Department of Revenue of Mont. v. Kurth Ranch, 511 U.S. 767, 14 (1994)

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Opinion of the Court

revenue-raising, rather than punitive, purposes. Yet at some point, an exaction labeled as a tax approaches punishment, and our task is to determine whether Montana's drug tax crosses that line.

We begin by noting that neither a high rate of taxation nor an obvious deterrent purpose automatically marks this tax as a form of punishment. In this case, although those factors are not dispositive, they are at least consistent with a punitive character. A significant part of the assessment was more than eight times the drug's market value—a remarkably high tax.17 That the Montana Legislature intended the tax to deter people from possessing marijuana is beyond question.18 The DOR reminds us, however, that many taxes that are presumed valid, such as taxes on cigarettes and alcohol, are also both high and motivated to some

17 The State recovered 1,811 ounces of marijuana with an estimated value of $46,000, and taxed the marijuana at $100 per ounce (that is, the greater of 10 percent of market value or $100 per ounce), for a total tax of $181,000. The State thus taxed the drugs at about 400 percent of their market value. Compared to similar taxes on legal goods and activities, Montana's tax—assessed at a rate of 10 percent or roughly 400 percent of market value, whichever is greater—appears to be unrivaled. Even the taxes identified by the United States, which supports the DOR as amicus curiae, do not approach a level this high. See Brief for United States as Amicus Curiae 23-24. The United States notes hypothetically, for example, that the current 24-cent-per-pack federal tax on cigarettes could, under a new health plan, be increased to 99 cents, resulting in a total tax burden that "could easily surpass" the 80 percent rate that Montana imposed on the part of the marijuana consisting of the higher valued " 'buds.' " Ibid. The Government offers no such example, however, of a tax equivalent to that assessed on the combined cache of buds and lower valued "shake." See n. 12, supra.

18 For example, although the Act's preamble evinces a clear motivation to raise revenue, it also indicates that the tax will provide for anticrime initiatives by "burdening" violators of the law instead of "law abiding taxpayers"; that use of dangerous drugs is not acceptable; and that the Act is not intended to "give credence" to any notion that manufacturing, selling, or using drugs is legal or proper. 1987 Mont. Laws, ch. 563, p. 1416.

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