Legal Document

517 U.S. 843116 S.Ct. 1793135 L.Ed.2d 124 UNITED STATESv.INTERNATIONAL BUSINESS MACHINES CORP.Certiorari to the United States Court of Appeals for Federal Circuit. No. 95-591. Supreme Argued March 18, 1996 Decided June 10, Syllabus* Pursuant Section(s) 4371 Internal Revenue Code, respondent International Business Machines Corporation (IBM) paid a tax on insurance premiums remitted foreign insurers cover shipments goods its subsidiaries. When refund claims were denied, IBM filed suit in Claims, contending that 4371's application policies insuring export violated Export Clause, which states "[n]o Tax or Duty shall be laid Articles exported from any State." The court agreed, rejecting Government's argument Thames & Mersey Marine Ins. Co. v. States, 237 U. S. 19--in this held federal stamp marine risks could not, under constitutionally applied covering shipments--had been superseded by subsequent decisions interpreting Import-Export relevant part, "No State . lay Imposts Duties Imports Exports." affirmed. Held: Clause prohibits assessment nondiscriminatory taxes transit. Pp. 2-20. (a) While has strictly enforced Clause's prohibition against taxation transit and certain closely related services activities, see, e.g., Mersey, supra, it not exempted pre-export ordinary burdens various activities only tangentially process, Cornell Coyne, 192 418. Conceding assessed here violates Government asks case overruled because underlying theory rejected context Commerce Clauses those have historically interpreted harmony with Clause. 2-7. (b) expressly disavowed early view dormant required strict ban state interstate commerce, Complete Auto Transit, Inc. Brady, 430 274, 288-289, resolved long struggle over meaning nontextual negative command other hand, Congress laying duty exports. These textual disparities strongly suggest shifts Court's scope cannot govern interpretation. Cf. Richfield Oil Corp. Bd. Equalization, 329 69, 75-76. 7-9. (c) one may question Mersey's finding exports is functionally same as exportation itself, apparently chosen do so here. Under principles animate policy stare decisis, declines overrule longstanding precedent, caused no uncertainty commercial transactions, argued parties. 11-13. (d) This recent cases require overruled. Meaningful differences should overlooked exist between In assessments Michelin Tire Wages, 423 276, Department Wash. Association Stevedoring Cos., 435 734, valid, recognized absolute ``Imposts Duties'' every tax. Because impost are thus narrower terms than tax, particular might beyond reach, while an identical subject word ``Tax'' common, usually expansive, ignored. also intended serve different goals. argument--that Framers narrowly alleviate fear northern repression through southern prohibiting discriminatory taxes--cannot squared broad language. better reading sought their concerns completely denying power at all. See Fairbank 181 283. 13-18. (e) Even assuming Washington inquiry here, holdings interpret permit imports 18-20. 59 F. 3d 1234, Thomas, J., delivered opinion Court, Rehnquist, C. O'Connor, Scalia, Souter, Breyer, JJ., joined. Kennedy, dissenting opinion, Ginsburg, Stevens, took part consideration decision case. Justice Thomas Court. 1 We resolve whether Constitution permits imposition generally applicable, hold does not. I. 2 Section Code imposes income tax.1 26 (1982 ed.). ships products manufactures numerous subsidiaries insures loss. subsidiary makes shipping arrangements, often places carrier. does, both listed beneficiaries policy. 3 excise returns years 1975 1984, but reported liability 4371. IRS audited determined taxable IBM--as named beneficiary policies--was liable each years. 4 claims, denied. then commenced focus was 19 (1915), we shipments. analysis longer having Clause--specifically, 276 (1976), 734 (1978). Claims noted never ruled 31 Fed. Cl. 500 (1994). Circuit 1234 (1995). agreed hear decide Mersey. 516 __ II. 5 simply directly: Const., Art. I, 9, cl. 5. had few occasions language our broadly goods, process. At time, attempted limit term "Articles exported" services. 