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U.S. Supreme Court

We begin by noting that neither a high rate of taxation nor an obvious deterrent purpose automatically marks this tax a form of punishment. In this case, although those factors are not dispositive, they are at least consistent with a punitive character. A significant part of the assessment was more than eight times the drug's market value—a remarkably high tax.[fn17] Thatthe Montana legislature intended the tax to deter people from possessing marijuana is beyond question.[fn18] The DOR reminds us, however, that many taxes that are presumed valid, such as taxes on cigarettes and alcohol, are also both high and motivated to some extent by an interest in deterrence. Indeed, although no double jeopardy challenge was at issue, this Court sustained the steep $100 per ounce federal tax on marijuana in United States v. Sanchez, 340 U.S. 42 (1950). Thus, while a high tax rate and deterrent purpose lend support to the characterization of the drug tax as punishment, these features, in and of themselves, do not necessarily render the tax punitive. Cf. Sonzinsky v. United States, 300 U.S. 506, 513-514 (1937).

Other unusual features, however, set the Montana statute apart from most taxes. First, this so called tax is conditioned on the commission of a crime. Thatcondition is "significant of penal and prohibitory intent rather than the gathering of revenue."[fn19] Moreover, the Court has relied on the absence of such a condition to support its conclusion that a particular federal tax was a civil rather than a criminal sanction.[fn20] In this case, the tax assessment not only hinges on the commission of a crime, it also is exacted only after the taxpayer has been arrested for the precise conduct that gives rise to the tax obligation in the first place.[fn21] Persons who have been arrested for possessing marijuana constitute the entire class of taxpayers subject to the Montana tax.

Taxes imposed upon illegal activities are fundamentally different from taxes with a pure revenue raising purpose that are imposed despite their adverse effect onthe 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.[fn22]

The Montana tax is exceptional for an additional reason. Although it purports to be a species of property tax—that is, a "tax on the possession and storage ofdangerous drugs," Mont. Code Ann. § 15-25-111 (1987)—it is levied on goods that the taxpayer neither owns nor possesses when the tax is imposed. Indeed, the State presumably destroyed the contraband goods in this case before the tax on them was assessed. If a statute that amounts to a confiscation of property is unconstitutional, Heiner v. Donnan, 285 U.S. 312, 326 (1932); Nichols v. Coolidge, 274 U.S. 531, 542 (1927), a tax on previously confiscated goods is at least questionable.[fn23] A tax on "possession" of goods that no longer exist and that the taxpayer never lawfully possessed has an unmistakable punitive character. This tax, imposed on criminals and no others, departs so far from normal revenue laws as to become a form of punishment.

Taken as a whole, this drug tax is a concoction of anomalies, too far removed in crucial respects from a standard tax assessment to escape characterization as punishment for the purpose of Double Jeopardy analysis.[fn24]

Because Montana's tax is fairly characterized as punishment, the judgment of the Court of Appeals must be affirmed. In Halper, we recognized that a civil penalty may be imposed as a remedy for actual costs tothe State that are attributable to the defendant's conduct. 490 U. S., at 452. Yet as The Chief Justice points out, tax statutes serve a purpose quite different from civil penalties, and Halper's method of determining whether the exaction was remedial or punitive "simply does not work in the case of a tax statute." Post, at 3 (dissenting opinion). Subjecting Montana's drug tax to Halper's test for civil penalties is therefore inappropriate. Even if it were proper to permit such a showing, Montana has not claimed that its assessment in this case even remotely approximates the cost of investigating, apprehending, and prosecuting the Kurths, or that it roughly relates to any actual damages that they caused the State. And in any event, the formula by which Montana computed the tax assessment would have been the same regardless of the amount of the State's damages and, indeed, regardless of whether it suffered any harm at all.

This drug tax is not the kind of remedial sanction that may follow the first punishment of a criminal offense. Instead, it is a second punishment within the contemplation of a constitutional protection that has "deep roots in our history and jurisprudence," Halper, 490 U. S., at 440, and therefore must be imposed during the first prosecution or not at all. The proceeding Montana initiated to collect a tax on the possession of drugs was the functional equivalent of a successive criminal prosecution that placed the Kurths in jeopardy a second time "for the same offence."

The judgment of the Court of Appeals is affirmed.

It is so ordered.