Jonah Patel
The US Constitution's Export Clause prohibits the federal government from imposing taxes or duties on exports. This clause, also known as the Prohibition on Taxes on Exports, is part of the Constitution's effort to ensure uniformity in trade relations with foreign countries and prevent commercial strife among the states. The interpretation of the clause has been refined over the years through court cases such as Turpin v. Burgess (1886), Cornell v. Coyne (1904), Fairbank v. United States (1901), and United States v. Hvoslef (1915). These cases have clarified the scope of the clause, distinguishing between discriminatory and nondiscriminatory taxes on exports and determining when a tax falls on articles exported. The Export Clause is an essential aspect of US tax law, shaping the way the government collects revenue from international trade.
| Characteristics | Values |
|---|---|
| Taxation of exports | Prohibited |
| Taxation of imports | Permitted |
| Taxation of goods at pre-export stage | Permitted |
| Taxation of goods in the course of exportation | Prohibited |
| Taxation of income from exports | Permitted |
| Taxation of exports to unincorporated territories | Permitted |
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What You'll Learn
The Import-Export Clause
> "No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's [sic] inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul [sic] of the Congress."
The court has interpreted the words "imports," "exports," and "imposts" in the Import-Export Clause to refer exclusively to foreign trade. In the case of Brown v. Maryland, the court defined "imports" as articles brought into the country and "impost" as a duty, custom, or tax levied on those articles. The court also examined the use of these terms in Article I, § 8, clause 1, which grants Congress the power to levy taxes, duties, imposts, and excises, but with the provision that they remain uniform throughout the United States.
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Congressional authority to impose internal taxes
The Congressional authority to impose internal taxes is derived from Article I, Section 8, Clause 1 of the US Constitution, also known as the Taxing Clause. This clause grants Congress the power to "lay and collect Taxes, Duties, Imposts, and Excises" to fulfil the country's financial obligations and ensure the general welfare of the United States. The specific wording of this clause gives Congress broad discretion in determining what will be taxed and how much tax will be levied.
The Supreme Court has played a significant role in interpreting and defining the limits of Congress's taxing authority. For instance, in McCulloch v. Maryland (1819), the Court suggested that redress for any misuse of the taxing power lies with the political process, where citizens can hold their elected officials accountable. Later, the Court affirmed that Congress exceeds its authority when it imposes monetary payments primarily intended to regulate behaviour rather than raise revenue.
The Import-Export Clause, adopted by the Constitutional Convention, prohibits the federal government and individual states from imposing taxes or duties on exports. This clause ensures uniformity in trade relations with foreign nations and prevents states from hindering interstate commerce with conflicting tariffs and regulations. The Supreme Court has interpreted the Export Clause to apply only to shipments to foreign countries and not to unincorporated territories, such as Puerto Rico or the Northern Mariana Islands.
While the Import-Export Clause restricts taxation on exports, it is important to note that a general tax applied uniformly to all property, including that intended for export, may not fall within this prohibition. For example, in Turpin v. Burgess (1886), the Court held that a tax on goods before they left the factory was not an unconstitutional tax on exports because it was levied regardless of their intended exportation. Similarly, in Cornell v. Coyne (1904), the Court clarified that exported goods are not exempt from ordinary taxation that applies equally to all similar property.
In conclusion, while Congress has the authority to impose internal taxes under the Taxing Clause, this power is not absolute. The Import-Export Clause and court interpretations thereof restrict the taxation of exports, ensuring uniform trade relations and preventing states from imposing conflicting tariffs. However, general taxes applied uniformly to all property, even if some of it is intended for export, may be permissible according to Supreme Court precedent.
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Excise taxes on exports
The US Constitution's Export Clause prohibits Congress from imposing taxes or duties on exports. This is also referred to as the Prohibition on Taxes on Exports. The Supreme Court has interpreted this clause to apply only to exports to foreign countries, not to unincorporated territories of the US, such as Puerto Rico and the Northern Mariana Islands.
The Constitution states that "No Tax or Duty shall be laid on Articles exported from any State". This prohibition on excise taxes applies specifically to the imposition of duties on goods that are in the process of being exported. In other words, a tax on exports is a tax on the goods themselves.
In Turpin v. Burgess (1886), the Supreme Court held that a general tax laid on all property, including that intended for export, is not prohibited as long as it is not levied on goods in the course of exportation or because of their intended exportation. The tax in question was imposed on goods before they left the factory, and the Court found that whether they would be exported or not would depend on the will of the manufacturer.
In Cornell v. Coyne (1904), the Court clarified that the constitutional provision means that no burden by way of tax or duty can be imposed on the exportation of articles. However, this does not mean that exported goods are exempt from general taxation, which applies equally to all property.
In United States v. IBM Corp. (1996), the Court held that a federal excise tax on insurance policies issued by foreign countries for exported products was unconstitutional. The Court observed that the tax was, in essence, a tax on the exported goods themselves. However, the Court did not overrule the previous case, as the government chose not to present that specific argument.
In Thompson v. United States (1892), the Court held that the giving of a bond for the exportation of distilled liquor did not exempt the spirits from an excise tax when they were not exported. Additionally, in Peck & Co. v. Lowe (1918) and National Paper Co. v. Bowers (1924), the Court found that a tax on the income of a corporation derived from its export trade was not a tax on "articles exported" and thus did not violate the Constitution.
