1 Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946 (1981).Google Scholar

2 See, e.g., Brief for Appellants at 8, Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946 (1981); Brief for Amici Curiae Congressman Robert W. Edgar et at., at 2, id.Google Scholar

3 Maryland v. Louisiana, 101 S. Ct. 2114 (1981).Google Scholar

4 See, e.g., Exceptions of the Plaintiff States and Brief in Support of Exceptions at 10–12, 28–31, Maryland v. Louisiana, 101 S. Ct. 2114 (1981); Exception of the United States and the Federal Regulatory Commission and Brief in Support of Exception at 38–42, id.Google Scholar

5 Coal Severance Tax: Hearing on S. 2695 Before the Senate Comm. on Energy and Natural Resources, 96th Cong., 2d Sess. passim (1980); Coal Severance Taxes: Hearings on H.R. 6625, H.R. 6654, and H.R. 7163 Before the Subcomm. on Energy and Power of the House Comm. on Interstate and Foreign Commerce, 96th Cong., 2d Sess. passim (1980).Google Scholar

6 Nev. Rev. Stat. §§ 463.370-.406 (1979).Google Scholar

7 N.Y. Tax Law §§ 270–281-a (McKinney 1966 & Cum. Supp. 1981–82).Google Scholar

8 See, e.g., Western & S. Life Ins. Co. v. State Bd. of Equalization, 101 S. Ct. 2070 (1981) (repudiating doctrine that a state may impose taxes in its unfettered discretion on foreign corporations as a condition to their doing business in the state); Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434 (1979) (announcing new test for validity of state taxes on foreign commerce); United States Steel Corp. v. Multistate Tax Comm'n, 434 U.S. 452 (1978) (sustaining constitutionality of Multistate Tax Compact); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977) (overruling doctrine that states cannot tax the privilege of doing interstate business); Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976) (establishing new analytical framework for determining validity of state taxes on imports). See generally Walter Hellerstein, State Taxation and the Supreme Court: Toward a More Unified Approach to Constitutional Adjudication? 75 Mich. L. Rev. 1426 (1977).Google Scholar

9 Lockhart, William B., A Revolution in State Taxation of Commerce? 65 Minn. L. Rev. 1025 (1981).Google Scholar

10 U.S. Const, art. I, § 10, cl. 2. The other is the duty of tonnage prohibition, U.S. Const, art. I, § 10, cl. 3, discussed in text accompanying notes 45–48 infra.Google Scholar

11 Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1868); Coe v. Errol, 116 U.S. 517 (1886).Google Scholar

12 See, e.g., Youngstown Sheet & Tube Co. v. Bowers (together with United States Plywood Corp. v. City of Algoma), 358 U.S. 534 (1959).Google Scholar

13 See, e.g., Kosydar v. National Cash Register Co., 417 U.S. 62, at 71 (1974).Google Scholar

14 423 U.S. 276 (1976). See generally Walter Hellerstein, Michelin Tire Corp. v. Wages: Enhanced State Power to Tax Imports, 1976 Sup. Ct. Rev. 99, from which the ensuing discussion draws.Google Scholar

15 435 U.S. 734 (1978).Google Scholar

16 Low v. Austin, 80 U.S. (13 Wall.) 29 (1872), which had construed the “original package” doctrine as proscribing a nondiscriminatory ad valorem property tax on imported goods still in their original packages, was overruled by Michelin. 423 U.S. at 301.Google Scholar

17 423 U.S. at 285.Google Scholar

18 Id.Google Scholar

19 Id. at 285–86.Google Scholar

20 Id. at 286.Google Scholar

21 Id.Google Scholar

22 Id.Google Scholar

23 Id. at 288.Google Scholar

24 Id. at 287. This reasoning ignores the possibility that a purpose of the Import-Export Clause might have been precisely to immunize foreign commerce from normal state and local tax burdens in order to permit the federal government to tax such commerce without putting it at a competitive disadvantage to domestic commerce which was free from federal import taxes.Google Scholar

25 Id. at 288.Google Scholar

26 Dakin, Melvin G., The Protective Cloak of the Export-Import Clause: Immunity for the Goods or Immunity for the Process? 19 La. L. Rev. 747, 766 (1959).Google Scholar

27 423 U.S. at 289.Google Scholar

28 Id. at 290. The Court also noted that traditional Commerce Clause doctrine would likewise afford protection to the free flow of goods. Id. at 290 n.11. See pt. IC infra.Google Scholar

29 423 U.S. at 302. The Court first considered whether the text of the Import-Export Clause required that the state be precluded from imposing even nondiscriminatory taxes on imports, and it concluded that the clause should not be so construed. Id. at 290–94.Google Scholar

30 For a more detailed analysis of the Michelin case and its implications, see Hellerstein, supra note 13.Google Scholar

31 See generally Abramson, Leslie W., State Taxation of Exports: The Stream of Constitutionality, 54 N.C.L. Rev. 59 (1975).Google Scholar

32 435 U.S. 734 (1978).Google Scholar

33 Id. at 758.Google Scholar

34 Id. (citations omitted).Google Scholar

35 Id. at 751–55, 757–58.Google Scholar

36 Id. at 755.Google Scholar

37 Id. at 757.Google Scholar

38 In justifying the distinction it was drawing between taxes on imported goods themselves and taxes on services distinct from the goods and their value, the Court relied upon its earlier decision in Canton R.R. v. Rogan, 340 U.S. 511 (1940). There the Court had sustained over Import-Export Clause objections a franchise tax imposed on a steam railroad and measured by its gross receipts, which were derived in large part from the transport of imports and exports. The Court in Washington Stevedoring observed that the Import-Export Clause challenge in Canton Railroad had been rejected “primarily on the ground that immunity of services incidental to importing and exporting was not so broad as the immunity of the goods themselves,” 435 U.S. at 756, and it quoted the following passages from the Canton Railroad case:. “The difference is that in the present case the tax is not on the goods but on the handling of them at the port. An article may be an export and immune from a tax long before or after it reaches the port. But when the tax is on activities connected with the export or import the range of immunity cannot be so wide.”… The broader definition which appellant tenders distorts the ordinary meaning of the terms. It would lead back to every forest, mine, and factory in the land and create a zone of tax immunity never before imagined.” [340 U.S.] at 514–515 (emphasis in original). 435 U.S. at 756–57.Google Scholar

39 435 U.S. at 757 n.23.Google Scholar

40 Id. at 762 (Powell, J., concurring).Google Scholar

41 See Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977); text accompanying notes 86–106 infra.Google Scholar

42 435 U.S. at 763 (Powell, J., concurring).Google Scholar

43 Id. at 764.Google Scholar

44 435 U.S. at 750–51, quoted in id. at 764 (Powell, J., concurring). The meaning of the criterion that a tax be “fairly related to services and protection provided by the State,” which is derived from the Court's Commerce Clause doctrine, is considered in detail below. See text accompanying notes 135–39, 303–9 infra.Google Scholar

45 U.S. Const, art. I, § 10, cl. 3.Google Scholar

46 Clyde Mallory Lines v. Alabama ex rel. State Docks Comm'n, 296 U.S. 261, 264–65 (1935).Google Scholar

47 Id. at 265–66.Google Scholar

48 Ouchita Packet Co. v. Aiken, 121 U.S. 444 (1887); Transportation Co. v. Parkersburg, 107 U.S. 691 (1883); Packet Co. v. Catlettsburg, 105 U.S. 559 (1882); City of Vicksburg v. Tobin, 100 U.S. 430 (1880); Packet Co. v. St. Louis, 100 U.S. 423 (1880); Packet Co. v. Keokuk, 95 U.S. 80 (1877); Inman Steamship Co. v. Tinker, 94 U.S. 238 (1877); Ex parte McNiel, 80 U.S. (13 Wall.) 236 (1872).Google Scholar

