Cornell v. Coyne
Headline: Court upheld federal one-cent-per-pound manufacturing tax on filled cheese even when made for export, requiring exporters to pay the tax rather than receive an exemption for exported goods.
Holding: The Court held that Congress may impose a general one-cent-per-pound manufacturing tax on filled cheese made for and actually exported, because the constitutional ban on export duties does not exempt goods from ordinary pre-export taxes.
- Makes exporters pay manufacturing tax before shipping goods abroad.
- Limits ability to avoid federal manufacturing taxes by immediately exporting goods.
- Affirms government power to collect revenue from domestic manufacturing.
Summary
Background
The dispute involves cheese makers in Illinois who manufactured "filled cheese" under contracts to send installments to buyers in Liverpool and London. After making each shipment ready for export, they asked the federal tax collector for permission to ship without buying the required revenue stamps, but the collector insisted on collecting a one-cent-per-pound manufacturing tax before export. The manufacturers sued, arguing the tax was barred by the constitutional ban on taxes on exported articles and that the statute's reference to existing stamp laws meant exports should be exempt.
Reasoning
The Court asked whether a general manufacturing tax can be applied to goods made for immediate export. The majority held the constitutional prohibition bars taxes on exportation itself but does not prevent Congress from levying ordinary manufacturing taxes that apply before goods enter the export process. The Court also rejected the manufacturers’ claim that the law’s reference to existing tobacco-and-snuff stamp rules incorporated an export exemption. Because the statute clearly imposed the one-cent tax on all filled cheese, the Court affirmed the collector’s right to collect it.
Real world impact
Manufacturers who make goods for foreign buyers must pay general manufacturing taxes even if the products are shipped abroad shortly after production. Export markets may be affected because taxes increase costs, and exporters cannot automatically avoid such pre-export taxes under this statute. The ruling confirms government authority to tax manufacturing for revenue.
Dissents or concurrances
A dissenting justice argued the statute should be read to allow export stamps and that cheese made and prepared immediately for export should be exempt under the constitutional ban on duties laid on exports.
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