The Commerce Clause refers to Article 1, Section 8, Clause 3 of the U.S. Constitution, which gives Congress the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.

How does the Commerce Clause affect the states?

The Commerce Clause is a grant of power to Congress, not an express limitation on the power of the states to regulate the economy. Under this interpretation, states are divested of all power to regulate interstate commerce.

How is the Commerce Clause implicated in state tax issues?

− Commerce clause authorizes Congress to “regulate commerce with foreign nations, and among the several States.” − The Commerce Clause prohibits states from enacting laws that might unduly burden or inhibit the free flow of commerce between the states.

What does the Commerce Clause do?

To address the problems of interstate trade barriers and the ability to enter into trade agreements, it included the Commerce Clause, which grants Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Moving the power to regulate interstate commerce to …

Does the Interstate Commerce Commission still exist?

The Interstate Commerce Commission was the first regulatory commission established in the U.S., where it oversaw common carriers. However, the agency was terminated at the end of 1995, with its functions either having been transferred to other bodies or in some cases rendered obsolete by deregulation.

What is the largest portion of state tax revenue?

State and local governments collect tax revenues from three primary sources: income, sales, and property taxes. Income and sales taxes make up the majority of combined state tax revenue, while property taxes are the largest source of tax revenue for local governments, including school districts.

What is the Commerce Clause and why is it important?

The Commerce Clause serves a two-fold purpose: it is the direct source of the most important powers that the Federal Government exercises in peacetime, and, except for the due process and equal protection clauses of the Fourteenth Amendment, it is the most important limitation imposed by the Constitution on the …

Which is an example of the Commerce Clause?

(1) To date the most significant analysis of the Commerce Clause has arisen in domestic cases of sale and use tax imposed by states upon sales made to vendees in their state from out of state vendors.

How is a tax sustained against a Commerce Clause challenge?

A tax will be sustained against a Commerce Clause challenge where the following is satisfied. The tax must be applied to an activity with a substantial nexus with the taxing state, the tax must be fairly apportioned, it must not discriminate against interstate commerce, and it must be fairly related to the services provided by the taxing state.

What is the negative sweep of the Commerce Clause?

However, the Commerce Clause is more than an affirmative grant of power, it has a negative sweep as well; by its own force it prohibits certain state actions that interfere with interstate commerce. The negative or dormant Commerce Clause has evolved substantially, particularly as it concerns limitation upon state taxation powers.

What is the nexus between commerce and due process?

Nexus. —“The Commerce Clause and the Due Process Clause impose distinct but parallel limitations on a State’s power to tax out-of-state activities.