prev | next
ArtI.S10.C3.1.4 Personal Property Taxes and Duties of Tonnage

Article I, Section 10, 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.

While the Court’s duties of tonnage jurisprudence has been consistent,1 questions remain about how to evaluate disputed charges. In particular, the Court appears divided on how the Duty of Tonnage Clause interacts with state or municipal authority to impose personal property taxes. In the 2009 case, Polar Tankers v. City of Valdez, the Court considered a tax ordinance imposed by the City of Valdez, Alaska. The Court identified four ways the ordinance might be constitutional as a personal property tax, although the Court ultimately held the tax at issue unconstitutional on other grounds.2

Polar Tankers involved an ordinance imposing a personal property tax on “boats and vessels of at least 95 feet in length that regularly travel to the City, are kept or used within the City, or which annually take on at least $1 million worth of cargo or engage in other business transactions of comparable value in the City.” 3 A majority of seven Justices held the ordinance violated the Duty of Tonnage Clause4 based on their findings that the ordinance applied in practice only to certain large vessels, the amount owed was effectively based on vessel capacity (i.e., tonnage), and a single entry into Valdez’s port made the vessel liable to pay the tax. Further, the City did not impose the tax to compensate for a service provided. Thus, the ordinance’s actual operation rendered it a duty of tonnage, not a personal property tax.5

Despite the 7-2 holding of Polar Tankers, the Justices diverged on how to approach determining whether the ordinance might qualify as a personal property tax, debating the principles and implications of the State Tonnage Tax Cases and Wheeling. Justice Stephen Breyer, writing for a plurality of four Justices, concluded that personal property taxes may be constitutional and not violate the general prohibition on duties of tonnage if vessels are taxed in the same manner as other property, as held in Wheeling. More precisely, this plurality interpreted the “same manner” requirement of Wheeling to require a state to impose similar taxes upon other businesses, effectively reading “same manner” as a non-discrimination requirement.6 Justice Breyer concluded that the Valdez ordinance failed this requirement, as it applied in practice almost exclusively to large vessels.7

By contrast, Justice John Paul Stevens, joined in dissent by Justice David Souter, argued that the “same manner” criterion, as set out in Wheeling and the State Tonnage Tax Cases, required only that a property tax on vessels be calculated based on property valuation, instead on tonnage.8 Chief Justice John Roberts, joined by Justice Clarence Thomas, wrote separately, contending that personal property taxes may be imposed only on a state’s citizens, not on visiting vessels.9 Justice Samuel Alito, in a concurrence, stated he disagreed with Justice Breyer’s view regarding taxation, but offered no further comment.10

Finally, the Constitution permits states to impose duties of tonnage with congressional consent. However, as noted in dicta by the Supreme Court, the Constitution does not specify when or how such consent must be given.11 To date, the Supreme Court has not had occasion to decide when or how congressional consent would be granted.

Footnotes
1
Polar Tankers, Inc. v. City of Valdez, 557 U.S. 1, 6 (2009) ( “The Court over the course of many years has consistently interpreted the language of the Clause in light of its purpose.” ). back
2
Id. back
3
Id. at 5. back
4
Id. at 9–11; id. at 17 (Roberts, C.J., concurring in part and concurring in the judgment). back
5
Id. at 9–11; id. at 17. back
6
Id. at 12. back
7
Id. back
8
Id. at 22–23 (Stevens, J., dissenting). back
9
Id. at 18 (Roberts, C.J., concurring in part and concurring in the judgment). back
10
Id. at 19–20 (Alito, J., concurring in part and concurring in the judgment). back
11
Virginia v. Tennessee, 148 U.S. 503, 521 (1893). back