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

See all articles by Daniel Jacob Hemel

Daniel Jacob Hemel

University of Chicago - Law School

Reuven S. Avi-Yonah

University of Michigan Law School

Lily L. Batchelder

New York University School of Law

Samuel D. Brunson

Loyola University Chicago School of Law

J. Clifton Fleming

Brigham Young University - J. Reuben Clark Law School

David Gamage

Indiana University Maurer School of Law

Ari D. Glogower

Ohio State University (OSU) - Michael E. Moritz College of Law

Jacob Goldin

Stanford Law School

Hayes Holderness

University of Richmond - School of Law

Michael S. Knoll

University of Pennsylvania Law School; University of Pennsylvania Wharton School -- Real Estate Department

Zachary D. Liscow

Yale University - Law School

Ruth Mason

University of Virginia School of Law

Goldburn Maynard

Louis D. Brandeis School of Law

Richard D. Pomp

University of Connecticut - School of Law

James R. Repetti

Boston College - Law School

Julie Roin

University of Chicago Law School

Erin A. Scharff

Arizona State University (ASU) - Sandra Day O'Connor College of Law

Jay A. Soled

Rutgers University

Edward A. Zelinsky

Yeshiva University - Benjamin N. Cardozo School of Law

Date Written: January 25, 2018

Abstract

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.

Suggested Citation

Hemel, Daniel Jacob and Avi-Yonah, Reuven S. and Batchelder, Lily L. and Brunson, Samuel D. and Fleming, J. Clifton and Gamage, David and Glogower, Ari D. and Goldin, Jacob and Holderness, Hayes and Knoll, Michael S. and Liscow, Zachary D. and Mason, Ruth and Maynard, Goldburn and Pomp, Richard D. and Repetti, James R. and Roin, Julie and Scharff, Erin A. and Soled, Jay and Zelinsky, Edward A., Brief of Tax Law Professors As Amici Curiae in Support of Petitioner in Loudoun County, Virginia v. Dulles Duty Free, LLC (January 25, 2018). Available at SSRN: https://ssrn.com/abstract=3109773 or http://dx.doi.org/10.2139/ssrn.3109773

Daniel Jacob Hemel (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Reuven S. Avi-Yonah

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4033 (Phone)

Lily L. Batchelder

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-992-8156 (Phone)

Samuel D. Brunson

Loyola University Chicago School of Law ( email )

25 E. Pearson
Chicago, IL 60611
United States

J. Clifton Fleming

Brigham Young University - J. Reuben Clark Law School ( email )

430 JRCB
Brigham Young University
Provo, UT 84602
United States

David Gamage

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

HOME PAGE: http://www.law.indiana.edu/about/people/bio.php?name=gamage-david

Ari D. Glogower

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Jacob Goldin

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Hayes Holderness

University of Richmond - School of Law ( email )

28 Westhampton Way
Richmond, VA 23173
United States

Michael S. Knoll

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6190 (Phone)
215-573-2025 (Fax)

University of Pennsylvania Wharton School -- Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

Zachary D. Liscow

Yale University - Law School ( email )

127 Wall St.
New Haven, CT 06511
United States

Ruth Mason

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

Goldburn Maynard

Louis D. Brandeis School of Law ( email )

Wilson W. Wyatt Hall
Louisville, KY 40292
United States
5028525563 (Phone)

HOME PAGE: http://louisville.edu/law/faculty-staff/faculty-directory/maynard-goldburn

Richard D. Pomp

University of Connecticut - School of Law ( email )

65 Elizabeth Street
Hartford, CT 06105
United States
860-570-5251 (Phone)

HOME PAGE: http://www.law.uconn.edu/faculty/rpomp/

James R. Repetti

Boston College - Law School ( email )

885 Centre Street
Newton, MA 02459-1163
United States
617-552-8550 (Phone)
617-552-2615 (Fax)

Julie Roin

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-5314 (Phone)

Erin A. Scharff

Arizona State University (ASU) - Sandra Day O'Connor College of Law ( email )

P.O. Box 877906
Tempe, AZ 85287-7906
United States

Jay Soled

Rutgers University ( email )

1 Washington Park
Newark, NJ 07901-1825
United States
(973) 353-1727 (Phone)

Edward A. Zelinsky

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

55 Fifth Ave.
New York, NY 10003
United States
212-790-0277 (Phone)

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