Court Opinion

ID: 9419884
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:51:56.931493+00
Date Added: 2024-06-11T17:22:21.070497
License: Public Domain

Mr. Justice Black,
dissenting.
Richfield Oil Corporation, while- doing business in California, sold oil extracted from California soil. Its purchaser bought the oil to transport and use abroad. California, like many other states, raises a large proportion of its revenue by a generally applied tax on sales.1 The Court holds that application of the California sales tax to this transaction is a “tax on exports” and therefore violates Article I, Section 10, Clause 2 of the Federal Constitution. I cannot agree.
In Spalding & Bros. v. Edwards, 262 U. S. 66, 69, a precedent upon which today’s decision heavily relies, this Court said that “with regard to any transaction we have to fix a point at which, in view of the purpose of the Constitution, the export must be said to begin. As elsewhere in the law there will be other points very near to it on the other side, so that if the necessity of fixing one definitely is not remembered any determination may seem arbitrary.” This principle announced in the Spalding case seems to follow what was said in Cornell v. Coyne, 192 U. S. 418, 427, that the constitutional prohibition against a tax on exports was not intended to relieve exported articles “from the prior ordinary burdens of taxation which rest upon all property *87similarly situated.” Every transaction held by this Court to have occurred after rather than before exportation began makes an encroachment not only on the power of states to tax, but, as the Court points out, the Federal Government’s area of taxation is also narrowed. The result of such a holding is all the more serious because, unlike the consequences of holding a state tax invalid under the Commerce Clause, the prohibitions against taxing exports are, with a minor exception, permanent, absolute and unqualified. After today’s ruling, Congress itself can neither tax nor permit states tt> tax sales like the one here proscribed. To classify sales transactions as having occurred after exportation began, therefore, results in creating an island of constitutional tax immunity for a substantial proportion of the profitable business of the nation. Such a result not only grants tax immunity to many profitable businesses which share governmental protections from payment of their fair part of taxes; it also throws an unfair part of the tax burden on others.- Since we cannot assume that the framers of the Constitution looked with favor on such consequences, we should, before classifying a transaction in such a wray as to render a tax on it unconstitutional, give it the most careful factual scrutiny. We should not invalidate such a tax unless satisfied beyond doubt that it falls squarely and wholly within the area marked by the Constitution for tax exemption.
The economic consequences of such sales taxes are probably about the same as would flow from a property or severance tax applied to Richfield. For all three types of taxes would likely be reflected in an increased sales price of Richfield’s oil. No one, I suppose, would think of saying that such a property or severance tax would be unconstitutional as a tax on exports. The reason would be that the taxable event clearly arose before and not after exportation began. This sales tax was no more applied after export had actually begun than a property or severance *88tax would have been. The tax was not even levied on an exporter or an exporter’s agent or broker. Richfield was neither. Its sale of local California goods was negotiated and completed wholly in California. This purely intrastate sale transaction cannot properly be held to have lost its intrastate pre-exportation status by reason of the fact that the parties did not intend “title to pass” until the oil was delivered at the purchaser’s ship. For formal “passage of title” is not an adequate criterion for measuring a state’s constitutional power to tax sales made within the state. Private parties are free to decide, so far as their own interests are concerned, when legal title shall be considered to “pass.” But a state surely is not required by the Constitution to forbear from taxing that part of a sales transaction which precedes the particular moment the parties have arbitrarily selected for a conceptual transfer of title. Nor need a state withhold the exercise of its power to tax sales until an article is delivered or paid for. That delivery, perhaps the last step in executing this agreement to sell, happened to border on the imaginary line where the actual exporter took possession does not justify us in concluding that therefore the whole sales transaction occurred after exportation. Constitutional interpretations which make serious inroads into the power of both the States and the Federal Government to tax sales made by local businesses should not turn on fine legal concepts of when title passed or delivery occurred in relation to the beginning of exportation.
Concededly, as the Court points out, the Constitution prohibits imposition of state and federal “imposts and duties” on “exports.” But the Constitution does not define in words what is an impost or tax on exports and what is not. It is well known that taxation of exports was primarily forbidden by the Constitution at the insistence of inland states which feared that seaboard states would exact a tribute from all goods sold in the interior which were *89thereafter transported through ports en route to foreign destinations. It was not intended to bestow a bounty of blanket tax immunity upon all those who engaged in the production, processing, purchase, or sale of goods shipped abroad. There was no broad purpose of encouraging foreign commerce by making all these preliminary steps tax free. The motivation of this tax and its economic consequences plainly are not those which the writers of the Constitution condemned. This was no tax on goods from an inland state which came through California in transit after severance, processing, and sale had been completed. Nor was it a disguised tax on a product of California soil or manufacture imposed solely because the oil was intended for a foreign destination. The tax was nothing more than an effort of California to defray a part of the state’s expenses by a uniform sales tax on all those businesses, including Richfield, which enjoyed California’s natural resources, the labor of its people, and the services and protection of its government.
True, the tax would impose a burden on export commerce to the extent that it increased the export price of Richfield oil. But if a tax on export sales be unconstitutional for imposing such a burden, so is a property tax or a severance tax applied to Richfield’s oil anywhere from well to consumer. For all these types of taxes would likely be reflected in the price of Richfield’s oil. But the history and the evolution of the constitutional prohibition against taxation of exports manifest that there was no intention to subsidize either export businesses or foreign purchasers by any such broad immunity from state and federal taxation.
I cannot believe that it was the purpose of the Constitution to let all goods destined for shipment abroad escape uniformly applied state and federal taxes, nor that a state whose resources are depleted is powerless to enforce its sales tax if the depleter sells to customers for immediate *90shipment for ultimate use in foreign countries. No persuasive evidence has been produced to indicate that those who wrote the Constitution thought in such terms or that they would have handicapped the state and federal taxing power in such a way. And no other sufficiently cogent reasons have been advanced to require a present interpretation which so disarranges, confuses, and handicaps the sales taxes of all the states.

 In 1945 California’s total revenue was $676,828,000. It collected $242,757,000 from its sales tax. California State Finances in 1945, 1 State Finances: 1945, Dept. of Commerce, Bureau of the Census (1946) 33.