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U.S. Supreme Court Rules Against Personal Property Tax on Docking Vessels

A recent decision by the United States Supreme Court overruled the Alaska Supreme Court, ruling that the City of Valdez, Alaska improperly imposed a personal property tax upon the value of large vessels traveling to and from the city. Justice Breyer, writing for the majority, asserted that this tax violated the Tonnage Clause, which forbids a “State… without the consent of Congress, to lay any duty of Tonnage.” This ordinance imposed a personal property tax upon all “boats and vessels of at least 95 feet in length” that regularly traveled to the city, which would require a charge for the privilege of entering, trading in, or lying in a port. This ordinance would ultimately apply to 28 vessels in its first year.
While the direct language of the ordinance was not contradictory to the Tonnage Clause, the Court interpreted the language of the clause in light of its purpose to restrain the states from exercising taxing power injuriously to the interests of each other. Breyer also dismissed the city’s claim that the tax was simply a value-related tax on personal property, asserting that vessels are not taxed in the same manner as other property of the citizens. Justice Breyer was joined by Justices Scalia, Kennedy, Ginsburg and Alito. In addition, Chief Justice Roberts and Justice Thomas filed an opinion concurring with a portion of Justice Breyer’s opinion.
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