Brief of Tax Law Professors As Amici Curiae in Support of Petitioner in Loudoun County, Virginia v. Dulles Duty Free, LLC
33 Pages Posted: 2 Feb 2018 Last revised: 1 Sep 2021
Date Written: January 25, 2018
For more than seven decades, state and local governments as well as market actors have labored under an export tax regime that is inconsistent, inefficient, and inequitable. The petition for a writ of certiorari in Loudoun County, Virginia, v. Dulles Duty Free, LLC, presents the Supreme Court with a chance to restore rationality to the tax treatment of the export sector. The economic implications are vast: annual exports of goods from the United States exceed $1.4 trillion. The Court’s resolution of this case will determine whether state and local governments can apply their sales and personal property taxes to exports in a balanced and nondiscriminatory fashion.
Near the middle of the last century, this Court held that the Import-Export Clause prohibits a State from levying a sales tax on goods that have begun a “continuous route or journey” to a foreign destination. See Richfield Oil Corp. v. State Bd. of Equalization, 329 U.S. 69, 79 (1946). The Court borrowed this “continuous route or journey” test—also known as the “stream of export” test—from an earlier dormant Commerce Clause decision that addressed the taxation of goods in interstate rather than international trade. See Coe v. Town of Errol, 116 U.S. 517, 527 (1886). The Richfield Oil test for exports was the jurisprudential analogue to the “original package” test for imports, which held that imported goods retained immunity from state personal property taxes until they left the importer’s control or were broken up from their original cases. See Low v. Austin, 80 U.S. (13 Wall.) 29, 32-34 (1871).
In the years since Richfield Oil, this Court has ceased to rely on Coe’s “continuous route or journey” test for dormant Commerce Clause purposes. See Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977). The Court also has discarded the “original package” doctrine as applied to imports. See Michelin Tire Corp. v. Wages, 423 U.S. 276, 285-86 (1976). And the Court has cast doubt on Richfield Oil’s continued validity in two cases. See Department of Revenue of Washington v. Association of Washington Stevedoring Cos., 435 U.S. 734, 757 n.23 (1978); Itel Containers Int’l Corp. v. Huddleston, 507 U.S. 60, 77 (1993). Still, this Court has yet to overrule Richfield Oil explicitly.
Courts in eight States as well as one federal court of appeals no longer adhere to Richfield Oil. Their decision to depart from Richfield Oil follows logically from this Court’s opinion in Michelin Tire, which rejected the premises upon which Richfield Oil rested. Courts in five other States as well as another federal court of appeals have said that Richfield Oil remains binding until this Court expressly overrules it. This split generates uncertainty for market actors as they struggle to develop long-term business plans, and it interferes with the ability of state and local governments to craft durable tax regimes.
Such uncertainty on its own is sufficient to justify this Court’s intervention. And, if and when it steps in, this Court should relegate Richfield Oil to the dustbin. Richfield Oil’s holding is at odds with the text and purpose of the Import-Export Clause; it has proven to be difficult for lower courts to apply; and it encourages exporters to alter their business practices in inefficient ways so as to ensure exemption for their goods. The businesses that cannot or choose not to put themselves through contortions in order to qualify for exemption then bear a disproportionate tax burden. Perhaps these consequences would be tolerable if Richfield Oil vindicated important constitutional values. But, to the contrary, Richfield Oil’s holding—that the Import-Export Clause prohibits the application of a nondiscriminatory tax to exports that have begun a “continuous route or journey” out of the country—needlessly infringes upon the fiscal autonomy of States without advancing the Import-Export Clause’s core objectives.
In the end, all that Richfield Oil’s holding has going for it is stare decisis. But if stare decisis was not enough to save Richfield Oil’s dormant Commerce Clause cousin or the analogous “original package” rule for imports, it cannot carry the day here. Reliance interests weigh on both sides, and the Court has given fair warning to regulated parties that it will reconsider Richfield Oil in the appropriate case. That case has now arrived, and this Court should seize the opportunity to overrule Richfield Oil once and for all.
Keywords: tax, taxation, public, policy, law, sales, use, state, export, multistate, amicus brief, Supreme Court, jurisprudence, stream of export, constitutional, constitution, commerce, due process, import-export, interstate, clause, stare decisis
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