State Regulation & Taxation of Commerce

Question 1

The requirements for a “doing business” tax do not include:

Answer 1

that the tax be a flat tax

Question 2

If a state imposes a nondiscriminatory tax on interstate commerce:

Answer 2

It may nevertheless violate the Commerce Clause

Question 3

The power to regulate interstate commerce is a federal power, BUT states may regulate interstate commerce subject to

Answer 3

the negative implications of the Commerce Clause.

Question 4

Who has the power to tax interstate commerce?

Answer 4

The federal government holds most of the power, but the states may tax local aspects

Question 5

Under the Commerce Clause, ad valorem property taxes must be

Answer 5

fairly apportioned.

Question 6

The Twenty-First Amendment allows states to:

Answer 6

Prohibit all sellers from making direct shipments of liquor to customers within the state

Question 7

Under the Commerce Clause, a state regulation that makes it difficult for out-of-state purchasers to access privately owned in-state products is:

Answer 7

likely to be held invalid.

Question 8

Under the Commerce Clause __________.

Answer 8

congress can adopt laws discriminating against interstate commerce and so can states if authorized by federal law

Question 9

If Congress has not enacted laws with regard to a specific area of interstate commerce, a state may regulate a local aspect of this interstate commerce:

Answer 9

When the state’s regulation does not discriminate against out-of-state competition and the regulation does not unduly burden interstate commerce

Question 10

When apportioning a state ad valorem property tax on instrumentalities used to transport goods in interstate commerce, the state may:

Answer 10

Impose an ad valorem property tax on instrumentalities of interstate commerce even if a taxpayer can prove double taxation

Question 11

In assessing whether a nondiscriminatory state tax on interstate commerce is valid absent any federal legislation in the area, courts will typically consider:

Answer 11

Whether there is a substantial nexus between the taxpayer and the state; whether the tax is fairly apportioned; and whether there is a fair relationship between the tax and the services or benefits provided by the state

Question 12

Can a law that discriminates against interstate commerce be valid under the Commerce Clause?

Answer 12

Yes, Congress can pass laws that discriminate against interstate commerce, and the states can too if authorized by federal law

Question 13

Ad valorem property taxes are taxes based on

Answer 13

a percentage of the assessed value of the property in question.

Question 14

A state may impose an ad valorem property tax on goods shipped through interstate commerce when

Answer 14

the goods reach their destination.

Question 15

A state use tax imposed on users of goods purchased out of state is usually invalid if it:

Answer 15

Imposes a higher tax on goods purchased out of state

Question 16

To be constitutional, a “doing business” tax (e.g., a privilege, franchise, or occupation tax imposed on businesses for the privilege of doing business in a state):

Answer 16

Must be fairly apportioned and must fairly relate to services provided by the state

Question 17

Under the Twenty-First Amendment:

Answer 17

a state may not prohibit interstate shipments of liquor to pass through the state

Question 18

When apportioning a state ad valorem property tax on instrumentalities used to transport goods in interstate commerce, the state may:

Answer 18

Place on the taxpayer the burden of establishing that an instrumentality has acquired a taxable situs outside his domiciliary state

Question 19

What is the standard for determining whether a nondiscriminatory state law that burdens interstate commerce will be upheld?

Answer 19

The law will be upheld if the burden on interstate commerce does not outweigh the promotion of legitimate local interests

Question 20

If a state tax on interstate commerce discriminates against a natural person who is a nonresident, which of the following lists contains the constitutional clauses most likely to be relevant in determining whether the tax is valid?

Answer 20

Commerce Clause, Equal Protection Clause, and Article IV Privileges and Immunities Clause

Question 21

Generally, the Commerce Clause prohibits states from discriminating against out-of-state competition. An exception to this prohibition is where:

Answer 21

the state acts as a market participant.

Question 22

The Privileges or Immunities Clause of the Fourteenth Amendment

Answer 22

applies when a state denies its own citizens rights of national citizenship.

Question 23

A state use tax imposed on users of goods purchased out of state:

Answer 23

May be valid even if it seeks to have out-of-state sellers collect the tax