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U.S. Supreme Court

Railway Express Agency, Inc. v. Virginia, 347 U.S. 359 (1954)

Railway Express Agency, Inc. v. Virginia

No. 163

Argued January 5, 1954

Decided April 5, 1954

347 U.S. 359


A Virginia statute provides a separate and detailed system of taxation for express companies. In addition to "taxes on property of express companies," it provides that, "for the privilege of doing business in this State," express companies shall pay an "annual license tax" upon gross receipts earned in the State "on business passing through, into, or out of this State."

Held: the gross receipts tax is in fact a effect a privilege tax, and its application to a foreign corporation doing an exclusively interstate business violates the Commerce Clause of the Federal Constitution. Pp. 347 U. S. 360-369.

(a) In a case involving the line between permissible state taxation of property at its full value, including going concern value, and prohibited taxation of gross receipts from interstate commerce, neither the state courts nor the legislature, by giving the tax a particular name or by the use of some form of words, can relieve this Court of its duty to consider the nature and effect of the tax, in which inquiry this Court is concerned only with the practical operation of the tax. P. 347 U. S. 363.

(b) When assessing tangible property, the State has the right to use any fair formula which will give effect to the intangible factors which influence real values, but that is not what the State did here. P. 347 U. S. 364.

(c) The practical effect of the challenged tax conforms to its statutory description as one whose impact is squarely upon gross receipts without consideration of their relation to the value of any of the classes of property recognized elsewhere in the statute. Pp. 347 U. S. 364-369

(d) Local incidents such as gathering up or putting down interstate commodities as an integral part of their interstate movement are not adequate grounds for a state license, privilege or occupation tax. Pp. 347 U. S. 367-368.

(e) Baltimore Steam Packet Co. v. Virginia, 343 U.S. 923, and Norfolk, B. & C. Line v. Virginia, 343 U.S. 923, distinguished. Pp. 347 U. S. 368-369.

194 Va. 757, 75 S.E.2d 61, reversed. chanroblesvirtualawlibrary

Page 347 U. S. 360

The Supreme Court of Appeals of Virginia sustained the constitutionality of a state tax as applied to appellant. 194 Va. 757, 75 S. E. 2d 61. On appeal to this Court, reversed and remanded, p. 347 U. S. 369.

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