The Commerce Clause, and Taxation of Gross Receipts and of "Intangible Property."

Authors

Frederick H. Cooke

Abstract

The decision in Galveston, Harrisburg &c. Ry. Co. v. Texas curiously, perhaps even painfully, illustrates the confusion that has resulted from the establishment by the Supreme Court of what seem to me to be incompatible rules of taxation. As is well understood, the commerce clause of the Federal Constitution imposes certain restrictions upon action under the authority of a State. That is to say, it is a general rule that has been frequently applied, that no restriction by way of prohibition or otherwise may be validly imposed under the authority of a State upon transportation within the scope of the commerce clause. Now such restrictions invalidly imposed under the authority of a State have commonly been in the form of a condition, rather than of absolute prohibition, thus, though by no means necessarily, by way of requirement of payment of a "tax," commonly termed a "license" or "privilege" tax. But such a "tax" is to be carefully distinguished from a mere ordinary tax on property, not imposed by way of condition. Yet the distinction has not infrequently been overlooked, with resultant confusion. Thus it is beyond the power of a State to impose a "license tax" as a condition of transacting the business (that is, in so far as within the scope of the commerce clause) of soliciting passengers for travel by railroad; so as to the business of transmission of telegraph messages; or that of transportation by express. On the other hand, it is equally well settled that if otherwise property is subject to taxation under the authority of a State, it is no objection to taxation thereof that if is employed in transportation within the scope of the commerce clause.

Recommended Citation

Frederick H. Cooke, The Commerce Clause, and Taxation of Gross Receipts and of "Intangible Property.", 8 Mich. L. Rev. 25 (1909).
Available at: https://repository.law.umich.edu/mlr/vol8/iss1/3