Tax Exporting and the Commerce Clause: Reflections on Commonwealth Edison

This paper appraises the conflicting contentions found in the majority and dissenting opinions in Commonwealth Edison Co. et al. v. Montana et al. about the feasibility of basing findings of constitutionality under the Interstate Commerce Clause on the results of incidence analysis. Severance taxes, property taxes, corporate income taxes levied by both producing and consuming states, and gross receipts taxes levied by consuming states in conjunction with price controls are considered. Factors affecting tax exporting by producing states include the degree of geographic concentration of natural resources, cartelization by producing states, the mobility of various resources, international competition, natural substitutability, government regulations, the prevalence of long-term contracts, and transportation costs. The analysis of tax exporting is sufficiently complicated that attempting to base constitutionality on estimates of tax exporting is fraught with danger, especially in times of rapid economic and institutional change, in part because it is so difficult to know when the tax exporting question is being asked properly.