49 See note 71 supra.Google Scholar

50 Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 449 (1827); Almy v. California, 65 U.S. (24 How.) 169 (1860). For a vigorous defense of this position, see 1 William W. Crosskey, Politics and the Constitution in the History of the United States 295–323 (Chicago: University of Chicago Press, 1953).Google Scholar

51 U.S. Const, art. I, § 8, cl. 3.Google Scholar

52 Id. amend. XIV, § 1.Google Scholar

53 Id.Google Scholar

54 Id. art. IV, § 2.Google Scholar

55 Id. art. I, § 8, cl. 3.Google Scholar

56 Felix Frankfurter, The Commerce Clause Under Marshall, Taney, and Waite 18 (Chicago: Quadrangle Books, 1964).Google Scholar

57 For more sustained attempts to recount that story, see Paul J. Hartman, State Taxation of Interstate Commerce (Buffalo, N.Y.: Dennis & Co., 1953); Jerome R. Hellerstein & Walter Heller-stein, State and Local Taxation 237–51 (4th ed. St. Paul, Minn.: West Publishing Co., 1978); Walter Hellerstein, Federal Limitations on State Taxation of Interstate Commerce, in Terrance Sandalow & Eric Stein, eds., Courts and Free Markets: Perspectives from the United States and Europe 431, 433–43 (London: Oxford University Press, 1982). The ensuing discussion draws from the latter two references.Google Scholar

58 These early developments have been frequently and skillfully described elsewhere. See, e.g., Frankfurter, supra note 56; Gerald Gunther, Constitutional Law 256–71 (10th ed. Mineola, N.Y.: Foundation Press, 1980); Frederick D. G. Ribble, State and National Power over Commerce (New York: Columbia University Press, 1937); Sholley, John B., The Negative Implications of the Commerce Clause, 3 U. Chi. L. Rev. 556 (1936).Google Scholar

59 53 U.S. (12 How.) 299 (1851).Google Scholar

60 Laurence H. Tribe, American Constitutional Law 324 (Mineola, N.Y.: Foundation Press, 1978).Google Scholar

61 53 U.S. (12 How.) at 319.Google Scholar

62 Case of the State Freight Tax, 82 U.S. (15 Wall.) 232 (1872).Google Scholar

63 Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 696 (1895);State Tax on Railway Gross Receipts, 82 U.S. (15 Wall.) 284 (1872).Google Scholar

64 See Hellerstein & Hellerstein, supra note 57, at 241–42.Google Scholar

65 See Hartman, supra note 57, at 24–25.Google Scholar

66 See Wolf Biklé, Henry, The Silence of Congress, 41 Harv. L. Rev. 200 (1927).Google Scholar

67 See Hellerstein & Hellerstein, supra note 57, at 320–21.Google Scholar

68 See, e.g., Robbins v. Shelby County Taxing Dist. 120 U.S. 489 (1887).Google Scholar

69 See Hellerstein, Jerome R., State Franchise Taxation of Interstate Business, 4 Tax L. Rev. 95, 99 (1948).Google Scholar

70 Pensacola Tel. Co. v. Western Union Tel. Co., 96 U.S. 1, 12–13 (1877).Google Scholar

71 Leloup v. Port of Mobile, 127 U.S. 640, 645 (1888); Western Union Tel. Co. v. Kansas, 216 U.S. 1, 47–48 (1910).Google Scholar

72 Cheney Bros. Co. v. Massachusetts, 246 U.S. 147, 153–54 (1918); Alpha Portland Cement Co. v. Massachusetts, 268 U.S. 203, 217 (1925).Google Scholar

73 Id.Google Scholar

74 See, e.g., Crutcher v. Kentucky, 141 U.S. 47 (1891); Pickard v. Pullman S. Car Co., 117 U.S. 34 (1886); cases cited in notes 71, 72 supra.Google Scholar

75 Robbins v. Shelby County Taxing Dist., 120 U.S. 489, 497 (1887).Google Scholar

76 See Western Live Stock v. Bureau of Revenue, 303 U.S. 250 (1938); Gwin, White & Prince v. Henneford, 305 U.S. 434 (1939); McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33 (1940); Hartman, supra note 57, at 33–40; Wechsler, Herbert, Stone and the Constitution, 46 Colum. L. Rev. 764 (1946).Google Scholar

77 303 U.S. 250 (1938).Google Scholar

78 Id. at 258, 260.Google Scholar

79 See, e.g., Central Greyhound Lines, Inc. v. Mealey, 334 U.S. 653, 661 (1948).Google Scholar

80 In developing the multiple taxation doctrine, Justice Stone did not reject the principle that the Commerce Clause forbade the states from imposing a tax on the privilege of doing interstate business. McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 48 (1940).Google Scholar

81 See, e.g., Coverdale v. Arkansas-Louisiana Pipeline Co., 303 U.S. 604 (1938); Memphis Natural Gas Co. v. Stone, 335 U.S. 80 (1948); see generally Strecker, Richard Lloyd, “Local Incidents” of Interstate Business, 18 Ohio St. L.J. 69 (1957).Google Scholar

82 Freeman v. Hewit, 329 U.S. 249 (1946). In Freeman, the Court held that the Commerce Clause forbade the state of Indiana from applying its gross income tax to the receipts from a sale of securities made by an Indiana resident through a local broker on the New York Stock Exchange. In so holding, the Court went out of its way to discredit the multiple taxation doctrine and to resuscitate the “direct-indirect” criterion for determining the validity of a state tax on interstate commerce. The Court declared that the Commerce Clause “by its own force created an area of trade free from interference by the States,”id. at 252; that a state “cannot justify what amounts to a levy upon the very process of commerce across State lines by pointing to a similar hobble on local trade,”id. at 254; that a state may not be allowed “one single-tax-worth of direct interference with the free flow of commerce,”id. at 256; and that a tax on gross receipts was “a direct imposition on that very freedom of commercial flow which for more than a hundred and fifty years has been the ward of the Commerce Clause.”Id.Google Scholar

83 Joseph v. Carter & Weekes Stevedoring Co., 330 U.S. 422 (1947); Memphis Steam Laundry Cleaner, Inc. v. Stone, 342 U.S. 389 (1952); Miller Bros. v. Maryland, 347 U.S. 340 (1954); Railway Express Agency v. Virginia, 347 U.S. 359 (1954).Google Scholar

84 Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157, 166 (1954).Google Scholar

85 Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 457 (1959).Google Scholar

86 Id.Google Scholar

87 Although the result in Northwestern was arguably an insignificant departure from its prior decisions, see 358 U.S. at 458–65, it was not so perceived by the business community. See Hellerstein, Walter, State Taxation of Interstate Business and the Supreme Court, 1974 Term: Standard Pressed Steel and Colonial Pipeline, 62 Va. L. Rev. 149, 151–53 (1976).Google Scholar

88 358 U.S. at 461–62.Google Scholar

89 303 U.S. 250 (1938). See text accompanying notes 76–79 supra.CrossRefGoogle Scholar

90 303 U.S. at 254.Google Scholar

91 In contrast with the uncertain character of its commitment in the 1940s and 1950s. See text accompanying notes 82–85 supra.Google Scholar

92 See text accompanying notes 69–74 supra.Google Scholar

93 See note 80 supra.Google Scholar

94 This is not to suggest, however, that no inroads had been made on the scope of the doctrine before 1959. See Hellerstein, supra note 87, at 177–78.Google Scholar

95 340 U.S. 602 (1951). The Northwestern Court cited Spector in stating that it was “beyond dispute that a State may not lay a tax on the ‘privilege’ of engaging in interstate commerce.” 358 U.S. at 458.Google Scholar

