Cite as: 517 U. S. 843 (1996)
Kennedy, J., dissenting
and that we reserved the question whether States could tax goods in import or export transit, ante, at 862 (citing 435 U. S., at 757, n. 23). So, in the Court's view, Washington Stevedoring does not support the Government's argument that "Congress [may] impose generally applicable, nondiscriminatory taxes that fall directly on exports in transit," ante, at 861. The Government never argues that § 4371 imposes a tax on goods in transit, however. See, e. g., Brief for United States 15 (the tax imposed by § 4371 "does not fall specifically on articles of export or export transactions"). If the Government can be faulted, it is for urging us to uphold § 4371 on a broad theory (a tax that does not discriminate against exports is valid) rather than the narrow theory subsumed within it (this particular tax does not fall on export goods at all). Nothing in the Government's argument prevents us from deciding the case on the narrower ground.
Even were we to suppose that the Government did not argue the goods and services distinction, the prudential rule against deciding a case on an unargued theory is in any event not absolute. See Arcadia v. Ohio Power Co., 498 U. S. 73, 77 (1990); Erie R. Co. v. Tompkins, 304 U. S. 64, 77-78 (1938) (overturning Swift v. Tyson, 16 Pet. 1 (1842), as unconstitutional); see also 304 U. S., at 82 (Butler, J.) (pointing out that no constitutional question was argued or briefed either in this Court or the court below). Cf. Evans v. United States, 504 U. S. 255, 269 (1992) (addressing a theory not argued by the parties but advanced by Justice Thomas in dissent); United States v. Burke, 504 U. S. 229, 246 (1992) (Scalia, J., concurring in judgment). This rule has less force when the issue before us is whether it is constitutional to apply the statute where Congress intended it to apply. The predicate question of whether the Export Clause prohibits taxes on distinct services like insurance is "essential to the analysis" of the question presented, Procunier v. Navarette, 434 U. S. 555, 559-560, n. 6 (1978), and necessary to "an intelligent resolution of the constitutionality" of the statute, Vance v.
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