6 Our upheld manufacture ultimately exported." Pace Burgess, 92 372 (1876); Turpin 117 504 (1886); 418 (1904). involved tobacco products. Pace, though exemption itself per-package charge 25 cents. manufacturer challenged charge, basis stamps designed prevent fraud did therefore, represent S., 375. later repealed 25-cent statute referred "export tax," another sued recover money stamps. Turpin, supra. Without disturbing prior ruling exports, 505, explained "has reference duties reason exportation, whilst they being exported," id., 507. said plaintiffs would claim even if there course exported. Ibid. suggested levied directed specifically 7 Cornell, addressed prohibited filled cheese manufactured contract export. Looking set out contention bars imposed before product entered exportation. "The true construction constitutional provision burden way can cast upon articles, mean articles relieved rest all property similarly situated." 427. made clear pre-exportation violate eventually 8 time defining domain within permissibly export, making duty, falls during 283 (1901); Hvoslef, (1915); Fairbank, example, bills lading War Act 1898. found facially discriminatory, 290, and, directly exported, nevertheless "in effect article transported," 294. Consequently, fell into category forbidden defined Turpin. striking down said: 9 requirement free governmental burden. `no duty.' Whether such wise courts nothing do. know compromises possible adoption Constitution. It restriction ." 290. 10 Hvoslef differed cases--on ship charters insurance, respectively--did discriminate nonetheless transactions issue was, effect, type charter contemplation law mere affreightment," 16, "was substance exportation; exports," 17. Likewise, "proper voyage necessities exportation" "the cargoes ports much exporting parties, lading, themselves." 27. 11 Shortly after attempt shield net company engaged business. William E. Peck Lowe, 247 165 (1918). accordance "[i]t anything inherently usages commerce embraced processes." 174. 12 Only struck sale baseball equipment. A. G. Spalding Bros. Edwards, 262 66 (1923). Although clearly nondiscriminatory, taxed when Id., 70. event, transfer title, occurred moment sale. 69-70. 13 transit, extended protection however, burdens; nor III. 14 concedes, below, largely indistinguishable that, still good law, Tr. Oral Arg. 5; 3d, 1237. parties agree legally significant distinction , accordingly, 15 asserts taxes, urges Commerce, Import-Export, Clauses. Accordingly, contends jurisprudence, symbolized become anachronism need modernization. us reinterpret argues, 16 jurisprudence shifted dramatically traditional understanding based partly outmoded justified. some relied interpretation since rejected. 298-300, analogized Robbins Shelby County Taxing Dist., 120 489, 497 (1887), "[i]nterstate [by States], amount domestic carried solely state." Referring categorical declared Robbins, likened 300; see ("The [in Fairbank] analogy given clause protecting legislation imposing direct burdens"). After espoused favor, Western Live Stock Bureau Revenue, 303 250, 254 (1938) ("It purpose relieve just share increases cost doing business"), 288-289 (1977). 17 rejection signal similar cases. decades-long lead conclusion equally fluid. thought text view.2 indeed cannot, 75-76 (1946) (distinguishing accommodations express Clause). B. 18 primary assertion modifications parallel context. More specifically, argues (1978), establish impose fall contends, more restrictive. textually says 2. Though minor sovereigns, treated bans several provisions two tandem. For instance, first Chief Marshall 20 State. There diversity language, none perceivable act prohibited." Brown Maryland, Wheat. 419, 445 (1827). 21 Kosydar National Cash Register Co., 417 62, 67, n. (1974); 13-14; 427-428; 506-507. interpretations judgment favor. disagree. 22 Michelin, ad valorem imported import tires Canada France stored them warehouse, Georgia assess tires. "[t]he three main concerns": (i) ensuring speaks voice regulating commerce; (ii) preserving revenues major source revenue; (iii) preventing disharmony likely seaboard coming ports. 285-286. these policies. A century earlier, "original package doctrine," until lost character incorporated mass Low Austin, Wall. 29, 34 (1872). Michelin's inventory imports. 301. Limbach Hooven Allison 466 353 (1984) (reaffirming original doctrine altogether merely facts). 