McGoldrick v. Berwind-White Coal Mining Co.

Background

A Pennsylvania coal company maintained a New York City sales office and delivered most coal by barge to New York buyers. New York adopted a temporary local law taxing purchasers two percent on receipts from sales of tangible goods consumed in the city. The City Comptroller assessed $176,703 against the company; New York courts held the tax unconstitutional as applied, and the company sought review in this Court.

Reasoning

The central question was whether the city sales tax, when applied to goods brought into and delivered for consumption in New York, unlawfully burdens interstate commerce. The Court said the tax is nondiscriminatory, targets sales for consumption within the city, and operates like taxes previously upheld on property use, storage, or sales at destination. Because the tax does not single out interstate commerce or obstruct it, the Court reversed the state decision and allowed enforcement of the tax on the sales at issue. The Court noted two transactions delivered outside New York were left for the state courts to decide under state law.

Real world impact

The ruling means cities may collect a nondiscriminatory sales tax on purchases consumed within their limits even when goods began their journey in another State. Out‑of‑state sellers who make sales resulting in delivery and consumption in the city may have to collect the tax or be liable for it. The decision preserves a balance between state taxing power and the commerce clause while leaving some state‑law questions to the state courts.

Dissents or concurrances

A dissent argued the tax effectively burdens interstate commerce by taxing gross receipts from interstate sales, risking multiple taxation and undermining the national free market, and would have affirmed the state court.