96 The subject is the legal incidence of a tax: it is the thing or event upon which the power to tax is predicated. The measure of a tax is the base to which the rate is applied.Google Scholar

97 421 U.S. 100 (1975).Google Scholar

98 Id. at 108. For a detailed discussion of the Colonial Pipeline case, see Hellerstein, supra note 86, at 176–88.Google Scholar

99 430 U.S. 274 (1977).Google Scholar

100 Id. at 276 n.4.Google Scholar

101 Id. at 289.Google Scholar

102 Id. at 279.Google Scholar

103 Id. at 288.Google Scholar

104 Id. at 277–78, 279, and 287.Google Scholar

105 See Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946, 2953 (1981); Maryland v. Louisiana, 101 S. Ct. 2114, 2133 (1981); Exxon Corp. v. Wisconsin Dep't of Revenue, 447 U.S. 207, 228 (1980); Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425, 443 (1980); Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 444–45 (1979); Department of Revenue v. Association of Washington Stevedoring Cos., 435 U.S. 734, 750 (1978).Google Scholar

106 Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425, 443 (1980); see also Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946, 2953 (1981).Google Scholar

107 Miller Bros. v. Maryland, 347 U.S. 340, 345 (1954). While Miller Brothers was decided under the Due Process Clause, the nexus requirement has also been incorporated into the Court's Commerce Clause jurisprudence. See notes 103 & 104 supra.Google Scholar

108 Standard Pressed Steel Co. v. Department of Revenue, 419 U.S. 560 (1975). For a detailed analysis of Standard Pressed Steel and the nexus issue it raised, see Hellerstein, supra note 86, at 155–68.Google Scholar

109 United Air Lines, Inc. v. Mahin, 410 U.S. 623 (1973).Google Scholar

110 National Geographic Soc'y v. State Bd. of Equalization, 430 U.S. 551, 556 (1977).Google Scholar

111 Id.; Scripto, Inc. v. Carson, 362 U.S. 207 (1960).Google Scholar

112 See, e.g., Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18 (1891); Maine v. Grand Trunk Ry., 142 U.S. 217 (1891).Google Scholar

113 See text accompanying note 79 supra.Google Scholar

114 See Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977); Hellerstein, supra note 8, at 1441–46.Google Scholar

115 See George T. Altman & Frank M. Keesling, Allocation of Income in State Taxation 107 (2d ed. Chicago: Commerce Clearing House, 1950).Google Scholar

116 Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18 (1891).Google Scholar

117 Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169 (1949).Google Scholar

118 Bass, Ratcliff & Gretton v. State Tax Comm'n, 266 U.S. 271 (1924).Google Scholar

119 Ford Motor Co. v. Beauchamp, 308 U.S. 331 (1939).Google Scholar

120 Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113 (1920).Google Scholar

121 Butler Bros. v. McColgan, 315 U.S. 501 (1942).Google Scholar

122 Union Refrigerator Transit Co. v. Lynch, 177 U.S. 149 (1900).Google Scholar

123 Western Union Tel. Co. v. Attorney Gen., 125 U.S. 530 (1888).Google Scholar

124 Maine v. Grand Trunk Ry., 142 U.S. 217 (1891).Google Scholar

125 Norfolk & W. Ry. v. North Carolina ex rel. Maxwell, 297 U.S. 682 (1936).Google Scholar

126 Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113, 121 (1920); Hans Rees' Sons, Inc. v. North Carolina ex rel. Maxwell, 283 U.S. 123, 133 (1931).Google Scholar

127 Only once in the past 50 years has the Court held the application of a state apportionment formula unconstitutional. Norfolk & W. Ry. v. State Tax Comm'n, 390 U.S. 317 (1968).Google Scholar

128 Exxon Corp. v. Wisconsin Dep't of Revenue, 447 U.S. 207 (1980); Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425 (1980); Moorman Mfg. Co. v. Bair, 437 U.S. 267 (1978); see generally Walter Hellerstein, State Income Taxation of Multijurisdictional Corporations: Reflections on Mobil, Exxon, and H.R. 5076, 79 Mich. L. Rev. 113 (1980).Google Scholar

129 See Welton v. Missouri, 91 U.S. 275 (1876).Google Scholar

130 See. e.g., Nippert v. City of Richmond, 327 U.S. 416 (1946) and cases cited therein.Google Scholar

131 Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64 (1963).Google Scholar

132 Id. at 72–73.Google Scholar

133 Dunbar-Stanley Studios, Inc. v. Alabama, 393 U.S. 537 (1969).Google Scholar

134 Boston Stock Exch. v. State Tax Comm'n, 429 U.S. 318, 329 (1977) (quoting Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 457 (1959)).Google Scholar

135 Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977).Google Scholar

136 See, e.g., Evansville-Vanderburgh Airport Auth. Dist. v. Delta Airlines, Inc., 405 U.S. 707 (1972) and cases cited therein.Google Scholar

137 Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 445 (1979).Google Scholar

138 101 S. Ct. 2946 (1981).Google Scholar

139 See text accompanying notes 303–9 infra.Google Scholar

140 U.S. Const, amend. XIV, § 1 (“nor shall any State deprive any person of life, liberty, or property without due process of law”).Google Scholar

141 Louisville & Jeffersonville Ferry Co. v. Kentucky, 188 U.S. 385 (1903) is the first case in which the Court invoked the Due Process Clause as a prohibition of extraterritorial taxation. See Central R.R. Co. v. Pennsylvania, 370 U.S. 607, 620 (1962) (Black, J., concurring).Google Scholar

142 Miller Bros. v. Maryland, 347 U.S. 340, 344–45 (1954). The case held that Maryland lacked the power to compel a Delaware vendor to collect taxes on sales made to Maryland residents. The footnotes to the Court's opinion contain an extensive list of its precedents dealing with Due Process restraints on state tax power. Id. at 353–57.Google Scholar

143 See, e.g., Union Tank Line Co. v. Wright, 249 U.S. 275 (1919).Google Scholar

144 See National Bellas Hess, Inc. v. Department of Revenue, 386 U.S. 753, 756 (1967) (nexus); Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169, 174 (1949) (apportionment).Google Scholar

145 See Western & S. Life Ins. Co. v. State Bd. of Equalization, 101 S. Ct. 2070 (1981); Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324 (1964); State Bd. of Ins. v. Todd Shipyards, 370 U.S. 451 (1962).Google Scholar

146 Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946, 2959 n.17 (1981).Google Scholar

147 U.S. Const, amend. XIV, § 1 (“nor [shall any State] deny to any person within its jurisdiction the equal protection of the laws”).Google Scholar

148 See, e.g., Kahn v. Shevin, 416 U.S. 351 (1974); Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356 (1973).Google Scholar

149 Allied Stores v. Bowers, 358 U.S. 522, 527 (1959).Google Scholar

150 101 S. Ct. 2070 (1981).Google Scholar

151 Cal. Ins. Code § 685 (West 1972). The tax is computed by determining the amount of taxes a hypothetical California insurer situated similarly to the out-of-state insurer would pay to the out-of-state insurer's state of incorporation if the hypothetical California insurer were doing business in that state. If the other state's taxes on the hypothetical California insurer exceed California's taxes otherwise due from the out-of-state insurer, a retaliatory tax in the amount of the difference is imposed. If the other state's taxes on the hypothetical California insurer are less than or equal to the California taxes on the out-of-state insurer, no retaliatory tax is due.Google Scholar

152 See 101 S. Ct. at 2074–76.Google Scholar

153 Before addressing the merits of the Equal Protection claim, the Court discarded the doctrine that the Equal Protection Clause did not forbid the states from imposing discriminatory taxes on foreign corporations as a condition of doing business in the state. Id. at 2076–83.Google Scholar

