Taxation and State Taxation -- 2006
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McLane Western, Inc. v. Department of Revenue
(U.S. Supreme Court)
Discriminatory state taxes
The NAM on 6/12/06 joined with the Council on State Taxation and the National Association of Wholesaler-Distributors to urge the Supreme Court to review an adverse decision from a Colorado appeals court. The court endorsed a state tax provision that discriminates against out-of-state distributors and manufacturers. It involves an excise tax on the sale or distribution of tobacco products in Colorado, and the tax is imposed once, upon the occurrence of the first taxable event in the state. Products that are distributed initially out-of-state will incur a higher tax than those distributed entirely within the state, since the increasing value of the product as it passes through distributors within the state will not affect the tax already paid. Our brief sounds the alarm that if this system is allowed to stand, states will have a new way to impose discriminatory taxes on out-of-state manufacturers and distributors.
On October 2, 2006, the Supreme Court declined to review this case.
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