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Court Opinions ›› Dep't of Revenue v. Kurth Ranch (1994)
DEPARTMENT OF REVENUE OF MONTANA, PETITIONER v. KURTH RANCH ET AL.
No. 93-144 SUPREME COURT OF THE UNITED STATES 511 U.S. 767; 114 S. Ct. 1937; 128 L. Ed. 2d 767; 1994 U.S. LEXIS 4440; 62 U.S.L.W. 4429; 73 A.F.T.R.2d (RIA) 2140; 94 Cal. Daily Op. Service 4091; 94 Daily Journal DAR 7673; 8 Fla. L. Weekly Fed. S 199 January 19, 1994, Argued June 6, 1994, Decided PRIOR HISTORY: ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT. Montana law enforcement officers raided the farm of respondents -- members of the extended Kurth family -- arrested them, and confiscated and later destroyed their marijuana plants. After the Kurths pleaded guilty to drug charges, petitioner revenue department attempted, in a separate proceeding, to collect a state tax imposed on the possession and storage of dangerous drugs. That tax is collected only after any state or federal fines or forfeitures have been satisfied, and taxpayers must file a return after they are arrested. In bankruptcy proceedings filed by the Kurths, they objected to petitioner's proof of claim for the tax and challenged the tax's constitutionality. The Bankruptcy Court held, among other things, that the assessment on harvested marijuana, a portion of which resulted in a tax eight times the product's market value, was a form of double jeopardy invalid under the Federal Constitution, and the District Court affirmed. In affirming, the Court of Appeals determined that the central inquiry under United States v. Halper, 490 U.S. 435, 104 L. Ed. 2d 487, 109 S. Ct. 1892, is whether the sanction imposed is rationally related to the damages the government suffered, that the Kurths were entitled to an accounting to determine if the sanction constituted an impermissible second punishment, and that the tax was unconstitutional as applied to them because the State refused to offer any such evidence.
The tax violates the constitutional prohibition against successive punishments for the same offense.
The government may, of course, tax illegal activity. See, e. g., Marchetti v. United States, 390 U.S. 39, 44, 19 L. Ed. 2d 889, 88 S. Ct. 697 (1968). In fact, we have upheld, as within Congress' taxing authority, a $100 per ounce tax on marijuana. United States v. Sanchez, 340 U.S. 42, 44, 95 L. Ed. 47, 71 S. Ct. 108 (1950). But the power to tax illegal activity carries with it the danger that the legislature will use the tax to punish the participants for engaging in that activity. This is particularly true of taxes assessed on the possession of illegal drugs: Because most drug offenses involve the manufacture, possession, transportation, or distribution of controlled substances, the State might use a tax on possession to punish a participant in a drug crime twice for the same conduct.
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The State and Federal Governments spend vast sums on drug control activities. See, e. g., U.S. Dept. of Justice, Bureau of Justice Statistics, Fact Sheet: Drug Data Summary 5 (Apr. 1994) (approximately $ 27 billion in fiscal year 1991). The Kurths are directly responsible for some of these expenditures -- the costs of detecting, investigating, and raiding their operation, the price of prosecuting them and incarcerating those who received prison sentences, and part of the money spent on drug abuse education, deterrence, and treatment. The State of Montana has a legitimate nonpunitive interest in defraying the costs of such activities.
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...[T]he Court holds that imposition of the drug tax is always punitive, regardless of the nature of the offense or the offender. The consequences of this decision are astounding. The State of Montana -- along with about half of the other States -- is now precluded from ever imposing the drug tax on a person who has been punished for a possessory drug offense. A defendant who is arrested, tried, and convicted for possession of one ounce of marijuana cannot be taxed $100 therefore, even though the State's law enforcement costs in such a case average more than $4,000. See Montana Criminal Justice Expenditures 24. Moreover, presumably the State cannot tax anyone for possession of illegal drugs without providing the full panoply of criminal procedure protections found in the Fifth and Sixth Amendments, given the Court's holding that "the proceeding Montana initiated to collect a tax on the possession of drugs was the functional equivalent of a successive criminal prosecution."
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Today's decision is entirely unnecessary to preserve individual liberty, because the Excessive Fines Clause is available to protect criminals from governmental overreaching. [...] On the other hand, today's decision will be felt acutely by law-abiding taxpayers, because it will seriously undermine the ability of the State and Federal Governments to collect recompense for the immense costs criminals impose on our society.
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It is time to [...] acknowledge what the text of the Constitution makes perfectly clear: the Double Jeopardy Clause prohibits successive prosecution, not successive punishment. Multiple punishment is of course restricted by the Cruel and Unusual Punishments Clause insofar as its nature is concerned, and by the Excessive Fines Clause insofar as its cumulative extent is concerned.
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Taxes imposed upon illegal activities are fundamentally different from taxes with a pure revenue-raising purpose that are imposed despite their adverse effect on the taxed activity. But they differ as well from mixed-motive taxes that governments impose both to deter a disfavored activity and to raise money. By imposing cigarette taxes, for example, a government wants to discourage smoking. But because the product's benefits -- such as creating employment, satisfying consumer demand, and providing tax revenues -- are regarded as outweighing the harm, that government will allow the manufacture, sale, and use of cigarettes as long as the manufacturers, sellers, and smokers pay high taxes that reduce consumption and increase government revenue. These justifications vanish when the taxed activity is completely forbidden, for the legitimate revenue-raising purpose that might support such a tax could be equally well served by increasing the fine imposed upon conviction.
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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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