Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-18
basis FOR TAXES
ON BUS LINES LAID
Court Decision Indicates
Carriers May Be Assessed
for Highway Use.
BY GEORGE E. DOYING.

Those States which have not yet sue
ceeded in levying special taxes upon
interstate motor buses are expected to
take advantage at the first opportunity
of the definite instructions given by the
Supreme Court Of the United States, in
an opinion by Justice Brandeis, hold
ing invalid a Tennessee statute which
attempted to assess privilege tax upon
interstate carriers.
The opinion, it was declared here to-
day, makes clear the precise manner
in which the court will approve taxation
of these carriers. They cannot be taxed
on the basis of earnings, and this in
cludes a tax measured by seating
capacity, the court held.
Glst Of Opinion.
"As such a charge is a direct burden
on interstate commerce" the opinion
says, "the tax cannot be sustained un-
less 1t appears afflrmatively, in some
way. that it is levied only as compen-
sation for use of the highways or to
defray the expense of regulating motor
trafic. This may be indicated by the
nature of the imposition, such as a
mileage tax directly proportioned to
the Use or by the express ALLEGATION
purposes, or otherwise.
Where it is shown that the tax Is so
imposed, 1t will be sustained unless the
taxpayer shows that 1t bears no reason
able relation to the privilege of using
the highways or Is discriminatory"
The decision was rendered upon an
appeal by an Ohio bus corporation OPP
Grating exclusively in interstate BUSH
ness between Cincinnati and Atlanta,
passing through Tennessee. The Ten
nessee Legislature in 1927 enacted law
for a privilege tax against various lines
of business. For interstate bus lines
the law provided a graduated scale ac-
cording to seating capacity, the amount
ranging from $50 to $3.50 a year. For
a bus having capacity of 20 to 80
passengers the tax was to be $500.
Use Of Highways.
Interstate Transit, Inc, the Ohio COM
pany, operated eight buses through
Tennessee and objected to paying the
$4,000 demanded by the State. The
State Supreme Court held the levy to be
proper, but the Supreme court Of the
United States reaf1rmed its holding that
a State may tax an interstate motor
carrier only for the use of the public
highways or to defray the expense Of
regulating motor traffic
Being free to levy occupation taxes
States may tax the privilege of doing
an interstate bus business without re-
gard to whether the charge imposed
represents merely a fair compensation
for the use of their highways" said the
court. But since a State may demand
of one carrying on an insterstate bust
ness only fair compensation for what it
gives, such imposition, although termed
a tax, cannot be tested by standards
which generally determine the validity
Of taxes. Being valid only II compen-
satory, the charge must be necessarily
predicated upon the use made, or to be
made, of the highways of the State.
In the present act the amount of
the tax is not dependent upon such
use. The tax is proportioned solely to
the earning capacity of the vehicle.
Accordingly, there is here no suficient
relation between the measure employed
and the extent or manner of use to
justify holding that the tax was a
charge made merely as compensation
for the use Of the highways by inter-
state buses
(Copyrieht, 1917