A state wishes to tax alcohol to raise revenue while at the same time protect their local producers. They have settled on accomplishing this by prohibiting the sale of liquor in privately-owned stores while allowing the sale of liquor in government-owned outlets only.

They are able to do this under the 21st Amendment. However, constitutionally taxing out-of-state alcohol while leaving in-state-alcohol exempt goes against the dormant commerce clause.

Are they safe from the Dormant Commerce Clause as a market participant even thought they are a state-run monopoly? And if so can they "tax" by purchasing in-state alcohol cheaper than out-of-state alcohol?

NOTE: I will not accept answers that rely on alternatives to the hypo like "why don't they just give subsidies to the local producers?"

  • I'm not sure I understand what kind of taxing scheme you think gets in-state producers taxed less. – pboss3010 Dec 28 '18 at 13:10
  • @pboss3010 Anything they can legally get away with. – S J Dec 28 '18 at 21:39

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.