to the mandate of Art. I, § 8, cl. 1, that "all Duties,
Imposs, and Excises shall be uniform throughout the United States"?
If Congress may authorize, under the Import-Export Clause, an
exaction that it could not directly impose under the Tax Clause,
would that not permit Congress to undermine the policies which both
Clauses were fashioned to secure? Since, however, we hold that
Low v. Austin was not properly decided, there is no
occasion to address the question whether Congress could have
constitutionally consented to state nondiscriminatory
ad
valorem property taxes if they had been within the prohibition
of the Import-Export Clause.
MR. JUSTICE WHITE, concurring in the judgment.
Being of the view that the goods involved here had lost their
character as imports and that subjecting them to
ad
valorem taxation was consistent with the Constitution as
interpreted by prior cases, including
Low v.
Austin, 13 Wall. 29 (1872), I would affirm the
judgment. There is little reason and no necessity at this time to
overrule
Low v. Austin. None of the parties has challenged
that case here, and the issue of its overruling has not been
briefed or argued.