154 Id. at 2083.Google Scholar

155 Id.Google Scholar

156 Id. at 2084.Google Scholar

157 Id. (emphasis in original).Google Scholar

158 Id.Google Scholar

159 Id.Google Scholar

160 Id. at 2085 (emphasis in original).Google Scholar

161 Id. at 2086 (quoting United States v. Carolene Prods. Co., 304 U.S. at 154).Google Scholar

162 U.S. Const, art. IV, § 2. The Fourteenth Amendment to the Constitution also contains a Privileges and Immunities Clause which provides that “[n]o State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” Five years after the amendment was adopted, however, the Supreme Court held that this provision created no new rights of national citizenship, but merely furnished an additional guarantee of rights which citizens of the United States already possessed. The Slaughter House Cases, 83 U.S. (16 Wall.) 36 (1873). It therefore has no independent significance as a limitation on state tax powers. See Madden v. Kentucky, 309 U.S. 83 (1940), overruling Colgate v. Harvey, 296 U.S. 404 (1935).Google Scholar

163 79 U.S. (12 Wall.) 418 (1870).Google Scholar

164 Id. at 430.Google Scholar

165 Chalker v. Birmingham & N.W. Ry., 249 U.S. 522 (1919).Google Scholar

166 Toomer v. Witsell, 334 U.S. 385 (1948).Google Scholar

167 Mullaney v. Anderson, 342 U.S. 415 (1952).Google Scholar

168 Bank of Augusta v. Earle, 38 U.S. (13 Pet.) 519, 586 (1839); Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1868).Google Scholar

169 See, e.g., Ward v. Maryland, 79 U.S. (12 Wall.) 418 (1870) (Commerce Clause); WHYY, Inc. v. Borough of Glassboro, 393 U.S. 117 (1968) (Equal Protection Clause).Google Scholar

170 The ensuing discussion of the theory and practice of state tax exportation relies heavily on the pioneering work of Charles E. McLure, Jr., in this area. See, e.g., McLure, Charles E. Jr., Commodity Tax Incidence in Open Economies, 17 Nat'l Tax J. 187 (1964); id., The Interstate Exporting of State and Local Taxes: Estimates for 1962, 20 Nat'l Tax J. 49 (1967); id., Economic Constraints on State and Local Taxation of Energy Resources, 31 Nat'l Tax J. 257 (1978); id., The Economic Effects of a Texas Tax on the Refining of Petroleum Products, Growth & Change July 1980, at 2; id., Market Dominance and the Exporting of State Taxes, 34 Nat'l Tax J—(1981, forthcoming); id., Tax Exporting and the Commerce Clause: Reflections on Commonwealth Edison, forthcoming in Charles E. McLure, Jr., & Peter Mieszkowski, eds., Fiscal Federalism and the Taxation of Natural Resources (Cambridge, Mass.; Lexington Books, 1982).Google Scholar

171 That is, the person upon whom the primary legal obligation to pay the tax is imposed.Google Scholar

172 Donald Phares, Who Pays State and Local Taxes? 37 (Cambridge, Mass.: Oelgeschlager, Gunn & Hain Inc., 1980); McLure, Interstate Exporting, supra note 170, at 54.Google Scholar

173 Phares, supra note 172, at 30; McLure, Interstate Exporting, supra note 170, at 57.Google Scholar

174 Phares, supra note 172, at 36. Thus one study concluded that for every $1.00 increase in the effective tax rate on corporations, average corporate profits before taxes increased by $1.34. Marian Krzyzaniak & Richard D. Musgrave, The Shifting of the Corporation Income Tax (Baltimore, Md.: Johns Hopkins Press, 1963), discussed in Albert M. Church, Taxation of Nonrenewable Resources 111 (Lexington, Mass: Lexington Books, 1981).Google Scholar

175 Id. at 39.Google Scholar

176 U.S., Department of Energy, Energy Information Administration, Energy Taxation: An Analysis of Selected Taxes, Energy Policy Study vol. 14, at 47–54 (Washington, D.C., 1980); McLure, Economic Constraints, supra note 170, at 259; see text accompanying notes 180–205 infra.Google Scholar

177 McLure, Interstate Exporting, supra note 170, at 56.Google Scholar

178 Id.Google Scholar

179 Id. at 56 n.27.Google Scholar

180 The following discussion is based on McLure, Tax Exporting supra note 170; McLure, Economic Constraints, supra note 170; and U.S. Department of Energy, supra note 176.Google Scholar

181 See text accompanying notes 1–2 supra and notes 259–362 infra.Google Scholar

182 Other taxonomies are possible. See Thomas F. Stinson, State Taxation of Mineral Deposits and Production 6 (Washington, D.C.: Department of Agriculture, Environmental Protection Agency, 1977).Google Scholar

183 Production in the taxing state would decline because producers would be willing to supply a particular quantity of coal only if they received a price of $1/ton higher than the price previously sufficient to induce that quantity of supply. Assuming increasing marginal costs of coal production with respect to the relevant quantities involved, the coal producer in the taxing state Would be compelled to curtail its supply in order to cover the effective increase in its marginal costs induced by the tax.Google Scholar

184 This assumes, among other things, that there are no contractual arrangements or regulatory requirements designed to produce a different result. See notes 202 & 204 infra.Google Scholar

185 See text at note 175 supra.Google Scholar

186 The elasticity of demand (or supply) is a measure of the sensitivity of the quantity of a product desired by consumers (or offered by producers) to a change in the price of that product. More technically, the elasticity of demand is the percentage decrease (increase) in quantity demanded induced by a 1 percent increase (reduction) in price, and the elasticity of supply is the percentage increase (decrease) in quantity supplied induced by a 1 percent increase (decrease) in price. If the elasticity of demand (or supply) is large, demand (or supply) is said to be relatively elastic; conversely, if the elasticity is small, demand (or supply) is said to be inelastic.Google Scholar

187 See note 184 supra.Google Scholar

188 See note 186 supra.Google Scholar

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190 Id. at 258.Google Scholar

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193 McLure, Economic Constraints, supra note 170, at 258.Google Scholar

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195 McLure, Economic Constraints, supra note 170, at 158.Google Scholar

196 See McLure, supra note 194, at 13–15.Google Scholar

197 See text at note 184 supra.Google Scholar

198 Assuming there were other states or industries where the burden of such a tax could be avoided.Google Scholar

199 See note 204 and text accompanying notes 327 and 328 infra.Google Scholar

200 McLure, supra note 194, at 13.Google Scholar

201 See text accompanying notes 254–56 infra.Google Scholar

202 Government regulation of resource prices, for example, may either facilitate tax exportation to out-of-state consumers by permitting a pass-through of severance taxes or restrain it, by requiring producers to bear the burden of such a tax. Cf. Maryland v. Louisiana, 101 S. Ct. 2114 (1981).Google Scholar

203 If states collude, their collective market dominance will increase and with it their potential ability to export their tax burden. See text accompanying notes 183–87 supra.Google Scholar

204 In the Montana severance tax case, it was alleged that out-of-state utilities were required to purchase coal from Montana producers and to reimburse such producers for any severance taxes imposed upon such coal. Complaint of Commonwealth Edison Co. et al., § 13–17, Commonwealth Edison Co. v. Montana, No. 42657 (Dist. Ct. of Lewis and Clark County, 1st Jud. Dist. of Mont., June 20, 1978). See text accompanying notes 269–346 infra.Google Scholar

205 While international competition is an element that should be considered in assessing market dominance, it is sometimes overlooked and therefore warrants mention as a separate factor.Google Scholar

206 [1981] 1 State Tax Guide (All States) (CCH) p. 663 (1981) (chart).Google Scholar