23 Two later, Stevedoring, challenge compensation received stevedoring companies performed Washington's Unlike activity That fact dispositive, themselves: 24 levy reaches business loading unloading or, words, transporting cargo Washington. Despite existence distinction, presence second leads `Impost Duty' [that Clause]." 755. Relying Canton R. Rogan, 340 511 (1951), gross receipts railroad operated terminal transported transportation services, docks stevedores ships, relate value considered imposts themselves. 757. 1. precisely speaking, essentially itself. 756, 21. expressed concern distinguishing less clear" Oil, arguably "had apart goods." Nevertheless, aspect 5, 8-9, 40. questioned implicit concession oral argument, admitted "chose to" argue 9. inappropriate reexamine case, without benefit parties' briefing, connected is, essence, exports.3 See, e. g., 27-28 ("[T]he record doesn't reveal sort statistical information Breyer suggesting relevant" determine"whether sufficiently indirect it's conceded throughout disputing violation Constitution"). 27 Stare decisis "principle policy," Helvering Hallock, 309 106, 119 (1940), "an inexorable command," Payne Tennessee, 501 808, 828 (1991). Applying policy, frequently declined appropriate circumstances "promotes evenhanded, predictable, consistent development legal principles, fosters reliance judicial decisions, contributes actual perceived integrity process." 827. "[E]ven cases, carries persuasive force always departure precedent supported `special justification.' 842 (Souter, concurring) (quoting Arizona Rumsey, 467 203, 212 (1984)). 28 governing "unworkable badly reasoned," Payne, 827; Smith Allwright, 321 649, 665 (1944), rarely done grounds advanced controlling 80 years, rule established "unworkable." dissent's speculative protestations contrary, post, 9-11, evidence will cause transactions. caution overruling decline case.4 29 What Mersey.5 hesitate adopting jurisprudence. together, 9-10, relies, meaningful overlooked. "Tax Duty" prevents "Imposts Duties" left open possibility properly called reach transgress dictates "not written `tax,'" 290-293. likewise absolutely 759. self-defining necessarily encompass taxes" respondents' contrary ignored central holding `Imposts Duties' taxes." 30 especially pertinent light peculiar definitional chose Michelin. Finding substantial ambiguity phrase Duties," "decline[d] presume embrace create evils eliminate." 293-294. entirely bypassed etymological proper "impost" "duty," instead created regime conclusions drawn examination exaction regarded objectionable Constitution." 286. prepared say "Tax" "sufficiently ambiguous," 293, ignore expansive,6 favor decisional unless discriminates all, logically validate which, accounts, remains "Tax." intuitively obvious three-pronged Framers' really stating nondiscrimination principle. But were, reasonably rely drew around excluded broader appears marked permissive approach presumptively stricter informs supports position. perceives substantive difference 32 hesitant adopt policy-based indication "evils" directed. protect supremacy international preserve revenue imposts, coastal taking unfair advantage inland 285-286, serves Indeed, textually, quite opposite. disallows raise treat 33 As purely historical matter, originally proposed delegates Convention Southern who feared Northern control use disproportionate South. M. Farrand, Records 1787, pp. 95, 305-308, 359-363 (rev. ed. 1966). "narrow purpose" justifies narrow conflict embodied Brief 32-34. impetus focus, remedial became Debates proponents fully breadth evident Convention, 220 (Mr. King: "In great points hands Legislature tied. importation slaves prohibited-exports taxed"); 305 ("Mr. Mason urged necessity connecting levying exports"); 360 Elseworth [sic]: "There solid reasons agst. Congs taxing ibid. Butler strenuously opposed 361 Sherman: "It best prohibit legislature cases"); 362 Gerry exports"). Fairbank. 292-293. Arguing interest diffusing sectional conflicts, document evidencing receipt uniformity country." 292. argument: 35 "If discrimination contemplated, seem follow obnoxious prohibition. surely limitation neither export." 36 think provides guide offered Government. reading, adopted earlier 3. 