Maryland v. Louisiana
Headline: High court strikes down Louisiana’s First Use Tax Act, blocks collection and forces refunds, stopping the state from collecting the tax and requiring repayment to taxpayers and affected businesses.
Holding:
- Stops Louisiana from collecting the First Use Tax immediately.
- Requires refunds and interest be returned to taxpayers.
- Forces the state to report revenues and transfer invested proceeds as they mature.
Summary
Background
A group of plaintiff States, the United States, a federal agency, and several energy companies challenged Louisiana’s First Use Tax Act. The dispute went through a Special Master with reports dated May 14, 1980, and September 15, 1980. The Court announced its opinion on May 26, 1981, and then considered the exact terms of the final decree before ordering relief.
Reasoning
The Court focused on whether the Louisiana First Use Tax Act conflicted with federal law and the Constitution’s protection of interstate commerce. The Court overruled Louisiana’s exceptions to the Special Master’s reports, found Section 1 of the Act violated the Supremacy Clause, and held the Act unconstitutional under the Commerce Clause. The Court denied Louisiana’s motion to dismiss and granted the plaintiff States’ motion for judgment on the pleadings in part, resulting in entry of a decree against the State.
Real world impact
The decree permanently bars Louisiana, its officers, agents, and employees from collecting the First Use Tax. Louisiana must file a full accounting within thirty days and refund all revenues and interest to taxpayers; if those revenues were invested, the state must transfer proceeds from maturing securities to taxpayers. The Court kept jurisdiction to enforce the decree. Justice Powell did not participate in these motions or the decree.
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