207 [1979] State & Loc. Taxes (All States) (P-H) § 101 (chart).Google Scholar

208 See notes 206 & 207 supra.Google Scholar

209 Id.Google Scholar

210 See McLure, Interstate Exporting, supra note 170, at 59–64.Google Scholar

211 See text accompanying notes 180–205 supra.Google Scholar

212 See text accompanying notes 215–45 infra.Google Scholar

213 McLure, Interstate Exporting, supra note 170, at 57, 59; Phares, supra 172, at 30–36.Google Scholar

214 McLure, Interstate Exporting, supra note 170, at 59.Google Scholar

215 Id. at 54; Phares, supra note 172, at 37.Google Scholar

216 Charles E. McLure, Jr., The Elusive Incidence of the Corporate Income Tax: The State Case, 9 Pub. Finance Q. 395 (1981); Phares, supra note 172, at 36–37.CrossRefGoogle Scholar

217 See text accompanying notes 236–45 infra.Google Scholar

218 See text at note 174 supra.Google Scholar

219 McLure, supra note 216, at 395.Google Scholar

220 See id. at 395–397.Google Scholar

221 Id. at 398.Google Scholar

222 Id. at 401.Google Scholar

223 See Hellerstein & Hellerstein, supra note 57, at 399–400.Google Scholar

224 See McLure, Interstate Exporting, supra note 170, at 57.Google Scholar

225 See text accompanying notes 236–45 infra.Google Scholar

226 McLure, supra note 216, at 402.Google Scholar

227 See Hellerstein, Walter, Construing the Uniform Division of Income for Tax Purposes Act: Reflections on the Illinois Supreme Court's Reading of the “Throwback” Rule, 45 U. Chi. L. Rev. 768, 771–74 (1978).Google Scholar

228 See text accompanying notes 213–14 supra.Google Scholar

229 See Hellerstein, supra note 227, at 775–76.Google Scholar

230 McLure, supra note 216, at 403.Google Scholar

231 See text accompanying notes 181–205 supra.Google Scholar

232 See Hellerstein & Hellerstein, supra note 57, at 478–79.Google Scholar

233 Under separate accounting, the in-state activities of a business are treated separately from the rest of the business. Income is computed as if the activities of the business were confined to the taxing state. See Hellerstein, supra note 128, at 117.Google Scholar

234 Specific allocation traces income to the state of its putative source and includes the income in that state's tax base. See id. at 116.Google Scholar

235 See McLure, supra note 216, at 403–5.Google Scholar

236 See, e.g., Aaron, Henry J., Who Pays the Property Tax? A New View (Washington, D.C.: Brookings Institution, 1975); Dick Netzer, The Incidence of the Property Tax Revisited, 26 Nat'l Tax J. 515 (1973);Mieszkowski, Peter, The Property Tax: An Excise Tax or a Profits Tax, 1 J. Pub. Econ. 73 (1972).Google Scholar

237 Phares, supra note 172, at 43; McLure, Charles E. Jr., The “New View” of the Property Tax: A Caveat, 30 Nat'l Tax J. 69 (1977). Such consumers would include both the consumers of the goods and services produced by industrial and commercial property as well as consumers (i.e., renters) of residential property. Hence with the exception of taxes on residential property occupied exclusively by its owners (and who thus are consumers of such property), property taxes are generally thought to be susceptible to forward shifting under the “old” view. Phares, supra note 172, at 43.Google Scholar

238 Id.Google Scholar

239 McLure, supra note 237, at 70 (emphasis in original).Google Scholar

240 Phares, supra note 172, at 44. Netzer, supra note 236, at 518–19.Google Scholar

241 McLure, supra note 237, at 70.Google Scholar

242 McLure, Interstate Exporting, supra note 170, at 61.Google Scholar

243 Id. at 61–64.Google Scholar

244 Phares, supra note 172, at 31–32.Google Scholar

245 The interested reader may pursue these matters further in the sources cited above. See notes 236 & 237 supra and sources cited therein.Google Scholar

246 McLure, supra note 172, at 53–54. McLure explains the latter aspect of the federal offset in the following way:. But in addition to the offsets necessitated by the deducibility of state and local taxes, allowance must be made for the possibility that state and local taxes reduce adjusted gross incomes by being shifted backward and reducing returns to factors. In such a case the burden of the tax is lightened by the existence of the federal income tax. When gross income falls because of a state or local tax, the federal government shares the burden because its income tax receipts fall. Id. at 53.Google Scholar

247 Id.Google Scholar

248 See text accompanying notes 249–58 infra.Google Scholar

249 Richard A. Musgrave & Darwin Daicoff, Who Pays the Michigan Taxes, in Michigan Tax Study Staff Papers 131–83 (Lansing, Mich.: Secretary of Finance, 1958); University of Wisconsin Tax Impact Study Committee, Wisconsin's State and Local Tax Burden (Madison: University of Wisconsin School of Commerce, 1959); Oswald Harvey Brownlee, Estimated Distribution of Minnesota Taxes and Public Expenditure Benefits (Minneapolis: University of Minnesota Press, 1960). These studies are cited both by McLure, supra note 172, at 50 n.5, and by Phares, supra note 172, at 61–62, as representing the important early work in this area.Google Scholar

250 McLure, Interstate Exporting, supra note 170.Google Scholar

251 See, e.g., Phares, supra note 172; Hogan, Timothy D. & Shelton, Robert B., Interstate Tax Exportation and States' Fiscal Structures, 26 Nat'l Tax J. 553 (1973);Shelton, Robert B. & Morgan, William E., Resource Taxation, Tax Exportation, and Regional Energy Policies, 17 Nat. Resources J. 261 (1977).Google Scholar

252 Phares, supra note 172.Google Scholar

253 See, e.g., Thomas A. Eapen & Ann Navarro Eapen, Incidence of Taxes and Expenditures of Connecticut State and Local Governments: Fiscal Year 1967 (1970) (report prepared for the Connecticut State Revenue Task Force), Robert D. Ebel & Robert M. Kamins, Who Pays Hawaii's Taxes? (Social Sciences and Linguistics Institute, 1975), and Darwin Daicoff & Robert H. Glass, Who Pays Kansas Taxes? (Institute for Economic and Business Research, 1978), all cited in Phares, supra note 172, at 62.Google Scholar

254 McLure, Interstate Exporting, supra note 170. The following summary of McLure's findings is taken from id. at 64–69, without citation to individual findings.Google Scholar

255 These high export rates for the corporate income tax may seem inconsistent with the implications of McLure's suggestion that such a tax be analyzed as a composite of taxes imposed on the factors used to apportion corporate income. See text accompanying notes 221–23 supra. McLure observed that “[t]he upshot of this analysis is that a state corporate income tax based on formula apportionment is likely to be borne in large part by residents of the taxing state, in their capacities as consumers, immobile workers, and owners of land and immobile capital.” McLure, supra note 216, at 403. In his earlier study, however, McLure assumed that “taxes on the profits of local industries other than public utilities … fall on owners of capital in both the short run and the long run,” and that taxes on firms with national markets would also be borne in substantial part by profits in both the short and long run especially if the state did not dominate the national market. McLure, Interstate Exporting, supra note 170, at 57. In short, McLure's incidence assumptions in his empirical study, which led to the conclusion that much of the burden of a state corporate income tax is borne by nonresident owners of capital, coupled with the large federal offset for such taxes, may explain the disparity between the empirical findings of his earlier study and the theoretical implications of his more recent analysis.Google Scholar

256 Phares, supra note 172. The following summary of Phares' findings is taken from id. at 64–82, without citation to individual findings.Google Scholar

257 Id. at 74–75.Google Scholar

258 Id. at 66–67.Google Scholar

259 260 U.S. 245 (1922). The following discussion draws from Walter Hellerstein, Constitutional Constraints on State and Local Taxation of Energy Resources, 31 Nat'l Tax J. 245 (1978).Google Scholar