37 short goal. facts importantly, burdened comes us, hybrid and--as concedes held--is (Michelin "demonstrate issue, applies process provide immunity taxation"). If succeed, very least must show now failed make showing. 38 invalidate 290 (compliance secured "by [import export] assessed"). Virginia Indonesia Harris Appraisal 910 W. 2d 905, 915 (Tex. 1995) (invalidating transit). 39 endorse Stevedoring. reciting distinguished pointed [or Government] either amounted "reach applicability transit," 757, 23, because, although "a service distinct value," Thus, contention, validity leave "laid 40 conclude Reexamination themselves await day. 41 ordered. 42 djq Stevens 43 whom Ginsburg joins, dissenting. 44 today holds unconstitutional giving heed simplest sustaining it. granted certiorari "[w]hether, casualty losses incurred shipment locations purchasers abroad, (U. Const. 5)," Pet. Cert. straightforward answer presented requires address continuing general premiums, exporters, goods. 45 Rejecting course, ventures implicated statute. To so, rewrites presented. sentence says, "We ante, reformulating question, assumption thereby premise I address. end assumes invalid rather deciding so. find setting aside peremptory way. Worse yet, wrong; proxy carves undeserved adding complexity administration. Moreover, apply, tackles problem reconciling modern Clauses, 8, 2, unwise unnecessary. reconsideration uphold respondent. With respect, dissent. 46 consider simple "4 cents dollar, fractional thereof, premium indemnity bond, issued for, name of, insured. 4371(1) "insured" include "domestic corporation partnership, individual resident against, respect to, hazards, risks, losses, liabilities wholly States. 4372(d)(1). mention them. traders insured, individual, covered whole risks. "eliminate unwarranted competitive favoring insurers," H. Rep. 2333, 77th Cong., Sess., 61 (1942), pay 4373(1) ed.) (exempting insurer "signed countersigned officer agent State, District Columbia, authorized business" therefore tax). 47 Resolution determine bearing like provided where plain casts doubt proposition. states, State," majority avoids necessary asserting point abandoned Ante, 12, 4. True, defends ground forms trade, fact, repeated references briefs, albeit discussing 12-13 (The "does apply transactions; `wholly' `partly' domestic."); `laid exported' 5). Instead, many including risk `wholly States' (26 4372(d)(1))"); ("Even unquestionably incidental remote relationship ."). 48 Solicitor General acknowledged he separate He greater utility, sparing nettlesome what asked why avoiding simpler clearer offset borne insurers, responded, avoid argument. That's application." 12. Later stated "it's problematic describe good," cited calling his position foreclosed basis, "I don't believe you're addressing you fit." statements equivocal reconsider bad briefs upheld. Blonder-Tongue Laboratories, University Ill. Foundation, 402 313, 319-320 (1971). 49 faulty characterization odd byways. Part III-B-3, rejects firm added importing exporting. 18-19, reserved 19-20 (citing 23). So, view, support "Congress [may] 19. however. (the transactions"). faulted, urging (a valid) subsumed (this all). Nothing ground. 50 suppose prudential unargued event absolute. Arcadia Ohio Power 498 73, 77 (1990); Erie Tompkins, 304 64, 77-78 (overturning Swift Tyson, (1842), unconstitutional); 82 (Butler, J.) (pointing briefed below). Evans 255, 269 (1992) (addressing dissent); Burke, 229, 246 (Scalia, concurring judgment). apply. predicate "essential analysis" presented, Procunier Navarette, 434 555, 559-560, intelligent resolution constitutionality" statute, Vance Terrazas, 444 252, 258, (1980). decided. Rule 14.1(a) statement deemed comprise fairly included therein"). 51 give owed, applied, borderline call litigation reaching seems agree, statutes, observed elementary reasonable resorted order save unconstitutionality." Hooper California, 155 648, 657 (1895). ex rel. Attorney Delaware Hudson 213 366, 408 (1909) ("where susceptible constructions, grave doubtful questions arise avoided, latter"); Murray Schooner Charming Betsy, Cranch 118 (1804). 