lieve that the Supreme Court will insist that a gross-receipts tax, imposed as a substitute for property taxes, must be a fair substitute, and must not through excessive rates of levy take disproportionate toll from a selected class of taxpayers engaged in interstate

commerce.

The gross-receipts tax declared invalid in Crew Levick Co. v. Pennsylvania 139 was imposed under the following provision of the

statutes:

"Each wholesale vender of or wholesale dealer in goods, wares and merchandise shall pay an annual mercantile license tax of three dollars, and all persons so engaged shall pay one-half mill additional on each dollar of the whole volume, gross, of business transacted annually." 140 The state court had called the tax one "upon the business of vending merchandise." 141 The complainant during the year in question had received about $47,000 from intra-state sales, so that there was no doubt that it was subject to an occupation tax. It confined its objections to the levy on receipts of about $430,000 from customers in foreign countries, insisting that a tax on such receipts was both a regulation of foreign commerce and an impost upon exports. Of these objections Mr. Justice Pitney said that

"although dual in form, the question may be treated as a single one, since it is obvious that, for the purposes of this case, an impost upon exports and a regulation of foreign commerce may be regarded as interchangeable terms." 142

The decision may therefore be treated as one on the law of interstate commerce.

The Crew Levick case insistently demands comparison with Ficklen v. Shelby County Taxing District 143 on which the Commonwealth of Pennsylvania unsuccessfully relied. Formal distinctions between the statutes in the two cases readily suggest themselves. Mr. Ficklen would not have been subject to the Shelby County law if he had not asked for a license to do a general business, but had held himself out to do only interstate business. The Crew Levick Company would have been taxed under the Pennsylvania statute

though it had notoriously restricted its solicitations and ministrations to customers beyond the seas. By no limitation of its enterprise less than a complete abandonment could it exclude itself from the terms of the Pennsylvania law. Nor did it have the possibility enjoyed by Mr. Ficklen of having the exaction measured by the amount of capital employed in the business rather than by the gross receipts therefrom. From every dollar received from interstate or foreign commerce Pennsylvania inexorably demanded that it render tribute unto Caesar. Formally and technically, therefore, the Supreme Court was quite correct in saying that the authority of the Ficklen case "would have to be stretched in order to sustain such a tax as is here in question." 144 Hence formally and technically the Crew Levick case does not overrule the Ficklen case.

In substance, however, the situations of Mr. Ficklen and of the Crew Levick Company were approximately the same. If the Pennsylvania law had been identical with that of Shelby County, the Crew Levick Company would undoubtedly have asked for the same kind of license that Mr. Ficklen did. It would hardly have cut itself off from $47,000 of local business in order to avoid a tax of $215 on its receipts from foreign business. Nor would it be likely to suffer less by having the tax measured by the capital used in the business. Ten cents on each $100 of its capital would amount to more than $215 as soon as that capital exceeded $215,000. It would not appear to be material that the capital of the Crew Levick Company may be otherwise taxed by Pennsylvania, for there is no indication that Mr. Ficklen would have escaped the ordinary property tax on his capital if he had been fortunate enough to possess any.

Looking through form to substance, both Shelby County and the Commonwealth of Pennsylvania imposed an occupation tax measured by gross receipts from all business whether foreign or local. Had the Crew Levick Company, like Mr. Ficklen, done no local business whatever during the year in question, it would still have been within the terms of the Pennsylvania statute, but clearly would not have been engaged in a taxable occupation, and so would not have been caught, as he was caught, by reason of the peculiar provision of the Shelby County Law whereby taxability depended upon professions and not upon events. But here by the course of

events the Crew Levick Company was engaged in a taxable occupation. It was taxable and was taxed. The only dispute was over the measure of the tax. The Supreme Court disallowed that part of the measure which embraced receipts from commerce not confined to the state. It did not hold the Pennsylvania law void. If later the Pennsylvania court interprets the law as not applicable to concerns that refrain from local business,145 the Supreme Court will have difficulty in applying the Crew Levick case without definitely overruling the Ficklen case.

In the absence of such a restrictive interpretation by the state court, the Supreme Court followed established practice 146 in refusing to rewrite the state law so as to bring it within the doctrine of the Ficklen case. Taking the Pennsylvania law as it reads, it plainly taxes interstate as well as local occupations; and, in so far as it makes the former a subject of taxation, it easily comes within the condemnation visited on those imposts which are "on interstate commerce itself" or on receipts from such commerce "as such." 147 Pennsylvania had not encased its demand in the fiction coating which is essential to bring it within those levies on interstate commerce which have been regarded as "merely incidental or indirect." At times this coating has seemed to need no other ingredient than words. The Crew Levick case naturally excites our curiosity whether a merely verbal compound can in these days turn poison into meat.

