McGoldrick v. Berwind-White Coal Mining Co.

Background

A Pennsylvania coal company sold large quantities of coal to New York customers through a New York sales office. New York City enacted a temporary two percent sales tax on receipts from sales of tangible goods consumed in the city, requiring vendors to collect the tax and making them liable if they failed to pay it. The City’s comptroller assessed $176,703 against the coal company; state courts held the tax violated the Constitution’s commerce clause and blocked the assessment.

Reasoning

The Court asked whether applying the city sales tax to these transactions unlawfully burdened interstate commerce. The majority concluded the tax was non‑discriminatory and targeted the local event of delivery and purchase for consumption in the city. It compared the tax to previously upheld state taxes on property, use, storage, and similar sales and found no special risk of obstructing interstate trade. Because the tax applied equally to local and out‑of‑state goods sold for use in the city, the Court reversed the state court and allowed the tax to stand as applied to the coal sales.

Real world impact

Out‑of‑state sellers who deliver goods for consumption in New York City can be required to collect and ultimately bear liability for local sales tax. Buyers who consume goods in the city remain the statutory taxpayers in substance. The state courts may still decide whether sales whose delivery occurs outside the city fall outside the local law’s reach; the Supreme Court’s ruling upheld the tax’s constitutionality as applied here.

Dissents or concurrances

Justice Hughes dissented, arguing the tax effectively burdens interstate commerce by reaching gross receipts and risks multiple taxation; he would have affirmed the state court’s protection of interstate sales.