52 "This reflects issues needlessly confronted, recognizes Congress, bound swears oath lightly assume infringe protected liberties usurp it." Edward J. DeBartolo Florida Gulf Coast Building Constr. Trades Council, 485 568, 575 (1988). 53 ourselves saving constructions suggest. Panama Johnson, 264 375, 389-391 (1924) (interpreting Jones allow action brought admiralty); cf. Plaintiff-in-Error 9-22 Defendant-in-Error 3-12, O. T. 1923, 369. statutory construction, take measures declaring "usurp[ed] it," DeBartolo, 575. cites disregarding am aware any. render inapplicable away unnecessary coordinate branch 54 instances, eschew alternative theories depend factual far afield below. export-related most inquiries undertakes: construing considering history purpose, reviewing precedents. explicit reexamination reasoning overrule, idea last step refuses take. 55 intimates, relative incidence (as unlikely) interested statistics 1942 pretext enacted. current whatever reflect market conditions operation strength lines exporters purchase, Holtom, Underwriting Principles Practices 451 (3d 1987) (ocean dominated companies). persons insured exempts nonexporters operation. needs dubious 56 Massachusetts 333 611 (1948), matters felt, undermined entire 624. refused accept concessions, interpretation, 625. mystifies me congressional revision, accepts purported independent invokes strike Torres Puerto Rico, 442 465, 471, (1979) ("even concession" Commonwealth Rico requirements Fourth Amendment "relieve per-formance function issue") (internal quotation marks omitted). 57 Quite today's adds administration thumb insure exempt 4371, mandate collect Service (IRS) henceforth finds faced array new problems unexplained unmentioned Insurance complex businesses, multitude coverage options lines, generated evolving pursuit profitable efficient underwriting Not fit model here: single shipment; beginning common carrier picking up warehouse manufacturing plant; ascertainment entry stream. Stipulation Facts Para(s) 13, App. 37a, 39a; 66, 68-69 (1923) (delivery signals commencement export). 58 Commercial form covers "is kind merchandise described covered." 435. appear, decision, leg journey shipments, untangle portion prorate So too proration (or accommodation) appear taken country abroad. addition, draws morass determining begun. own trucks carry freight forwarder port, hiatus extensive enough remove stream, Joy Comm'n, 337 286, (1949); preliminary movement toward eventual triggers immunity, (1974), determination layer Finally, many, ever types Truckers, loss damage carrying. specific passed measure exporter "falls process," Questions freight-forwarder storing ocean vessel owner cargo, 452, domestic. 60 severity administrative penetration lines. anticipate increased 4% price cut results decision. wrong frustrate needless incorrect, unexamined Turning Fifth prohibitions. value, IBM. 62 my understood says: nations' onerous England rise mercantilist trade resulted repeal seventeenth century, English Taxation 1640-1799, p. (1913). And mentioned debate Constitutional Gouverneur Morris Pennsylvania, opposing favored individuals. 63 "He highly politic. her account Tobacco. All Countries them; wines brandies. lumber, Indies punish restrictions trade. live-stock degree flour. dearth West Indies, please. Taxes revenue. people America taxes. Seize sell effects push Revolts." 307 64 306 Madison: tobacco, Americans unrivalled shift foreigners), (Gouverneur Morris: essential embargoes, ginseng masts skins, beavers, raw materials encourage American manufactures), Dickenson Clause), Fitzimmons: wool Great Britain). Proponents focused Mercer: encourages raising meant exportation), Williamson: North Carolina Virginia), "[a]n enumeration difficult invidious improper"), 363 (Colonel Mason: tobacco; Mr. Clymer: middle apprehensions wheat flour unlike rice, sold markets). Oliver Ellsworth Connecticut contended "there all; Tobo. rice indigo, alone partial unjust." 360. 65 power, recall want national government weaknesses Confederation. expenses outpacing requisitions emptied vaults 1782 soon defaulted debt. Paul, 4-5 (1954). records indicate, depriving contentious off needed well disable using instrument Madison's last-minute proposal total replaced requiring two-thirds vote House 363. extending bargain text. compelling weighing costs. 