State Powers Flashcards
Tenth Amendment
Provides that “powers not delegated to the U.S. by the Constitution, nor prohibited by it to the states, are reserved to the state’s respectively, or to the people.”
Exam Tip on the Tenth Amendment
It is usually the wrong answer except when the facts show that the federal government commandeered the states.
The Constitution specifically prohibits any state from:
- Making treaties with other nations
- Coining money
- Passing a bill of attainder
- Enacting an ex post facto law
- Impairing the obligation of contracts
- Laying any duty on imports or exports, except where necessary for executing its inspection laws;
- Engaging in war; or
- Maintaining a peacetime army
Req. for a State Tax on Interstate Commerce to be Valid
- It is not preempted by federal law
- It does not discriminate against interstate commerce
- There is a substantial nexus between the activity taxed and the taxing state
- There is a fair apportionment and relationship
Various Types of State Taxes
Include:
- Sales Tax
- Use Tax
- Doing Business Tax
- Net Income Tax
- Flat License Fee
- License Tax
Sales Tax
A tax upon the transfer of title of goods consummated within the state
-valid if sale is consummated within the state but invalid if sale is made to buyer outside state.
Use Tax
A tax upon the use of goods within the state that were purchased outside the state.
-the ability of a state to collect a use tax usually depends upon whether the interstate seller, who receives goods from outside the state, has a sufficient nexus within the taxing state.
Doing Business Tax
Flat annual fee or a graduated rate based in proportion on the amount of revenue derived from the taxing state.
-must relate to the benefits conferred by the taxing state upon the interstate business
Net Income Tax
Applied to a company engaging in interstate commerce or on a nonresident engaged in business in the taxing state.
-valid only as long as the tax is fairly apportioned, has a significant nexus, and is nondiscriminatory
Flat License Fee
Fees on solicitors who solicit local orders and then fill them out-of-state and ship them through interstate commerce.
License Tax
Valid on an itinerant salesperson when a state levies it upon a seller who actually sells and delivers the product within the state.
-valid as nondiscriminatory only as long as the tax is fairly apportioned with an equal application to local salespeople.
State Tax on Federal Property
Is prohibited. But watch out for a property interest tax levied against a private user’s right to the use and enjoyment of federal property (this is permissible if the tax itself is nondiscriminatory (applied throughout the state).
Congressional Authorization to Regulate Interstate Commerce
Congress may use its commerce power to delegate, share, or prohibit state regulation of interstate commerce. States may then enact laws that discriminate against or impose an undue burden on interstate commerce.
