Import-Export Clause

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IMPORT-EXPORT CLAUSE

The Constitution provides: "No State shall … lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws." It also prohibits the federal government from placing any tax or duty on exports.

The limitation on state taxation of imports came before the Supreme Court in brown v. maryland (1827). Chief Justice john marshall pointed out that the clear intention of the Framers was to prohibit the states from levying customs duties. Only Congress was to have this power. He recognized, however, that state power to raise revenues would be unduly restricted if goods that had come from another country could never be subject to taxation along with other goods within the state. He resolved the dilemma by holding that imported goods should be free from state taxation until they have been incorporated into the mass of property in the state. Such incorporation would take place when the importer sold the goods or when he took them out of the original package in which they were imported. Hence was born the original package doctrine, which survived as the measure for state taxation of imports until michelin tire corp. v. wages (1976).

In Michelin the Supreme Court held that the intention of the Framers was only to prevent the states from imposing special taxes on imports. Hence, it concluded that imported goods could, as soon as they came to rest in the taxing state, be subject to nondiscriminatory state property taxes.

The Supreme Court has long held that goods become exports—and thus free from either state or federal taxes—when they have actually commenced the journey to another country. Once the journey has commenced or they have been committed to a common carrier for transport abroad, they may not be taxed.

Application of the import-export clause to those businesses that transport or otherwise handle goods in foreign commerce has posed a separate problem. Recently the Court has held that nondiscriminatory taxes apportioned to cover only values within the taxing state may be imposed upon the instrumentalities of foreign commerce or the business of engaging in such commerce. Thus, in Department of Revenue of Washington v. Association of Washington Stevedoring Companies (1978), it upheld a Washington tax on the privilege of engaging in business activities measured by gross receipts as applied to a stevedoring company that confined its activities to the loading and unloading in Washington ports of ships engaged in foreign commerce.

In general, the rules governing state taxation of interstate commerce now seem to apply to imports and exports.

Edward L. Barrett, Jr.
(1986)

(see also: State Taxation of Commerce.)