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U.S. Supreme Court

The Court of Appeals for the Ninth Circuit also affirmed, but based its conclusion largely on the State's refusal to offer evidence justifying the tax, and accordingly refused to hold the tax unconstitutional on its face. In re Kurth Ranch, 986 F. 2d 1308, 1312 (CA9 1993). The court first determined that under Halper, a disproportionately large civil penalty can be punitive for double jeopardy purposes. Id., at 1310. That the assessment is called a tax, as opposed to some kind of penalty, is not controlling. Id., at 1310-1311. The central inquiry under Halper, the court determined, is whether the sanction imposed is rationally related to the damages the government suffered. Id., at 1311. That inquiry only applies to cases in which there has been a separate criminal conviction, however.[fn13] The courtconcluded that the Kurths were entitled to an accounting to determine if the sanction constitutes an impermissible second punishment, and because the State refused to offer any such evidence, it held the tax unconstitutional as applied to the Kurths. 986 F. 2d, at 1312.

While this case was pending on appeal, the Montana Supreme Court reversed two lower state court decisions that had held that the Dangerous Drug Tax was a form of double jeopardy. Sorensen v. State Dept. of Revenue, 254 Mont. 61, 836 P. 2d 29 (1992). Over the dissent of two Justices, the State Supreme Court found that the legislature had intended to establish a civil, not a criminal, penalty and that the tax had a remedial purpose other than promoting retribution and deterrence. Id., at 31. The court found that Halper was not controlling, both because it expressly announced " `a rule for the rare case' " and because the case involved a civil penalty, not a tax. Id., at 32-33. The Sorensen court concluded that the drug tax was not excessive and that a tax, unlike the civil sanction at issue in Halper, requires no proof of the State's remedial costs on the part of the State. Id., at 33.

The Montana Supreme Court's decision is directly at odds with the conclusion reached in the federal proceedings involving the Kurths. We therefore granted certiorari to review the decision of the Court of Appeals. 509 U. S. ___ (1993). We now affirm its judgment.

In Halper we considered "whether and under what circumstances a civil penalty may constitute `punishment' for the purpose of double jeopardy analysis." 490 U. S., at 436. Our answer to that question does notdecide the different question whether Montana's tax should be characterized as punishment.

Halper was convicted of 65 separate violations of the criminal false claims statute, 18 U.S.C. § 287 each involving a demand for $12 in reimbursement for medical services worth only $3. After Halper was sentenced to two years in prison and fined $5,000, the Government filed a separate action to recover a $2,000 civil penalty for each of the 65 violations. See 31 U.S.C. § 3729 (1982 ed., Supp. II). The District Court found that the $130,000 recovery the statute authorized "bore no `rational relation' to the sum of the Government's $585 actual loss plus its costs in investigating and prosecuting Halper's false claims." 490 U. S., at 439. In the court's view, a civil penalty "more than 220 times greater than the Government's measurable los[s] qualified as punishment" that was barred by the Double Jeopardy Clause. Ibid.

On direct appeal to this Court, we rejected the Government's submission that the Double Jeopardy Clause only applied to punishment imposed in criminal proceedings, reasoning that its violation "can be identified only by assessing the character of the actual sanctions imposed on the individual by the machinery of the state." Id., at 447.[fn14] In making such an assessment, "the labels `criminal' and `civil' are not of paramount importance." Ibid. Accepting the District Court's findings, we held that "a defendant who already has been punished in a criminal prosecution may not be subjected to an additional civil sanction to the extentthat the second sanction may not fairly be characterizedas remedial, but only as a deterrent or retribution." Id., at 448-449.

Halper thus decided that the legislature's description of a statute as civil does not foreclose the possibility that it has a punitive character.[fn15] We also recognized in Halper that a so called civil "penalty" may be remedial in character if it merely reimburses the government for its actual costs arising from the defendant's criminal conduct. Id., at 449-450, 452. We therefore remanded the case to the District Court to determine what portion of the statutory penalty could be sustained as compensation for the Government's actual damages.

Halper did not, however, consider whether a tax may similarly be characterized as punitive.

Criminal fines, civil penalties, civil forfeitures, and taxes all share certain features: They generate government revenues, impose fiscal burdens on individuals, and deter certain behavior. All of these sanctions are subject to constitutional constraints. A government may not impose criminal fines without first establishing guilt by proof beyond a reasonable doubt. Cf. In re Winship, 397 U.S. 358 (1970). A defendant convicted and punished for an offense may not have a nonremedial civil penaltyimposed against him for the same offense in a separate proceeding. Halper, supra. A civil forfeiture may violate the Eighth Amendment's proscription against excessive fines. Austin v. United States, 509 U. S. ___ (1993). And a statute imposing a tax on unlawful conduct may be invalid because its reporting requirements compel taxpayers to incriminate themselves. Marchetti v. United States, 390 U.S. 39 (1968).

As a general matter, the unlawfulness of an activity does not prevent its taxation. Marchetti, 390 U. S., at 44; United States v. Constantine, 296 U.S. 287, 293 (1935); James v. United States, 366 U.S. 213 (1961). Montana no doubt could collect its tax on the possession of marijuana, for example, if it had not previously punished the taxpayer for the same offense, or, indeed, if it had assessed the tax in the same proceeding that resulted in his conviction. Missouri v. Hunter, 459 U.S. 359, 368-369 (1983); see also Halper, 490 U. S., at 450. Here, we ask only whether the tax has punitive characteristics that subject it to the constraints of the Double Jeopardy Clause.

Although we have never held that a tax violated the Double Jeopardy Clause, we have assumed that one might.[fn16] In the context of other constitutional requirements, we have repeatedly examined taxes for constitutional validity. We have cautioned against invalidating a tax simply because its enforcement might be oppressive or because the legislature's motive was somehow suspect, A. Magnano Co. v. Hamilton, 292 U.S. 40, 44 (1934). Yet we have also recognized that "there comes a time in the extension of the penalizing features of the so called tax when it loses its character as such and becomes a mere penalty with the characteristics of regulation and punishment." Id., at 46 (citing Child Labor Tax Case, 259 U.S. 20, 38 (1922)). That comment, together with Halper's unequivocal statement that labels do not control in a double jeopardy inquiry, indicates that a tax is not immune from double jeopardy scrutiny simply because it is a tax.

Halper recognized that "[t]his constitutional protection is intrinsically personal," and that only "the character of the actual sanctions" can substantiate a possible double jeopardy violation. 490 U. S., at 447. Whereas fines, penalties, and forfeitures are readily characterized as sanctions, taxes are typically different because they are usually motivated by revenue raising rather than punitive purposes. Yet at some point, an exaction labeled as a tax approaches punishment, and our task is to determine whether Montana's drug tax crosses that line.