Opinion ID: 716733
Heading Depth: 3
Heading Rank: 4

Heading: Department of Revenue v. Kurth Ranch: Objective Purpose and Deterrence

Text: 94 One year after deciding Austin, the Court added another wrinkle in Department of Revenue v. Kurth Ranch, --- U.S. ----, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994), announcing that the no deterrent purpose rule of Halper and Austin does not apply in all situations. Kurth Ranch held that Montana's Dangerous Drug Tax violated the Double Jeopardy Clause. The Montana law, which taxed illegal drugs and equipment at rates up to 400 percent, constituted punishment because it was a concoction of anomalies, too far removed in crucial respects from a standard tax assessment to escape characterization as punishment for the purpose of Double Jeopardy analysis. Id. at ----, 114 S.Ct. at 1948. Because Montana levied this tax in a separate proceeding, after the defendants were tried and sentenced, this punishment violated the Double Jeopardy Clause. Id. 95 Kurth Ranch further expanded on the historical inquiry begun in Austin. It distinguished the rule of Halper----that any deterrent purpose makes a law punishment----on the ground that fines and forfeitures are readily characterized as sanctions whereas taxes have typically served the salutary 23 purpose of raising revenue. Id. at ----, 114 S.Ct. at 1946. Thus, the Court explained, a high tax rate and even a deterrent purpose would not automatically render a tax punitive. Id. at ----, 114 S.Ct. at 1947. 96 The Court then examined whether the particular tax at issue operated in the usual manner of most taxes. It differentiated among taxes with a pure revenue raising purpose, mixed-motive taxes imposed both to deter a disfavored activity and to raise revenue, and taxes imposed upon illegal activities. Pure revenue raising taxes are not punishment, the Court said, because they are imposed despite their negative effect on the taxed activity. Id. Even mixed-motive taxes, such as those imposed on cigarette sales, are not punishment because the government wishes the activity to continue to the extent that its benefits----including tax revenues----outweigh its harms. However, the Court found that these salutary justifications vanish when the taxed activity is completely forbidden, for the legitimate revenue-raising purpose that might support such a tax could be equally well served by increasing the fine imposed upon conviction. Id. The Court held that because a tax on illegal drugs did not operate in the usual manner, the historically non-punitive purposes of taxes could not insulate this tax from being considered punishment. Id. at ----, 114 S.Ct. at 1948. 97 The main significance of the Kurth Ranch limitation is that, at least for measures that have historically served salutary functions, even some deterrent purpose will not render a measure punishment: We begin by noting that neither a high rate of taxation nor an obvious deterrent purpose automatically marks this tax a form of punishment. Id. at ----, 114 S.Ct. at 1946 (emphasis added). In these cases, courts must examine whether the particular measure at issue operates in a usual manner consistent with its historically salutary or mixed purposes. 24 98 Kurth Ranch also reemphasizes that at least some negative effect on the defendant does not convert a measure into punishment. We note[ ], however, that whether a sanction constitutes punishment is not determined from the defendant's perspective, as even remedial sanctions carry the 'sting of punishment.'  Id. at ---- n. 14, 114 S.Ct. at 1945 n. 14 (citations omitted). 99