In Spalding & Bros. v. Edwards (1923), the Court held that the sale of goods to a foreign consignee through an exporting carrier was part of the exportation process and therefore exempt from a general tax on sales of such commodities.
In Fairbank v. United States (1901), the Court found that a stamp tax imposed on foreign bills of lading was effectively a tax on exports and thus prohibited. Similarly, in United States v. Hvoslef (1915), the Court stated that a tax on charter parties was, in substance, a tax on exports.
In United States v. United Shoe Corp. (1998), the Court held that the Harbor Maintenance Tax (HMT) was unconstitutional under the Export Clause when applied to goods loaded at US ports for export. The HMT required shippers to pay a uniform charge on cargo shipped through the nation's ports, which the Court found to be a tax. However, the Court clarified that a "user fee" for government-supplied services or facilities is not prohibited, as it lacks the attributes of a general tax or duty.
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The Export Clause and its interpretation
The Export Clause, or the Prohibition on Taxes on Exports, is outlined in Article I, Section 9, Clause 5 of the United States Constitution. It states that "no Tax or Duty shall be laid on Articles exported from any State". This clause is interpreted to mean that no state can impose taxes or duties on goods that are in the course of exportation to a foreign country.
The interpretation and application of the Export Clause have been the subject of several court cases, with some key rulings providing clarity on its scope and limitations. For example, in Turpin v. Burgess (1886), the court held that a general tax laid on all property, including that intended for export, is not prohibited as long as it is not levied on goods in the course of exportation or because of their intended exportation. This means that goods intended for export are subject to the same general taxes as any other property, but once they enter the stream of commerce leading to exportation, they are protected by the Export Clause.
In Cornell v. Coyne (1904), the court clarified that the Export Clause does not mean that exported goods are exempt from ordinary taxes that apply to all property similarly situated. This means that exported goods are still subject to general taxes as long as those taxes are not specifically imposed because of their export status.
The Export Clause has also been interpreted in harmony with the Import-Export Clause, which prevents states, without the consent of Congress, from imposing tariffs on imports and exports beyond what is necessary for inspection laws. The Import-Export Clause is outlined in Article I, Section 10, Clause 2 of the US Constitution. The Supreme Court has interpreted both clauses to address shipments to foreign countries, not to unincorporated territories like Puerto Rico or the Northern Mariana Islands.
In addition, the Export Clause has been applied in cases involving excise taxes and insurance policies. In Fairbank v. United States (1901), the court held that a stamp tax on foreign bills of lading was, in substance, a tax on exports and thus prohibited by the Export Clause. Similarly, in United States v. IBM Corp. (1996), the court found that a federal excise tax on insurance policies issued by foreign countries for exported products was unconstitutional.
The interpretation of the Export Clause has evolved over time, with courts crafting rules to determine when a tax falls on "articles exported". While the clause provides important protections for exports, its application is not absolute and there are still complexities and grey areas that require judicial interpretation.
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The constitutional prohibition on export taxes
The US Constitution's Export Clause prohibits the federal government from imposing taxes or duties on exports. This is enshrined in Article 1, Section 9, Clause 5, which states that "No Tax or Duty shall be laid on Articles exported from any State".
The Supreme Court has interpreted this clause to refer only to shipments to foreign countries, not to unincorporated territories such as Puerto Rico and the Commonwealth of the Northern Mariana Islands. The Export Clause is also distinct from the Import-Export Clause, which prohibits states from imposing taxes or duties on imports or exports without the consent of Congress.
The prohibition on excise taxes applies only to the imposition of duties on goods by reason of exportation. A general tax laid on all property, including that intended for export, is not prohibited, as long as it is not levied on goods in the course of exportation or because of their intended exportation. For example, in Turpin v. Burgess (1886), the Court held that a tax laid on goods before they had left the factory was not prohibited, as they were not in the course of exportation and might never be exported.
The Court has also held that certain "user fees" are not prohibited by the Export Clause, as they lack the attributes of a generally applicable tax or duty and are instead designed to compensate for government-supplied services, facilities, or benefits. However, the Export Clause has been interpreted to categorically bar Congress from imposing any tax on exports. For example, in United States v. IBM Corp. (1996), the Court held that a federal excise tax on insurance policies issued by foreign countries for exported products was unconstitutional.
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Frequently asked questions
The US Constitution's Import-Export Clause states that "No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports". This clause was adopted by the Constitutional Convention to address the issues of commercial strife between states and the federal government's lack of secure funding under the Articles of Confederation.
This means that Congress has the sole authority to impose taxes or duties on exports and imports. The Export Clause specifically prohibits any taxation on goods in the course of exportation. However, a general tax laid on all property, including that intended for export, is not prohibited as long as it is not levied specifically on goods being exported.
Yes, there are some exceptions. For example, a legitimate user fee may be applied to vessels carrying exports, and an income tax of general application is not considered a tax on exports. Additionally, the Export Clause only applies to goods exported to a foreign country and not to unincorporated territories of the United States, such as Puerto Rico.
