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CRS Annotated Constitution

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Privilege Taxes.—A state law requiring importers to take out a license to sell imported goods amounts to an indirect tax on imports and hence is unconstitutional.2010 Likewise, a franchise tax upon foreign corporations engaged in importing nitrate and selling it in the original packages,2011 a tax on sales by brokers2012 and auctioneers2013 of imported merchandise in original packages, and a tax on the sale of goods in foreign commerce consisting of an annual license fee plus a percentage of gross sales,2014 have been held invalid. On the other hand, pilotage fees,2015 a tax upon the gross sales of a purchaser from the importer,2016 a license tax upon dealing in fish which, through processing, handling, and sale, have lost their distinctive character as imports,2017 an annual license fee imposed on persons engaged in buying and selling foreign bills of exchange,2018 and a tax upon the right of an alien to receive property as heir, legatee, or donee of a deceased person2019 have been held not to be duties on imports or exports.

Property Taxes.—Overruling a line of prior decisions which it thought misinterpreted the language of Brown v. Maryland, the Court now holds that the clause does not prevent a State from levying a nondiscriminatory, ad valorem property tax upon goods that are no longer in import transit.2020 Thus, a company’s inventory of[p.401]imported tires maintained at its whole distribution warehouse could be included in the State’s tax upon the entire inventory. The clause does not prohibit every “tax” with some impact upon imports or exports but reaches rather exactions directed only at imports or exports or commercial activity therein as such.2021

Inspection Laws.—Inspection laws “are confined to such particulars as, in the estimation of the legislature and according to the customs of trade, are deemed necessary to fit the inspected article for the market, by giving the purchaser public assurance that the article is in that condition, and of that quality, which makes it merchantable and fit for use or consumption.”2022 In Turner v. Maryland,2023 the Court listed as recognized elements of inspection laws, the “quality of the article, form, capacity, dimensions, and weight of package, mode of putting up, and marking and branding of various kinds. . . .”2024 It sustained as an inspection law a charge for storage and inspection imposed upon every hogshead of tobacco grown in the State and intended for export, which the law required to be brought to a state warehouse to be inspected and branded. The Court has cited this section as a recognition of a general right of the States to pass inspection laws, and to bring within their reach articles of interstate, as well as of foreign, commerce.2025 But on the ground that, “it has never been regarded as within the legitimate scope of inspection laws to forbid trade in respect to any known article of commerce, irrespective of its condition and quality, merely on account of its intrinsic nature and the injurious consequence of its use or abuse,” it held that a state law forbidding the importation of intoxicating liquors into the State could not be sustained as an inspection law.2026

[p.402]

Clause 3. No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

Tonnage Duties

The prohibition against tonnage duties embraces all taxes and duties, regardless of their name or form, whether measured by the tonnage of the vessel or not, which are in effect charges for the privilege of entering, trading in, or lying in a port.2027 But it does not extend to charges made by state authority, even if graduated according to tonnage,2028 for services rendered to the vessel, such as pilotage, towage, charges for loading and unloading cargoes, wharfage, or storage.2029 For the purpose of determining wharfage charges, it is immaterial whether the wharf was built by the State, a municipal corporation, or an individual. Where the wharf was owned by a city, the fact that the city realized a profit beyond the amount expended did not render the toll objectionable.2030 The services of harbor masters for which fees are allowed must be actually rendered, and a law permitting harbor masters or port wardens to impose a fee in all cases is void.2031 A State may not levy a tonnage duty to defray the expenses of its quarantine system,2032 but it may exact a fixed fee for examination of all vessels passing quarantine.2033 A state license fee for ferrying on a navigable river is not a tonnage tax but rather is a proper exercise of the police power and the fact that a vessel is enrolled under federal law does[p.403]not exempt it.2034 In the State Tonnage Tax Cases,2035 an annual tax on steamboats measured by their registered tonnage was held invalid despite the contention that it was a valid tax on the steamboat as property.