Mr. Justice Pitney's opinion indicates that it cannot. Not a little that he says is quite as applicable to the tax sustained in the Ficklen case as to that held invalid in the Crew Levick case. Of the former he says that "undoubtedly that case is near the border

145 For an instance of such construction by a state court of a statute imposing license taxes varying in amount according to the population of the towns and cities in which business was carried on, see Osborne v. Florida, 164 U. S. 650, 17 Sup. Ct. Rep. 214 (1897). In the cases of taxes on gross receipts the federal courts will make the necessary separation, when it is feasible, and hold void only that part on interstate receipts. Ratterman v. Western Union Telegraph Co., 127 U. S. 411, 8 Sup. Ct. Rep. 1127 (1888). But where a specific fee is imposed, the Supreme Court will not assume that the subject taxed is local business only if the language of the statute applies to any or all business. See cases cited in note 146.

146 Leloup v. Port of Mobile, 127 U. S. 640, 8 Sup. Ct. Rep. 1380 (1888); Crutcher v. Kentucky, 141 U. S. 47, 11 Sup. Ct. Rep. 851 (1891); Williams v. Talladega, 226 U. S. 404, 33 Sup. Ct. Rep. 116 (1912).

147 See cases cited in note 19, supra.

line." 148

One distinction which he draws is so frail that a breath of thought would disintegrate it. "Besides," he says,

"the tax imposed in the Ficklen Case was not directly upon the business itself or upon the volume thereof, but upon the amount of commissions earned by the brokers, which, although probably corresponding with the volume of the transactions, was not necessarily proportionate thereto. For these and other reasons the case has been deemed exceptional.” 149 This assumed distinction is no more than that the Crew Levick Company sold their own products, while Mr. Ficklen was a somewhat independent intermediary between seller and purchaser. It is the distinction between receipts from commissions on sales and receipts from sales. One is quite as likely not to be necessarily proportional to the volume of the transactions, if this means the quantity of goods sold, as is the other. Even if by "volume of the transactions" Mr. Justice Pitney means the volume as measured by gross receipts, it cannot be important that the broker's commissions were not exactly proportional to the prices paid the seller. If the broker's part in the transaction is regarded as interstate commerce, his receipts are from interstate commerce, and whether he were paid by the day or the deal or by a percentage can hardly matter. In so far as there is any validity to the distinction suggested, it relates to the nature of the business involved in the different cases and not to the character of the statutes.

It is not unlikely that it is a distinction between the businesses that the learned Justice has in mind. This can hardly be gathered from the opinion in the Crew Levick case, but it finds support in an earlier opinion of the same Justice in United States Fidelity & Guaranty Co. v. Kentucky 150 which sustained a specific tax upon a mercantile agency engaged in reporting the financial responsibility of merchants who bought goods from without as well as from within the state. In that opinion Mr. Justice Pitney says:

"The present case has no close parallel in former decisions, but in some of its aspects it bears a resemblance to the case of a tax imposed upon a resident citizen engaged in a general business that happens to include a considerable share of interstate business. Ficklen v. Taxing District, 145 U. S. I. Or the business of the live stock exchange that was under

148 245 U. S. 292, 296, 38 Sup. Ct. Rep. 126 (1917).

149 Ibid., 297.

consideration in Hopkins v. United States, 171 U. S. 578, 592. Or the business of a cotton broker dealing in futures or options. Ware v. Mobile County, 209 U. S. 405."

"151

The Hopkins case and the Ware case held that the acts in question were not acts of interstate commerce. The collocation suggests that the broker who is a mere intermediary is less intimately connected with commerce than a vendor or his regular drummers. It is not likely that the court would go so far as to hold that such a sales broker, like the broker who furnishes exchange, 152 is not himself engaged in the commerce which he facilitates. But the passage above quoted has the aroma of the idea that Mr. Ficklen was a degree or two removed from direct participation in interstate commerce, and that therefore the tax which was sustained against him must be subjected to more rigid tests if ever it is sought to be imposed on those whose receipts are from interstate commerce instead of being receipts from receipts from interstate commerce. To the extent that the Ficklen case is now sought to be explained or apologized for on any such notion, it is excluded from the class of cases with which we are concerned and, from the standpoint from which we are considering it, is abandoned.

We hardly need, however, to enter upon such refinements to discern that, even if the Ficklen case still lives, its working days are over. Of the tax from which the Crew Levick Company was relieved, Mr. Justice Pitney says:

"It operates to lay a direct burden upon every transaction in commerce by withholding, for the use of the State, a part of every dollar received in such transactions. That it applies to internal as well as to foreign commerce cannot save it; . . . That portion of the tax which is measured by the receipts from foreign commerce necessarily varies in proportion to the volume of that commerce, and hence is a direct burden upon it." 153

This would be quite as applicable to a tax specifically imposed on a local occupation but measured by receipts from all sources. To sustain a tax on interstate receipts, something more is now needed than the declaration of the state that it is merely using the receipts as the measure of a tax on something else that is taxable. The 151 231 U. S. 399, 34 Sup. Ct. Rep. 122 (1913).

152 Nathan v. Louisiana, 8 How. (U. S.) 73 (1850).