260 1921 Pa. Laws, No. 225, at 479.Google Scholar

261 260 U.S. at 257.Google Scholar

262 Id. at 249–52.Google Scholar

263 Id. at 251–53.Google Scholar

264 See text accompanying notes 62–68 supra.Google Scholar

265 260 U.S. at 259–60.Google Scholar

266 Id. at 261.Google Scholar

267 Oliver Iron Mining Co. v. Lord, 262 U.S. 172 (1923); Hope Natural Gas Co. v. Hall, 274 U.S. 284 (1927).Google Scholar

268 Presumably the Court would have invalidated a severance tax that explicitly discriminated against interstate commerce—e.g., one that by its terms was imposed exclusively on resources to be shipped outside the state—regardless of whether the resources had entered the stream of commerce. Cf. Welton v. Missouri, 91 U.S. 275 (1876); see text at note 67 supra.Google Scholar

269 Mont. Code Ann. § 15–35-101 et seq. (1981). The tax is imposed “on each ton of coal produced in the state.” Id. § 15–35-103. It is measured by the value or “contract sales price” of the coal, which means “the price of coal extracted and prepared for shipment f.o.b. mine, excluding the amount charged by the seller to pay taxes paid on production.” Id. § 15–35-102(1). The rate of the tax varies from 3 to 30 percent depending on the value and energy content of the coal and the method of extraction. Id. § 15–35-103. Substantially all of the coal involved in the case was alleged to be subject to the 30 percent rate, see Complaint of Commonwealth Edison Co. et al., § 24, Commonwealth Edison Co. v. Montana, No. 42657 (Dist. Ct. of Lewis and Clark County, 1st Jud. Dist. of Mont., June 20, 1978). In fact, however, the effective rate of the tax is lower than the statutory rate because, as indicated above, other taxes paid on production to federal, state, and local governments are excluded in computing the value of the coal to which the severance tax applies.Google Scholar

270 Complaint of Commonwealth Edison Co. et al., Commonwealth Edison Co. v. Montana, No. 42657, (Dist. Ct. of Lewis and Clark County, 1st Jud. Dist. of Mont., June 20, 1978); see also Complaint of Lake Superior District Power Co. et al., Lake Superior Dist. Power Co. v. Montana, No. 42689, (Dist. Ct. of Lewis and Clark County, 1st Jud. Dist. of Mont., June 28, 1978).Google Scholar

271 Complaint of Commonwealth Edison Co. et al., § 20, Commonwealth Edison Co. v. Montana, No. 42657 (Dist. Ct. of Lewis and Clark County, 1st Jud. Dist. of Mont., June 20, 1978).Google Scholar

272 Id. ¶ 22.Google Scholar

273 Id. ¶ 18.Google Scholar

274 Id. ¶ 26.Google Scholar

275 Id. ¶ 27.Google Scholar

276 Id. ¶ 28.Google Scholar

277 No. 42657 (Dist. Ct. of Lewis and Clark County, 1st Jud. Dist. of Mont., July 27, 1979).Google Scholar

278 Mont —, 615 P.2d 847 (1980).Google Scholar

279 449 U.S. 1033 (1980).Google Scholar

280 101 S. Ct. 2946 (1981).Google Scholar

281 See text at note 264 supra.Google Scholar

282 260 U.S. at 259.Google Scholar

283 Id. at 259–60, quoted in text at note 265 supra.Google Scholar

284 Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425, 443 (1980), quoted in Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946, 2953 (1981).Google Scholar

285 101 S. Ct. at 2953.Google Scholar

286 Id. at 2954 (quoting Commonwealth Edison Co. v. Montana,— Mont. —, —, 615 P.2d 847, 855 (1980)).Google Scholar

287 Id.Google Scholar

288 See note 269 supra.Google Scholar

289 Western Live Stock v. Bureau of Revenue, 303 U.S. 250 (1938); see text at note 78 supra.Google Scholar

290 Hellerstein, supra note 259, at 249.Google Scholar

291 101 S. Ct. at 2971 (citing id.).Google Scholar

292 Id. at 2954.Google Scholar

293 Id.Google Scholar

294 Id.Google Scholar

295 Id. at 2954–55.Google Scholar

296 See text accompanying notes 280–85 supra.Google Scholar

297 101 S. Ct. at 1954.Google Scholar

298 Id. at 2955 n.8 (citations omitted).Google Scholar

299 Id. at 2955.Google Scholar

300 Id.Google Scholar

301 Id.; see Brief for Appellants at 6, id.Google Scholar

302 101 S. Ct. at 2955.Google Scholar

303 On the assumption that the tax in question substantially affects interstate commerce.Google Scholar

304 101 S. Ct. at 2958 (emphasis in original).Google Scholar

305 Id. at 2958–59 (citations omitted).Google Scholar

306 Id. at 2956 (quoting Commonwealth Edison Co. v. Montana, — Mont. —, —, 615 P.2d 847, 856 (1980)).Google Scholar

307 Id. at 1956–57 (quoting Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 521–22 (1937)).Google Scholar

308 Id. at 2957.Google Scholar

309 Id. at 2958 (emphasis in original).Google Scholar

310 Id. at 2972 (quoting Hughes v. Oklahoma, 441 U.S. 322, 325–26 (1979)).Google Scholar

311 Id. at 2968.Google Scholar

312 Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977).Google Scholar

313 101 S. Ct. at 2970.Google Scholar

314 Id. at 2968–69.Google Scholar

315 Id. 2971 (citation omitted).Google Scholar

316 Id. at n.16.Google Scholar

317 Id.Google Scholar

318 Id. at 2971.Google Scholar

319 Id. at 2971–72 (citations omitted).Google Scholar

320 See text accompanying notes 259–85 supra.Google Scholar

321 See text at note 105 & note 105 supra.Google Scholar

322 Prior to Commonwealth Edison, the Court had done little more than make perfunctory references to this criterion. See text accompanying notes 135–39 supra.Google Scholar

323 See text accompanying notes 297–98 supra.Google Scholar

324 101 S. Ct. at 2959 (citations omitted).Google Scholar

325 See text at note 307 supra.Google Scholar

326 Id.Google Scholar

327 Id. at 2972.Google Scholar

328 101 S. Ct. at 2955 n.8 (quoting Commonwealth Edison Co. v. Montana, — Mont. —, —, 615 P.2d 847, 856 (1980)).Google Scholar

329 Brief for Appellants at 12, Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946 (1981).Google Scholar

330 See, e.g., John V. Krutilla & Anthony C. Fisher with Richard E. Rice, Economic and Fiscal Impacts of Coal Development: Northern Great Plains (Baltimore, Md: Johns Hopkins University Press, 1978); Comment, An Outline for Development of Cost-based State Severance Taxes, 20 Nat. Resources J. 913 (1980).Google Scholar

331 Id.Google Scholar

332 Id. (citations omitted).Google Scholar

333 Id. (quoting H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 534–35 (1949)).Google Scholar

334 See 101 S. Ct. at 2959 n.18; id. at 2972 n.19.Google Scholar

335 See, e.g., S. 2965, 96th Cong., 2d Sess. (1980); H.R. 6625, 96th Cong., 2d Sess. (1980).Google Scholar

336 See Coal Severance Tax: Hearing on S. 2695 Before the Senate Comm. on Energy and Natural Resources, 96th Cong., 2d Sess. (1980); Coal Severance Taxes: Hearings on H.R. 6625, H.R. 6654, and H.R. 7163 Before the Subcomm. on Energy and Power of the House Comm. on Interstate and Foreign Commerce, 96th Cong., 2d Sess. (1980).Google Scholar

337 101 S. Ct. at 2959 n.18.Google Scholar

338 Id. at 2972 n.19.Google Scholar

339 See text accompanying notes 181–205 supra.Google Scholar

340 See text at note 258 supra.Google Scholar

341 101 S. Ct. at 2971 n.17.Google Scholar

342 See text accompanying notes 181–205 supra; McLure, Tax Exporting, supra note 170; but see text accompanying notes 327–28 supra.Google Scholar

