Brown-Forman Co. v. Kentucky, 217 U.S. 563 (1910)

Brown-Forman Co. v. Kentucky

No. 6

Argued April 11, 12, 1910
Decided May 16, 1910
217 U.S. 563

ERROR TO THE COURT OF APPEALS

OF THE STATE OF KENTUCKY

Syllabus

This Court accepts the construction by the highest court of the state that the tax imposed by the state statute in this case is not a property tax, but a license tax, imposed on the doing of a business which is subject to the regulating power of the state.

The function of taxation is fundamental to the existence of the governmental power of the states, and the restriction against denial of equal protection of the law does not compel an iron rule of equal taxation, prevent variety in methods, or the exercise of a wide discretion in classification.

A classification which is not capricious or arbitrary and rests upon reasonable consideration of difference or policy does not deny equal protection of the law, and so held that the classification in the Kentucky act of 1906 imposing a license tax on persons compounding, rectifying, adulterating, or blending distilled spirits is not a denial of equal protection of the law because it discriminates in favor of the distillers and rectifiers of straight distilled spirits.

A state cannot impose an occupation tax on a business conducted outside of the state, and a license tax imposed on those doing a specified business within the state is not unconstitutional as denying equal protection of the law or violating the commerce clause because not imposed on those who carry on the same business beyond the jurisdiction of the state and who ship goods into the state.

While taxation discriminating in favor of residents and domestic products and against nonresidents and foreign products might be invalid under the commerce clause, that objection does not apply to uniform taxation on a business which does not discriminate in favor of residents or domestic products.

While a state tax on goods which discriminates arbitrarily against the products of that state and in favor of other states denies equal protection of the law, as both classes of goods are within the taxing power of the state, where the license tax for the business of producing the product cannot be imposed on the business beyond the state, it is not discriminatory. State v. Hoyt, 71 Vt. 59, distinguished.

125 Ky. 402 affirmed.

The facts are stated in the opinion.