Department of Revenue of Mont. v. Kurth Ranch, 511 U.S. 767, 22 (1994)

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Rehnquist, C. J., dissenting

noted that "[i]t is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activity taxed." Id., at 44. And, as the Court concedes, ante, at 778-779, it is well settled that the unlawfulness of an activity does not prevent its taxation. Marchetti v. United States, 390 U. S. 39, 44 (1968); United States v. Constantine, 296 U. S. 287, 293 (1935).

The Court's opinion today gives a passing nod to these cases, but proceeds to hold that a high tax rate and a deterrent purpose "lend support to the characterization of the drug tax as punishment." Ante, at 781. The Court then discusses "[o]ther unusual features" of the Montana tax which, it concludes, brands this tax as a criminal penalty.

The Court first points to its conclusion that the so-called tax is conditioned on the commission of a crime, ibid., a conclusion that the State disputes, and for good reason. The relevant provision of the rule, Mont. Admin. Rule 42.34.102(1) (1988), which provides that the tax return "shall be filed within 72 hours of . . . arrest," merely acknowledges the practical realities involved in taxing an illegal activity.2 Then, quite contrary to the teachings of Marchetti, Constantine, and James v. United States, 366 U. S. 213 (1961), the Court states that the justifications for mixed-motive taxes—imposed both to deter and to raise revenue—vanish "when the taxed activity is completely forbidden." Ante, at 782.

2 Other potential schemes for taxing illegal drug possession will face similar pitfalls. Because the activity sought to be taxed is illegal, individuals cannot be expected to voluntarily identify themselves as subject to the tax. The Minnesota scheme cited by respondents provides for the anonymous purchase of tax stamps prior to, and independent of, any criminal prosecution. Minn. Stat. 297D.01 et seq. (1992). Not surprisingly, when asked at oral argument "Does Minnesota collect any money off that scheme . . . Not too many stamps being sold?," counsel for respondents admitted, amidst laughter, that he did not know the answer. Tr. of Oral Arg. 41.

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