The Government imposes a tax on the sale of exported coal, determined by the weight and value of the coal at sale, rather than at the time of its extraction. A coal company challenged the tax because the Export Clause of the Constitution prohibits federal taxation of goods in export transit. The Federal Circuit, however, ruled that the tax was imposed on extraction, not sale, because it was based on weight rather than sales price.
The NAM filed an amicus brief on March 16, 2011, supporting the company’s bid for Supreme Court review. We argued that the Federal Circuit’s decision undermines the protections of the Export Clause by adopting a more lenient policy that allows some taxation of exports. If not reviewed and reversed, the decision will encourage administrative agencies and Congress to impose excise taxes on currently exempt articles for export. Such a result threatens the national economic recovery plan and the survival of thousands of small and medium-sized businesses that together comprise 97% of all exporters and account for 31% of total export value.
Our brief warned that a tax’s label, rather than its substance, will dictate whether it is an impermissible tax on exports. Congress has whittled away at export tax exemptions in a variety of ways, and IRS regulations have narrowed them further. These actions have affected not only coal and crude oil, but also automobiles, trucks and trailers, tires, vaccines, sporting goods, and motor and aviation fuels.
The petition was denied on June 13, 2011.