Article I, Section 8, Clause 1:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; . . .

Article I, Section 8, Clause 1 of the Constitution authorizes Congress to lay and collect duties, imposts, or excise taxes—collectively referred to as indirect taxes—and requires that they be “uniform throughout the United States.” 1 The Supreme Court has held that an indirect tax satisfies the Uniformity Clause “only when the tax ‘operates with the same force and effect in every place where the subject of it is found.” 2 In general, an indirect tax does not violate the Uniformity Clause where the subject of the indirect tax is described in non-geographical terms.3 If Congress uses geographical terms to describe the subject of the indirect tax, then the Supreme Court “will examine the classification closely to see if there is actual geographic discrimination.” 4

In Knowlton v. Moore,5 the Supreme Court examined how the rule of uniformity applied to indirect taxes. In Knowlton, the Court adopted a less restrictive reading of the Uniformity Clause,6 holding that, in selecting the subject of an indirect tax, Congress could define the class of objects subject to the tax and make distinctions between similar classes.7 The Knowlton Court ruled that an inheritance tax that exempted legacies and distributive shares of personal property under $10,000 imposed a primary tax rate that varied based on the beneficiary’s degree of relationship to the decedent, and progressively raised tax rates on legacies and distributive shares as they increased in size, did not violate the Uniformity Clause.8 The Court held that the Uniformity Clause merely requires “geographical uniformity,” meaning indirect taxes must operate in the same manner throughout the United States.9

The Court further clarified the meaning of the Uniformity Clause in United States v. Ptasynski.10 In Ptasynski, the Court ruled that the Crude Oil Windfall Profit Tax Act of 1980,11 which made the windfall profit tax inapplicable to “exempt Alaskan oil,” 12 did not violate the Uniformity Clause despite the Act’s inclusion of favorable treatment for a geographically defined classification.13 The Court explained, “Where Congress defines the subject of a tax in nongeographic terms, the Uniformity Clause is satisfied. . . . But where Congress does choose to frame a tax in geographic terms, we will examine the classification closely to see if there is actual geographic discrimination.” 14 The Court held that the geographically defined classification was constitutional because Congress used “neutral factors” relating to the ecology, environment, and the remoteness of the location to conclude the exempt Alaskan oil classification merited favorable treatment.15 Moreover, the Court found nothing in the legislative history that suggests Congress intended to grant Alaska “an undue preference at the expense of other oil producing states.” 16

Footnotes

1

U.S. Const. art. I, § 8, cl. 1; see Flint v. Stone Tracy Co., 220 U.S. 107, 151 (1911) ( “[T]he terms duties, imposts and excises are generally treated as embracing the indirect forms of taxation contemplated by the Constitution.” ).

2

United States v. Ptasynski, 462 U.S. 74, 82 (1983) (quoting Head Money Cases, 112 U.S. 580, 594 (1884)).

3

Ptasynski, 462 U.S. at 84; see, e.g., Knowlton v. Moore, 178 U.S. 41, 106 (1900).

4

Ptasynski, 462 U.S. at 85.

5

178 U.S. at 46.

6

Id. at 84–106; see id. at 96 ( “The proceedings of the Continental Congress also make it clear that the words ‘uniform throughout the United States,’ which were afterwards inserted in the Constitution of the United States, had, prior to its adoption, been frequently used, and always with reference purely to a geographical uniformity and as synonymous with the expression, ‘to operate generally throughout the United States.’ The foregoing situation so thoroughly permeated all the proceedings of the Continental Congress that we might well rest content with their mere statement. . . . The view that intrinsic uniformity was not then conceived is well shown.” ).

7

Id. at 83–110; see also Ptasynski, 462 U.S. at 82.

8

Knowlton, 178 U.S. at 110; see id. at 83–84.

9

Id. at 87.

10

462 U.S. 74.

11

Pub. L. No. 96–223, 94 Stat. 229 (1980).

12

Ptasynski, 462 U.S. at 77; see id. at 77–78 ( “[Exempt Alaskan oil] is defined as: ‘any crude oil (other than Sadlerochit oil) which is produced (1) from a reservoir from which oil has been produced in commercial quantities through a well located north of the Arctic Circle, or (2) from a well located on the northerly side of the divide of the Alaska-Aleutian Range and at least 75 miles from the nearest point on the Trans-Alaska Pipeline System.’ § 4994(e). Although the Act refers to this class of oil as ‘exempt Alaskan oil,’ the reference is not entirely accurate. The Act exempts only certain oil produced in Alaska from the windfall profit tax. Indeed, less than 20% of current Alaskan production is exempt. Nor is the exemption limited to the State of Alaska. Oil produced in certain offshore territorial waters—beyond the limits of any State—is included within the exemption.” ).

13

Id. at 85.

14

Id. at 84–85.

15

Id. at 85.

16

Id. at 85–86.