Vanderbilt Law Review

First Page



There are, generally speaking, three broad areas of exemption understatutes imposing sales and use taxes in the United States. These are:

(a) Exemptions arising out of the immunities of governmental agencies and instrumentalities, or out of the exercise of governmental functions (b) Exemptions arising under the commerce clause of the federal constitution (c) Specific exemptions created out of governmental taxing policies or social economic considerations

Each of these areas of exemption has grown up somewhat haphazardly over a substantial period of time, and very largely as the result of shifting judicial opinion, rather than as a matter of consistent legislative policy. As a consequence it may be said that the whole body of exemptions rests upon premises that have somewhat dubious legal foundation and somewhat incongruous legal concepts. For example, the concept of states rights from the extremist point of view, which prevailed during the first half century of our Republic, underwent a drastic and startling revision as the result of the Civil War and the revolutionary change in public sentiment which followed it. In that process a large body of judicial opinion dealing with the immunity of the federal government from any encroachment whatever by the several states and based largely on the bold opinions of Chief Justice Marshall, began to give way to the stronger demands of an economic system based upon the nineteenth century industrial revolution.