As part of his new tax plan, the president has proposed ending the “step-up” in tax basis for inherited assets, and, furthermore, requiring the capital gains tax to be paid at death rather than when an heir later sells...
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- Reviving the Import-Export Clause in Kentucky v. Davis
Reviving the Import-Export Clause in Kentucky v. Davis
Attorneys at Mintz Levin have written an article summarizing the arguments made by the Davis side in the upcoming Supreme Court case Kentucky Dep't of Revenue v. Davis, in which the Tax Foundation submitted an amicus curiae ("friend of the court") brief in support of Mr. and Mrs. Davis. The Mintz Levin article is excellent and mostly neutral, though it takes issue with our discussion of the Import-Export Clause, which prohibits states from burdening trade:
The Davises' brief (as well as the supporting amicus brief from the Tax Foundation) also raises a new argument that Kentucky-type statutes violate a separate clause of the United States Constitution, known as the "Import-Export Clause." However, the "Import-Export Clause" has previously been interpreted by the U.S. Supreme Court as applicable only to transactions involving foreign nations, not to transactions involving other states within the United States. Accordingly, this argument does not appear to have much force.
The authors are correct, that in the 1868 case of Woodruff v. Parham, the Supreme Court concluded that there was no evidence to suggest that the Import-Export Clause applied domestically (between states); instead the Court found it applied only internationally (between countries). We say as much on pages 16-17 of our brief.
But our brief argues that subsequent scholarship since 1868 about the meaning of the Clause shows it was meant to apply domestically. The Founders, contemporaneous ratifying conventions, newspapers, laws, and other writers used the word "imports" to describe interstate trade. As scholar Brannon P. Denning has written, "The evidence suggests that the Woodruff Court was too hasty...[and its] reading of the Import-Export Clause was too narrow."
In the 1997 Camps Newfound case, two sitting Supreme Court justices called on the Court to apply the Import-Export Clause domestically, and presented a compelling argument as to the Clause's original meaning. We hope that the other members of the Court will take the Clause into consideration when they hear arguments in Davis on November 5.
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