•  
  •  
 

Abstract

Established constitutional doctrine grants the federal government immunity from state taxation. Application of this doctrine ordinarily depends upon the "legal incidence" of the state tax. A state tax imposed directly on the United States or on one of its instrumentalities violates the immunity of the federal government. Gamage v. Halperin raised the issue of whether a sale partly subsidized by the federal government is entitled to constitutional immunity from a state sales tax, at least to the extent of the government's share of the tax. Taxation of a federally subsidized sale presents difficult problems of federal tax immunity. The threshold issue is whether the legal incidence of the tax is on the vendor or on the purchaser. If the incidence is on the purchaser, then immunity will depend on whether the federal government may be characterized as a purchaser by virtue of its subsidy contribution. The Supreme Judicial Court of Maine upheld the assessment of the full tax on the sale of the fishing vessel. Finding that the legal incidence of the Maine sales tax is on the vendor, the court ruled that it was the shipbuilder who was being taxed, not the federal government. There are two difficulties with the court's construction of the Maine sales tax as placing the incidence of the tax on the vendor. First, the express language of the statute provides that the incidence of the tax is on the "consumer," or purchaser, a problem which the court attempted to resolve with a brief citation to prior case law. Second, the court's opinion ignores the provision of the statute requiring vendors to collect the tax from consumers by adding it to the sales price. In light of constitutional pronouncements by the United States Supreme Court on the incidence of taxes for purposes of federal immunity, this factor alone seems to warrant a finding that the legal incidence of the Maine sales tax is on the purchaser. Even if the court had so found, it still could have upheld the tax in Gamage by concluding that the United States was not a purchaser in the transaction.

First Page

149

Download

Share

COinS