Helson & Randolph v. Kentucky

Background

A Kentucky law imposed a per-gallon tax on gasoline “sold at wholesale,” explicitly including fuel purchased outside the State and used, sold, or distributed within it. Two Illinois residents who run an interstate ferry between Illinois and Kentucky bought all their gasoline in Illinois and used most of it while operating the ferry in Kentucky. Kentucky sued to collect the tax on the fuel the ferry consumed in the State, and state courts upheld the assessment.

Reasoning

The Court asked whether a State may impose this tax on fuel used to run an interstate ferry. The majority explained that transportation between states is commerce controlled by Congress, and a State may not impose a tax that functions as a price for using an instrument of interstate commerce. Because the gasoline was used as the means of propulsion for interstate trips, the tax directly burdened interstate commerce and could not be sustained. The Supreme Court reversed the state judgment, concluding the tax was an unconstitutional burden on commerce between states.

Real world impact

The ruling prevents Kentucky from collecting this tax on fuel used for interstate ferry operations and limits similar state taxes that fall on the means of interstate transport. Operators who run boats, trains, or other carriers between states are protected from comparable state levies on fuel or other instrumentalities used exclusively for interstate trips. States remain free to tax property generally within their borders, but they cannot impose exactions that work as a charge for conducting interstate transportation.

Dissents or concurrances

One Justice would have affirmed the tax; another Justice agreed with the result but disagreed with the Court’s reasoning, arguing carriers should share state expenses.