343 McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 46 n.2 (1940); see generally Hellerstein, supra note 8, at 1448–50.Google Scholar

344 Brief for Appellants at 8–9, Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946 (1981).Google Scholar

345 Cf. Tribe, supra note 60, at 400 n.4.Google Scholar

346 101 S. Ct. at 2959.Google Scholar

347 Brown, Ernest J., The Open Economy: Justice Frankfurter and the Position of the Judiciary, 67 Yale L.J. 219, 222 (1957).Google Scholar

348 The taxpayers did rely on the Supremacy Clause, U.S. Const, art. VI, cl. 2, in claiming that Montana's severance tax was preempted by federal legislation. The Court unanimously rejected the argument. 101 S. Ct. at 2960–64, 2972 n.21.Google Scholar

349 See text at note 146 supra.Google Scholar

350 Brief for Appellants at 6, Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946 (1981).Google Scholar

351 101 S. Ct. at 2959 n.17 (quoting Magnano Co. v. Hamilton, 292 U.S. 40, 44 (1934)).Google Scholar

352 See text accompanying notes 147–61 supra.Google Scholar

353 See text accompanying notes 150–61 supra.Google Scholar

354 Allied Stores v. Bowers, 358 U.S. 522, 532 (1959) (Brennan, J., concurring).Google Scholar

355 Id. at 533.Google Scholar

356 101 S. Ct. at 2082 n.21.Google Scholar

357 Transcript of Oral Argument at 18, Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946 (1981).Google Scholar

358 Id. at 25.Google Scholar

359 Id. at 28.Google Scholar

360 Id.Google Scholar

361 101 S. Ct. at 2959 n.16.Google Scholar

362 Cf. H.B. 7 introduced in the 1981 session of the Alaska legislature, which proposed the repeal of all state taxes except the income tax on oil and gas corporations.Google Scholar

363 See, e.g., Harry Kalven, Jr., The Metaphysics of the Law of Obscenity, 1960 Sup. Ct. Rev. 1 (1960).CrossRefGoogle Scholar

364 See text accompanying notes 10–44 supra.Google Scholar

365 See text accompanying notes 163–69 supra.Google Scholar

366 See text accompanying notes 334–38 supra.Google Scholar

367 See text accompanying notes 270–365 supra.Google Scholar

368 See text accompanying notes 206–14 supra. The suggestion in the text that consumption taxes are unlikely to give rise to claims of excessive tax exportation is based on the thesis that any taxes that fall predominantly on residents (i.e., voters) will tend not to be excessive. See M'Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 428 (1819).Google Scholar

369 101 S. Ct. 2114 (1981). There was also a substantial preemption issue in Maryland v. Louisiana, see id. at 2128–32, which will not be considered here.Google Scholar

370 La. Rev. Stat. Ann. §§ 47:1301-1307 (West Cum. Supp. 1981) (First Use Tax on Natural Gas); id. § 47:1351 (First Use Tax Trust Fund); id. § 47:647 (severance tax credit); id. § 47:11 (tax credit for electric and natural gas service). The ensuing discussion draws from Walter Hellerstein, State Taxation in the Federal System: Perspectives on Louisiana's First Use Tax on Natural Gas, 55 Tul. L. Rev. 601 (1981).Google Scholar

371 La. Rev. Stat. Ann. § 47:1303(A) (West Cum. Supp. 1981).Google Scholar

372 A taxable “use” was defined as the sale; the transportation in the state to the point of delivery at the inlet of any processing plant; the transportation in the state of unprocessed natural gas to the point of delivery at the inlet of any measurement or storage facility; transfer of possession or relinquishment of control at the delivery point in the state; processing for the extraction of liquefiable component products or waste materials; use in manufacturing; treatment; or other ascertainable action at a point within the state. Id. § 47:1302(8).Google Scholar

373 [1981] 2 State Tax Guide (All States) (CCH) pp. 4501–2.Google Scholar

374 The Outer Continental Shelf Lands Act provides that “[s]tate taxation laws shall not apply to the outer Continental Shelf.” 43 U.S.C. § 1333(a)(2)(A) (Supp. III 1979).Google Scholar

375 The Proposed First Use Tax on Natural Gas: Hearings on H.B. 768 Before the Comm. on Ways and Means of the Louisiana House of Representatives, 4th Reg. Sess. (1978); The Proposed First Use Tax on Natural Gas: Hearings on H.B. 768 Before the Revenue and Fiscal Affairs Comm. of the Louisiana Senate, 4th Reg. Sess. (1978) [hereinafter cited as Senate Hearings].Google Scholar

376 Senate Hearings, supra note 375 (statement of Rep. William Tauzin).Google Scholar

377 Id.Google Scholar

378 La. Rev. Stat. Ann. § 47:1303(B) (West Cum. Supp. 1981).Google Scholar

379 Such as the questions whether the tax had a sufficient nexus with the state, see 101 S. Ct. at 2133 n.27, whether it was fairly apportioned, id., or whether the analogy the state drew to a traditional compensating use tax was a persuasive one. Id. at 2135.Google Scholar

380 Exceptions of the Plaintiff States and Brief in Support of Exceptions at 30, Maryland v. Louisiana, 101 S. Ct. 2114 (1981).Google Scholar

381 La. Rev. Stat. Ann. § 47:647 (West Cum. Supp. 1981).Google Scholar

382 Id. § 47:11(B).Google Scholar

383 Id. § 47:1303(A).Google Scholar

384 Id.Google Scholar

385 Id.Google Scholar

386 Id.Google Scholar

387 Exceptions of the Plaintiff States and Brief in Support of Exceptions at 10, Maryland v. Louisiana, 101 S. Ct. 2114 (1981).Google Scholar

388 “Owner” was defined as. the person or person[s] having title to and the right to alienate the natural gas subject to the tax at the time a use occurs in the state. It shall not include any person to whom temporary possession or control has been transferred. In the event of a sale the purchaser shall be deemed the owner. La. Rev. Stat. Ann. § 47:11302(9) (West Cum. Supp. 1981).Google Scholar

389 Id. § 47:1305.Google Scholar

390 Id. § 47:1303(C).Google Scholar

391 Id.Google Scholar

392 In most instances, the pipeline company becomes the owner of the gas as it surfaces at the offshore platform. The producer, however, usually retains the right to extract the liquids—ethane, butanes, and propane—from the gas. In these retention contracts, the producer agrees to reimburse the owner for all costs associated with the extraction process.Google Scholar

393 101 S. Ct. at 2133 (quoting Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 458 (1959)).Google Scholar

394 Id. at 2134.Google Scholar

395 See text accompanying notes 381–86 supra.Google Scholar

396 101 S. Ct. at 2134.Google Scholar

397 Id.Google Scholar

398 Id.Google Scholar

399 Id. at 2136.Google Scholar

400 Id. at 2135 (quoting the Report of the Special Master, Second Report, at 34).Google Scholar

401 Exceptions of the Plaintiff States and Brief in Support of Exceptions at 10, Maryland v. Louisiana, 101 S. Ct. 2114 (1981).Google Scholar

402 Id. at 11 (quoting The Proposed First Use Tax on Natural Gas: Hearings on H.B. 768 Before the Comm. on Ways and Means of the Louisiana House of Representatives, 4th Reg. Sess. 37 (1978) (testimony of Ed Steimel)).Google Scholar

403 See text at note 215 supra.Google Scholar

404 See note 367 supra. There may, however, be substantial exporting of personal income taxes to the federal government through the federal offset, see text accompanying notes 236–38 supra, but, as there noted, such exportation is not a concern of this article.Google Scholar