Footnotes

2010 Brown v. Maryland, 12 Wheat. (25 U.S.) 419, 447 (1827).
2011 Anglo–Chilean Corp. v. Alabama, 288 U.S. 218 (1933).
2012 Low v. Austin, 13 Wall. (80 U.S.) 29, 33 (1872).
2013 Cook v. Pennsylvania, 97 U.S. 566, 573 (1878).
2014 Crew Levick Co. v. Pennsylvania, 245 U.S. 292 (1917).
2015 Cooley v. Port Wardens, 12 How. (53 U.S.) 299, 313 (1851).
2016 Waring v. The Mayor, 8 Wall. (75 U.S.) 110, 122 (1869). See also Pervear v. Massachusetts. 5 Wall. (72 U.S.) 475, 478 (1867); Schollenberger v. Pennsylvania, 171 U.S. 1, 24 (1898).
2017 Gulf Fisheries Co. v. MacInerney, 276 U.S. 124 (1928).
2018 Nathan v. Louisiana, 8 How. (49 U.S.) 73, 81 (1850).
2019 Mager v. Grima, 8 How. (49 U.S.) 490 (1850).
2020 Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976), overruling Low v. Austin, 13 Wall. (80 U.S.) 29 (1872), expressly, and, necessarily, Hooven & Allison Co. v. Evatt, 324 U.S. 652 (1945), among others. The latter case was expressly overruled in Limbach v. Hooven & Allison Co., 466 U.S. 353 (1984), involving the same tax and the same parties. In Youngstown Sheet & Tube Co. v. Bowers, 358 U.S. 534 (1959), property taxes were sustained on the basis that the materials taxed had lost their character as imports. On exports, see Selliger v. Kentucky, 213 U.S. 200 (1909) (property tax levied on warehouse receipts for whiskey exported to Germany invalid).

Supplement: [P. 400, add to n.2020:]

See also Itel Containers Int’l Corp. v. Huddleston, 507 U.S. 60, 76–8 (1993) . And see id. at 81–2 (Justice Scalia concurring).

2021 Michelin Tire Corp. v. Wages, 423 U.S. 276, 290–294 (1976). Accord: R. J. Reynolds Tobacco Co. v. Durham County, 479 U.S. 130 (1986) (tax on imported tobacco stored for aging in customs–bonded warehouse and destined for domestic manufacture and sale); but cf. Xerox Corp. v. County of Harris, 459 U.S. 145, 154 (1982) (similar tax on goods stored in customs–bonded warehouse is preempted “by Congress’ comprehensive regulation of customs duties;” case, however, dealt with goods stored for export).
2022 Bowman v. Chicago & Northwestern Railway Co., 125 U.S. 465, 488 (1888).
2023 107 U.S. 38 (1883).
2024 Id., 55.
2025 Patapsco Guano Co. v. North Carolina, 171 U.S. 345, 361 (1898).
2026 Bowman v. Chicago & Northwestern Railway Co., 125 U.S. 465 (1888). The Twenty–first Amendment has had no effect on this principle. Department of Revenue v. James B. Beam Distilling Co., 377 U.S. 341 (1964).
2027 Clyde Mallory Lines v. Alabama, 296 U.S. 261, 265 (1935); Cannon v. City of New Orleans, 20 Wall. (87 U.S.) 577, 581 (1874); Transportation Co. v. Wheeling, 99 U.S. 273, 283 (1879).
2028 Packet Co. v. Keokuk, 95 U.S. 80 (1877); Transportation Co. v. Parkersburg, 107 U.S. 691 (1883); Ouachita Packet Co. v. Aiken, 121 U.S. 444 (1887).
2029 Cooley v. Port Wardens, 12 How. (53 U.S.) 299, 314 (1851); Ex parte McNiel, 13 Wall. (80 U.S.) 236 (1872); Inman Steamship Company v. Tinker, 94 U.S. 238, 243 (1877); Packet Co. v. St. Louis, 100 U.S. 423 (1880); City of Vicksburg v. Tobin, 100 U.S. 430 (1880); Packet Co. v. Catlettsburg, 105 U.S. 559 (1882).
2030 Huse v. Glover, 119 U.S. 543, 549 (1886).
2031 Steamship Co. v. Portwardens, 6 Wall. (73 U.S.) 31 (1867).
2032 Peete v. Morgan, 19 Wall. (86 U.S.) 581 (1874).
2033 Morgan v. Louisiana, 118 U.S. 455, 462 (1886).
2034 Wiggins Ferry Co. v. City of East St. Louis, 107 U.S. 365 (1883). See also Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 212 (1885); Philadelphia Steamship Co. v. Pennsylvania, 122 U.S. 326, 338 (1887); Osborne v. City of Mobile, 16 Wall. (83 U.S.) 479, 481 (1873).
2035 12 Wall. (79 U.S.) 204, 217 (1871).
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