WASHINGTON — It was a case of highway robbery by a state tax collector — and Rep. Chris Cannon, R-Utah, worries it's a sign that states are increasingly trying to tax out-of-state businesses with the flimsiest of excuses.

Smithfield Foods executive Vernon Turner tells how New Jersey tax agents stopped one of his company's trucks (filled with frozen pork) at a port of entry. "The agent held the truck and its driver for several hours and demanded that, in order to release the truck, Smithfield had to wire $150,000 immediately," or the pork would thaw and rot.

Smithfield has no places of business in New Jersey — it just delivers its products to customer stores that order it there — so it argued it owed no New Jersey tax. New Jersey said merely soliciting sales there made it subject to state tax. Smithfield paid $8,000 to release the truck (which was later returned after legal wrangling).

"Our experience is not unique. It is shared by many businesses large and small," Turner told the House Judiciary Subcommittee on Administrative and Commercial Law chaired by Cannon.

Cannon said such "business activity taxes" (BAT) on out-of-state companies may be getting out of hand, and he held a hearing on them Thursday, including examining a bill by Rep. Bob Goodlatte, R-Va., to require that a company must have a place of business (store, warehouse, sales office, etc.) to be subject to a state's business taxes.

"Currently, some states are unfairly taxing businesses that do not have a physical presence in that state," Cannon said. "The Internet and other new technologies have spurred our economy and helped small businesses emerge as real competitors, but they are being hurt by these taxes. I believe that a required physical presence by a company is appropriate for a state to impose these type of business taxes."

Cannon's staff provided numerous examples of aggressive taxation by states, including an attempt by Los Angeles to tax orbiting satellites — even though they don't pass directly overhead — if they are used to help conduct business there. It led to jokes that the tax collector there looks heavenward and yells, "Look up in the sky. It's a bird! It's a plane! It's taxable property!"

Arthur Rosen, a tax lawyer, testified such attempts violate the underlying principle of tax laws that only those governments that provide services that help a business — such as roads, police and water — should be the ones that receive that company's taxes, not a remote state or city. He said Goodlatte's bill would ensure that principle is followed.

But groups such as the National Governors Association and the National League of Cities strongly opposed that bill and urged the federal government to keep out of local taxation.

"This is an issue of state sovereignty," said Rick Clayburgh, North Dakota tax commissioner, on behalf of the National Governors Association.

National League of Cities Executive Director Donald Brunt wrote that the bill might allow companies to consolidate physical facilities in ways to avoid most local taxes — and it could cost state and local governments $60 billion a year.

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