Conlaw Rules 5

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Conlaw Rules 5
2010-07-12 19:15:24
State regulation taxation

State regulation and taxation
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  1. Dormant commerce clause
    Implies in the commerce clause that, because Congress has power to regulate interstate commerce, individual states are limited in their ability to legislate on such matters.

    If Congress has not enacted legislation in a particular area of interstate commerce, the states are free to regulate, so long as the state statutes:

    • do not discriminate against out-of-state commerce
    • do not unduly burden interstate commerce
    • do not regulate extraterritorial (wholly out-of-state) activity.

    Does not apply where state acts as a market participant.
  2. Test for discrimination under dormant commerce clause
    State statutes that are discriminatory against out of state commerce are invalid unless state can establish that:

    • an important local interest is being served
    • no other non-discriminatory means are available.
  3. Test for undue burden on interstate commerce
    Even if not discriminatory, will be struck down if an unde burden on interstate commerce.

    Court will balance objective and purpose of law against burden on interstate commerce.
  4. Ability to tax out of state interests
    Must be

    • Substantial nexus btwn activity taxed and taxing state
    • Fairly apportioned where multiple states have a nexus
    • Non-discriminatory against out of state interests (i.e., favor local business over interstate competitors)
    • Have a fair relationship to the services provided by the taxing state