City of Tacoma v. General Metals of Tacoma, Inc.

Hale, C.J.

(dissenting) — I dissent. The court’s opinion expands the term export far beyond its constitutional meaning and I think gives it a significance never contemplated by the Constitution of the United States. Although a *565state may not tax exports per se, the court holds that it likewise cannot tax the process of exporting, nor the business of manufacturing, hauling, processing, financing, fabricating, warehousing or the transaction of any other business in connection with any of these processes affecting the article to be exported. Nearly everything destined for shipment to the ports for overseas delivery, by this opinion and contrary to the intendment of the constitution, may be converted into an export from the moment it is so declared an export by a producer, manufacturer, seller, or broker.

While paying a modicum of deference — amounting to no more than a tip of the judicial hat — to the idea of irrevocability of export, the court cleaves to what I think is a mistaken and nebulous concept that the goods become exports when they have entered the stream of foreign commerce. For this principle, it cites a number of cases dealing with interstate — as distinguished from foreign — commerce and caps this rationale with reliance upon Kosydar v. National Cash Register Co., 417 U.S. 62, 40 L. Ed. 2d 660, 94 S. Ct. 2108 (1974), a case which I think holds precisely the opposite of the majority opinion.

I would cite Kosydar, therefore, in direct support of the proposition that the scrap metal stored on the docks at the Hylebos Waterway was a part of the mass of goods within the city of Tacoma and the state of Washington. Kosydar was, I think, properly cited to uphold a similar tax in the dissenting opinion in Carrington Co. v. Department of Revenue, 84 Wn.2d 444, 527 P.2d 74 (1974) which opinion I would restate here.

Article 1, section 10 of the Constitution of the United States declares, in part:

No state shall, without the consent of the congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of *566the treasury of the United States; and all such laws shall be subject to the revision and control of the congress.

(Italics mine.)

One should note in this provision the precise use of the nouns imports and exports and ipso facto the avoidance of such broader and more vague concepts as foreign commerce or foreign trade or general terms describing commerce occurring among or between the states. Even with respect to interstate transactions, Congress is empowered only to regulate commerce with foreign nations and among the several states. U.S. Const, art. 1, § 8, cl. 3. Thus, the constitution does not authorize Congress to deprive the states of power to tax foreign commerce nor interstate commerce either; nor does the constitution authorize Congress to prohibit the state taxation of business activities or processing occurring within the several states or the taxation of goods while they are a part of the mass of property within a state, for that matter. And with respect to goods destined for foreign delivery, the prohibition is limited to goods specifically defined as imports and exports. Thus, the power to prohibit state taxation does not extend to transactions connected with such goods before they have become exports nor after they have ceased to be imports.

That the framers of the constitution did not intend to bar the several states from imposing reasonable, that is nonconfiscating, taxes upon goods and property within the state nor upon services connected with them and performed within the states before the goods have become exports, is clear from the language used. Employing only the most explicit and narrow terms to bar the states from taxing imports and exports, the constitution does not prohibit a state tax upon the importing or exporting or the wholesaling, retailing, hauling, processing, fabricating, storing, financing, factoring or rendering a service with respect to them.

As it did in Carrington, the court now takes the goods which may ultimately be shipped in foreign commerce to a *567foreign consignee, and by necessary implication relates the term export back to all or nearly all transactions affecting them wheresoever the transaction may have taken place and in whatever state. The court, I think, has fashioned a rule which shelters the goods and commodities from state and local taxes during all their phases or transactions as exports under the nebulous theory that somewhere long before being loaded aboard ship or plane they had entered the export stream — a concept I find unjustified by either the power to regulate foreign commerce or the express constitutional prohibition barring the taxation of exports or imports.

Nearly everything we produce and consume in this country, including the movement of money and credit, enters a stream of commerce at one stage or another of its development, and a good share of it enters the stream of foreign commerce. All of the processes and businesses connected with it and occurring within the state of Washington are and, in my opinion, should be subject to State business and occupation taxes. The goods do not become exempt as exports, I think, until they reach a point in the journey where they have been irrevocably severed from and cannot be said to be a part of the mass of goods and property within the state. That, in my view, is the holding in Kosydar, supra. As a further rationale, I would restate and adopt the dissenting opinion in Carrington Co. v. Department of Revenue, 84 Wn.2d 444, 527 P.2d (1974).

Hunter, J., concurs with Hale, C.J.