What is the standard for determining whether a state tax is unconstitutional due to discrimination?

The standard for determining whether a state tax is unconstitutional due to discrimination is that it cannot burden interstate commerce. This principle stems from the Commerce Clause of the U.S. Constitution, which grants Congress the power to regulate interstate commerce and prevents states from enacting legislation that unjustly discriminates against or burdens interstate transactions.

A state tax that places an undue burden on interstate commerce might favor in-state businesses over out-of-state competitors, leading to an unfair advantage and disrupting the free flow of goods and services across state lines. Courts typically apply a balancing test to assess whether the benefits of a state regulation outweigh its burdens on interstate commerce.

The other options do not accurately reflect the constitutional standard. Favoring local businesses may be an outcome of a discriminatory tax but is not itself a standard. Similarly, the application of the tax to goods exclusively does not inherently confer discrimination under the Commerce Clause. Lastly, generating insufficient revenue relates more to the effectiveness of the tax rather than its constitutionality concerning discrimination against interstate commerce. Therefore, the correct choice emphasizes the need to ensure that state taxes do not create an undue burden on interstate commerce.