1797 "An stamped Vellum, Parchment Paper." Among 67 "any nature whereby vessels going district port place, wit, twenty-five cents; sum exceed five hundred dollars, dollar. July 6, 1797, ch. 11, 1, Stat. 527. 68 survived unpopular Federalist system, felt bear heavily able pay, abolished Jefferson office. 6. 69 reluctant origin offends Constitution, absent inconsistency. Knowlton Moore, 178 41, (1900) (imposition legacy lacks power); Ludecke Watkins, 335 160, 171 (1948) [Alien Enemy 1798] almost old savor doctrinaire audacity offensive emanation Bill Rights"). dispel issue. offend likely, moreover, circumvent Congresses scrupulous honoring exemptions laws Mar. 3, 1791, 15, 51, 199, 210-211 (tax distilled spirits); 1794, 14, 384, 387 snuff refined sugar). Their refusal grant indicates viewed equivalent 70 (1901), 1898 bill despite 5-4, strong dissent Harlan deference exposition Congress. though, contemporaneous-exposition " `doubtful cases,' 311, "discriminating excessive tax" (10 times internal 290) unconstitutional. 71 distinguish sole "effectively represented goods," exports; exporting; regulatory eliminating insurers. Viewed light, bar weight assessing constitutionality contrary. 72 once note discussed opinion. furthermore, examine relying companion (1915): namely, "process obstructed hindered taxation," citation 25. (Hvoslef's way, Act, tax.) 73 Besides failing cited, implication, justified exercise Congress' power. 25, citing Paul Virginia, 168 (1869). result, reasoned, personal custom, transaction. 25-26. costs, ago notion regulate. South-Eastern Underwriters Assn., 322 533, 543-545 (1944). enacted regulate competition field, authority ought impaired strained 74 discarded, afoot gross-receipts steam railroad, railroad's handling Baltimore. port," said, "when range wide." 514-515. Following Canton, decided permissible activity, stevedoring, occurs remarked, settings import-export relates distinctions 75 effort justify unconvincing. poor yet proven unworkable, odds Fulton Faulkner, __, __-__ (1996) (slip. op. 20-21). matter proves unworkable; today, chance work mischief 76 move service-intensive export-oriented economy, policymakers experts wisdom shifting Lugar, Sales Tax: Avoiding Zero-Sum Scenario, Executive (1996); Bartlett, Replacing Tax, Notes 997 (1995), shaky deprive important revenue-raising options. 31, invites providers number diesel-fuel 4041, truckers carrying reading. protections extend, perhaps, somewhat "[i]f obstructions readily nominally conforming overriding 13. proxies (discussing sales supra). category, but, "note[d] bears closer relation ships." 78 Premiums, i.e., loss, component factor risk. Before fixed, rate determined. factors shipment: place destination how packaged, distance trip, route mode(s) transportation, material expected trip." Premiums multiplying shipment-specific rate. 39a. Practices, 453-457 nationality crew, management, seaworthiness vessel, suitability packaging, season travel, perishability, pilferage call, accompanying cargo). charged million dollars overland IBM's computer factory Richfield, Minnesota customer Quebec trifling comparison transport San Jose, California across continent east New York sea Russia. Facts, 36a-37a; Respondent Given stipulated, undeniable graded predictable intent value. rough proxy, advantages structure did. 79 further intend operate effective serious mistake opposite reverse * syllabus constitutes Reporter Decisions convenience reader. Detroit Lumber 200 321, 337. business." "regulate among States." anything, implications legislate. (slip op., 4-5); Quill Dakota, 298, (1992). 419 (1827), dicta skepticism occupational pass scrutiny ("[W]ould permitted censure evade prohibitions constitution expose it, saying person, article, right occupations?"). effectively repudiated principle, carefully extent raised petition certiorari, brief merits Posters `N' Things, Ltd. ___, ___ (1994) 15); Russell 369 749, 754, (1962). suggests so." Post, assumptions. Rather, begin controls agrees whose contravenes sit condemn saved binding precedent. "serious mistake" arguments actually discusses "taxes" "every exaction," Founding "probably capitation, land, exactions known `tax' `duty,'" 291. used

Classification Label: 11