## Facts

- New Mexico imposed a privilege tax on gross receipts from specified businesses, including a 2% tax on amounts received from selling advertising space in newspapers and magazines.
- Western Live Stock published a monthly livestock trade journal that was prepared, edited, and printed entirely in New Mexico, where it had its only office and place of business.
- The journal was distributed to subscribers both within and outside New Mexico through the mails and other transportation.
- Some advertising was solicited from out-of-state advertisers; contracts involved interstate mailing of payments to New Mexico and interstate shipment of advertising copy and materials to the publisher.
- New Mexico assessed the tax on the publisher’s gross advertising receipts, including amounts paid by out-of-state advertisers.
- The publisher paid under protest and sued for a refund, alleging a Commerce Clause violation; the New Mexico Supreme Court ultimately sustained the tax, and the publisher appealed.

## Issues

1. Whether a state may apply a gross-receipts privilege tax to a magazine publisher’s receipts from advertising when the magazine circulates interstate and advertising transactions involve interstate communications, shipments, and payments.
2. Whether measuring the tax by advertising receipts derived in part from interstate circulation creates an unconstitutional burden on interstate commerce due to discrimination or exposure to cumulative multi-state taxation.

## Decision

- The Supreme Court affirmed the judgment sustaining the tax.
- The Court held the tax, as applied to receipts from the challenged advertising contracts, did not violate the Commerce Clause.
- The taxed activity was the local business of preparing, printing, and publishing magazine advertising in New Mexico, distinct from interstate circulation.
- Interstate aspects of the advertising transactions (contract formation, shipment of materials, and remittance of payment) were incidental and did not convert the taxed activity into protected interstate commerce.
- Any effect on interstate commerce from the tax’s measurement by advertising receipts was too remote to invalidate the levy, and the tax did not create the type of cumulative multi-state burden condemned in prior cases.

## Legal Principles

- The Commerce Clause does not exempt interstate businesses from paying their share of state taxes merely because the tax increases the cost of doing business.
- A state may tax a local business or occupation that is separate from interstate transportation or intercourse, even if the local business induces or occasions interstate movement.
- The mere formation of a contract between persons in different states is not itself protected by the Commerce Clause absent federally protected performance.
- Gross-receipts taxes are constitutionally suspect when they subject interstate commerce to cumulative burdens that each state the commerce touches could impose on the same basis, resulting in multiple taxation not borne by local commerce.
- Preparing, printing, and publishing magazine advertising at an in-state place of business is a local activity distinct from distribution, even when distribution is interstate.
- Commerce Clause review of state taxation turns on practical distinctions, including whether the tax realistically risks multiple taxation of the same interstate receipts.

## Conclusion

New Mexico could impose a privilege tax measured by a publisher’s advertising receipts because the levy fell on a local publishing activity conducted in the state and did not discriminate against, directly tax, or expose interstate commerce to the type of cumulative multi-state taxation the Commerce Clause forbids.


W. Live Stock v. Bureau of Revenue, 303 U.S. 250 (1938)