State Taxation of Interstate Commerce, Preemption, and State Relations

Question 1

State Taxation of Interstate Commerce

Answer 1

General - discriminatory taxation will be struct down unless congress consents and non-discrimintaroy taxation will be upheld unless it is unduly burdensome

Non-Discriminatory Taxation - valid if :

1. must be substantial nexus between the taxing state and the property or activity to be taxed
2. must be a fair apportionment of tax liablity among states

Ex: state may tax in state portion of corp revenue but cannot tax entire world wide value of corp

Ad Valorem Property Taxes (value based property taxes) - tax on personal property; distinguish two types of personal property because taxed differently

1. Commodoties - goods that move from state to state and are taxed upon a specified date if the commoditiees has come to rest in the state (cannot tax goods that are merely in transit)

Rule - pay the full tax to every state where goods are stopped for a business purpose on tax day but no taxes are due where they are merely passing through

2. Instrumentalities - transportation equipment that moves commodities and may be taxed by each state in which it is used porportional to to the in-state use

Question 2

Preemption

Answer 2

Federal law preempts (overrides) inconsistent/incompatiable state law

State law is not preempted simpl because it addressed the same subject matter as a federal satute; must conflict

Preempting the Field - when congress determiens that there should be no state law of any sort in a particular field, then any state law in that area is inconsistent with the federal statute and is preempted

Question 3

Relations Among States

Answer 3

Compacts - interstate compacts are agreements among states

Creation - states can make interstate compaacts, but if the compat affects federal rights, congress must approve

Full Faith and Credit Clause - states don’t have to follow other states’ laws but they do have to give full faith and credit to judgments rendered by other states’ courts, so long as the rendering court had jurisdiction to render a final judgment on the merits