Commerce Clause - License And Privilege Tax

A state may not impose a tax for the privilege of engaging in, and carrying on, interstate commerce, but it might be permitted to require a license if doing so does not impose a burden on interstate commerce. A state tax on the use of an instrumentality of commerce is invalid, but a tax may be imposed on the use of goods that have traveled in interstate commerce, such as cigarettes. A state may not levy a direct tax on the gross receipts and earnings derived from interstate or foreign commerce, but it may tax receipts from intrastate business or use the gross receipts as the measurement of a legitimate tax that is within the state's authority to levy.

A state may tax the sale of gasoline or other motor fuels that were originally shipped from another state, after the interstate transaction has ceased. As long as the sale is made within the state, it is immaterial that the gasoline to fulfill the contract is subsequently acquired by the seller outside the state and shipped to the buyer. The state may tax the sale of this fuel to one who uses it in interstate commerce, as well as the storage or withdrawal from storage of imported motor fuel, even though it is to be used in interstate commerce.

Although radio and television broadcasting may not be burdened by state-privilege taxes as far as they involve interstate commerce, broadcasting involving intrastate activity may be subject to local taxation.

A state may impose a nondiscriminatory tax for the use of its highways by motor vehicles in interstate commerce if the charge bears a fair relation to the cost of the construction, maintenance, and regulation of its highways.

The Commerce Clause does not prohibit a state from imposing a tax on a natural resource that is produced within its borders and that is sold primarily to residents of other states. In Commonwealth Edison Co. v. Montana, 453 U.S. 609, 101 S. Ct. 2946, 69 L. Ed. 2d 884 (1981), the U.S. Supreme Court upheld a 30 percent severance tax levied by Montana on the production of coal, the bulk of which was exported for sale to other states. The amount of the tax was challenged as an unconstitutional burden on interstate commerce. The Court reasoned that the Commerce Clause does not give the residents of one state the right to obtain resources from another state at what they consider a reasonable price, for that right would enable one state to control the development and depletion of natural resources in another state. If that right were recognized, state and federal courts would be forced to formulate and to apply a test for determining what is a reasonable rate of taxation on legitimate subjects of taxation, tasks that rightfully belong to the legislature.