Article by Walter Hellerstein
When Dean Verkuil first inquired whether I would be interested in coming to Tulane to talk about Louisiana's First Use Tax, I responded that I would be honored to do so. The prospect of speaking in your distinguished series of Shell Foundation Lectures presented a very special opportunity indeed. Moreover, I doubt that I was able to conceal my delight and, perhaps, surprise, that someone might actually want to hear about state taxation since I usually have to persuade friends and colleagues that state taxation is something worth talking about in the first place. For most of us, after all, the burden of state taxes pales by comparison to our federal tax burden. Furthermore, the legal issues in the state tax field were thought for many years to be too parochial in nature or too entangled in a web of irreconcilable Supreme Court opinions to generate much scholarly attention.
But times have changed. There has, it seems, been a growing interest in the state tax field. Popular sentiment has been aroused by the dramatic rise in state and local taxes resulting from the attempts of state and local governments to meet demands for increased services in the face of sharply escalating costs. Taxpayers have reacted by enacting Proposition 13 and a host of similar measures imposing limitations on state and local taxing powers. These events have led many observers to conclude that we are in the midst of a taxpayers' revolt—a revolt focusing largely, although not exclusively, on state and local taxes. These developments have also provoked academic interest in the state tax field, as have the Supreme Court's recent efforts to cut through the "tangled underbrush" of its prior opinions and to delineate more clearly the constitutional restraints on state tax power. In addition, both popular and academic interest in state taxation have been stimulated by the actions of states like Louisiana that have imposed new or higher taxes on the extraction or processing of energy resources consumed primarily in other states. In an age of anxiety over national energy shortages and local environmental degradation, these levies have raised questions that touch the most sensitive nerves of our federal system.
My task is to examine some of these questions within the framework of Louisiana's First Use Tax on Natural Gas. In so doing, I have chosen the title of my lecture with care. The term "perspectives" carries with it a distinct impression of distance, and this is an impression I wish to implant firmly in your minds at the outset. The Louisiana First Use Tax is presently the subject of no less than eleven judicial proceedings in state and federal courts, including an original action pending before the Supreme Court and the Special Master to whom the case has been assigned. Any attempt to evaluate in detail the merits of these various challenges to the Louisiana levy in light of the myriad and complex issues they raise would hardly be possible in this forum. Indeed, at this juncture, any such undertaking would probably be premature in light of the fact that many of the legal and evidentiary issues raised by the challenge to the tax have been explored, at best, only on a preliminary basis. Instead, I will approach the Louisiana First Use Tax at a comfortable distance from the details of the litigation over its validity. I thereby hope to be in a better position to suggest an appropriate framework for resolving some of the issues it raises. Before embarking on that enterprise, let me briefly describe the Louisiana First Use Tax and the current controversies surrounding it.
About the Author
Walter Hellerstein. Distinguished Research Professor & Francis Shackelford Distinguished Professor in Taxation Law Emeritus, University of Georgia School of Law; A.B. 1967, Harvard; J.D. 1970, University of Chicago.
Citation
55 Tul. L. Rev. 601 (1981)