405 See text accompanying notes 162–69 supra.Google Scholar

406 See text accompanying notes 369–402 supra.Google Scholar

407 420 U.S. 656 (1975).Google Scholar

408 Forty states and the District of Columbia have broad-based personal income taxes. [1981] 1 State Tax Guide (All States) (CCH) p. 662. New Hampshire imposes a limited income tax on interest and dividends. N.H. Rev. Stat. Ann. § 77:1 et seq. (1971 & Supp. 1979).Google Scholar

409 N.H. Rev. Stat. Ann. § 77-B:2 II (1971), quoted at 420 U.S. at 658.Google Scholar

410 N.H. Rev. Stat. Ann. § 77-B:2 I (1971), quoted at 420 U.S. at 658.Google Scholar

411 See note 408 supra.Google Scholar

412 See Hellerstein, Walter, Some Reflections on the State Taxation of a Nonresident's Personal Income, 72 Mich. L. Rev. 1309, 1337, 1352 (1974); [1981] State Tax Guide (CCH) (All States) p. 1523.Google Scholar

413 420 U.S. at 666.Google Scholar

414 Department of Revenue v. Association of Washington Stevedoring Cos., 435 U.S. 734, 750 (1978).Google Scholar

415 420 U.S. at 669.Google Scholar

416 Id. at 665.Google Scholar

417 See text accompanying notes 297–98 supra.Google Scholar

418 See text accompanying notes 216–35 supra.Google Scholar

419 See text accompanying notes 222–25 supra.Google Scholar

420 See text accompanying notes 357–62 and 414–16 supra.Google Scholar

421 Alaska Stat. §§ 43.19.010-.050 (1977 & Cum. Supp. 1981), 43.20.021 (Cum. Supp. 1981); see text at note 213 supra.Google Scholar

422 Alaska Stat. § 43.21.010 et seq. (Cum. Supp. 1981).Google Scholar

423 See note 233 supra.Google Scholar

424 Alaska Stat. § 43.21.010 et seq. (Cum. Supp. 1981).CrossRefGoogle Scholar

425 See, e.g., Atlantic Richfield Co. v. State of Alaska, No. 3AN-79-1903-Civ. (Super. Ct., 3d Jud. Dist. of Alaska, filed March 21, 1979).Google Scholar

426 Alaska Sess. Laws ch. 116 (S.B. 524), reported inCCH State Tax Review, vol. 42, No. 31, Aug. 3, 1981.Google Scholar

427 See text accompanying notes 112–28 supra; Hellerstein, supra note 128.Google Scholar

428 See text accompanying notes 129–34 supra.Google Scholar

429 See text accompanying notes 147–61 supra.Google Scholar

430 See text accompanying notes 216–35 supra.Google Scholar

431 See text accompanying notes 288–309 supra.Google Scholar

432 See text accompanying notes 370–402 supra.Google Scholar

433 Cf. Exxon Corp. v. Governor of Maryland, 437 U.S. 117 (1978) (state regulation discriminating against integrated oil companies not violative of Commerce Clause).Google Scholar

434 See text accompanying notes 269–79 supra.Google Scholar

435 See text accompanying notes 259–63 supra.Google Scholar

436 Counterclaim of Exxon Corporation for Refund of Taxes §§ 42–43, Alaska v. Exxon Corp., No. 3AN-80-1542 Civ. (Super. Ct., 3d Jud. Dist. of Alaska, Oct. 6, 1980).Google Scholar

437 As alleged in one of the documents filed in the litigation challenging Alaska's tax:. The history of Alaska's income taxation of the oil and gas industry … shows graphically how Alaska has altered its pattern of taxation whenever such alteration would increase Alaska's take. Because there was little or no actual production from Prudhoe Bay until mid-1977, Exxon's Alaska operations produced a sizable loss during this time period. Exxon, however, was engaged in substantial exploration and development work, and had significant property interests and payroll in Alaska. The apportionment formula contained in the Net Income Tax thus apportioned a substantial percentage of Exxon's non-Alaska income to Alaska during this period. Between January 1, 1969 and December 31, 1977, Exxon paid $1,111,643 incorporate income taxes to Alaska; in addition, Alaska claims that Exxon owes another $1,835,401 for that period. Prudhoe Bay production commenced in June 1977. Given the now substantial production from the field, Alaska concluded that separate allocation of production and pipeline income, rather than apportionment as provided for in the Net Income Tax, would produce greater tax revenues. Alaska accordingly enacted the Oil Tax Act effective January 1, 1978, and reversed its policy on apportioning production and pipeline income. If counterclaimants were still taxed under the Net Income Tax, counterclaimants would have paid a total of approximately $31 million in income taxes for 1978 and 1979. Instead, counterclaimants paid in excess of $132 million—over $100 million more. Id. at §§ 32–33.Google Scholar

438 101 St. Ct. at 2968 n.11.Google Scholar

439 See text accompanying notes 357–63 supra. As indicated in the cited text, I am not suggesting that such a decision could be rationalized on the basis of clearly articulated analytical principles.Google Scholar

440 See text accompanying notes 216–45 & 417–19 supra.Google Scholar

441 101 S. Ct. at 2957.Google Scholar

442 Michelin Tire Corp. v. Wages, 423 U.S. 276, 285–86 (1976).Google Scholar

443 See text accompanying notes 16–30 supra.Google Scholar

444 See text accompanying notes 269–309 supra.Google Scholar

445 See text accompanying notes 370–402 supra.Google Scholar

446 See text accompanying notes 357–62 supra.Google Scholar

447 The severance tax, the corporate income tax, and the property tax, to name three. See text accompanying notes 175–76 & 216–45 supra.Google Scholar

448 See text accompanying notes 177–79 supra.Google Scholar

449 Compare, e.g., Tom Cochran & J. R. Prestidge, The United American Emirates: State Revenues from Non-Renewable Energy Resources (Washington, D.C.: Northeast-Midwest Institute, 1981) with text accompanying notes 181–205 supra.Google Scholar

450 See text accompanying notes 249–58 supra.Google Scholar

451 See, e.g., Exxon Corp. v. Wisconsin Dep't of Revenue, 447 U.S. 207 (1980); Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425 (1980); Moorman Mfg. Co. v. Bair, 437 U.S. 267 (1978); Department of Revenue v. Association of Washington Stevedoring Cos., 435 U.S. 734 (1978); National Geographic Soc'y v. State Bd. of Equalization, 430 U.S. 551 (1977); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977); Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976).Google Scholar

452 Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 476 (1959) (Frankfurter, J., dissenting).Google Scholar

453 See Ernest J. Brown, The Open Economy: Justice Frankfurter and the Position of the Judiciary, 67 Yale L.J. 219, 221 (1957). While this observation is generally made in the context of the Court's decisions construing the Commerce Clause, where congressional power to modify the Court's decisions is unquestioned, see note 454 infra; Commonwealth Edison Co. v. Montana, 101 S. Ct. 2946, 2959 (1981), it would seem to be equally true with respect to virtually any issue involving state tax exportation regardless of the constitutional provision in question. Such an issue would almost certainly fall within the scope of congressional power under the Commerce Clause, see id.; Hodel v. Virginia Surface Mining & Reclamation Ass'n, Inc., 101 S. Ct. 2352 (1981). Moreover, if the Due Process or Equal Protection Clause were at issue, Congress' power under § 5 of the Fourteenth Amendment might provide a basis for congressional intervention. See U.S. Const, amend. IV, § 5.Google Scholar

454 See, e.g., Southern Pac. Co. v. Arizona, 325 U.S. 761, 769 (1945); Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 155–56 (1942); South Carolina State Highway Dep't v. Barnwell Bros., Inc., 303 U.S. 177, 189–90 (1938).Google Scholar

455 See text at note 346 supra.Google Scholar