Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976)

A state tax on imported goods is not unconstitutional if it is non-discriminatory, applies to goods no longer in import transit, and does not violate the Commerce Clause.

Summary

Michelin Tire Corp. challenged the constitutionality of a state property tax levied on imported tires stored in a warehouse. The Supreme Court reversed its prior precedent, holding that the Import-Export Clause does not bar a state from imposing a non-discriminatory ad valorem property tax on imported goods that are no longer in transit. The Court reasoned that such a tax does not interfere with the federal government’s regulation of foreign commerce or generate revenue for the states at the expense of the federal government.

Facts

Michelin Tire Corporation imported tires from France and Nova Scotia and stored them in a warehouse in Gwinnett County, Georgia. Gwinnett County assessed a non-discriminatory ad valorem property tax on the tires. Michelin argued that the tax violated the Import-Export Clause of the U.S. Constitution.

Procedural History

The Georgia state courts upheld the tax. The Supreme Court granted certiorari to reconsider the scope of the Import-Export Clause in light of modern commerce realities.

Issue(s)

Whether the Import-Export Clause of the United States Constitution prohibits a state from levying a non-discriminatory ad valorem property tax on imported goods stored in a warehouse, when those goods are no longer in transit.

Holding

No, because a non-discriminatory ad valorem property tax is permissible under the Import-Export Clause when applied to goods that are no longer in transit and is non-discriminatory.

Court’s Reasoning

The Supreme Court overruled its prior holding in Low v. Austin, which had established a broad prohibition against state taxation of imported goods. The Court re-examined the history and purpose of the Import-Export Clause, concluding that its primary aims were to prevent states from impeding federal regulation of foreign commerce and from generating revenue at the expense of the federal government. The Court stated that the prohibition was meant to prevent states from levying “imposts or duties” not to provide blanket immunity for goods from taxation. The Court reasoned that a non-discriminatory ad valorem property tax, like the one imposed by Gwinnett County, did not offend these core principles. It did not discriminate against imported goods, it applied to all property within the state, and it did not interfere with the federal government’s power to regulate commerce. The Court emphasized that the tires were no longer in import transit and were indistinguishable from other property subject to state taxation. The Court clarified that “It is obvious that such nondiscriminatory property taxation can have no impact whatsoever on the Federal Government’s exclusive regulation of foreign commerce, because it is not imposed on imports as such as a class nor is it discriminatory.” The Court effectively shifted the focus from the physical location of the goods to the nature of the tax and its potential impact on federal prerogatives. Justice Blackmun concurred, emphasizing that the crucial factor was the non-discriminatory nature of the tax. He argued that this ensured that the tax did not unduly burden foreign commerce or give local businesses an unfair advantage.