Document: 74 L.Ed.2d 562 103 S.Ct. 692 459 U.S. 392 MEMPHIS BANK & TRUST COMPANY, Appellantv.Riley C. GARNER, Shelby County Trustee, et al. No. 81-1613. Argued Nov. 29, 1982. Decided Jan. 24, 1983. Syllabus A Tennessee statute imposes a tax on the net earnings of banks doing business in State, and defines to include interest received obligations United States its instrumentalities other but not earned political subdivisions. Appellant bank brought an action state court recover taxes paid various federal obligations, alleging that tax, as applied appellant, violated 31 U.S.C. § 742—which exempts from local taxation except where are "nondiscriminatory franchise or nonproperty lieu thereof imposed corporations" estate inheritance thus was unconstitutional under Supremacy Clause. The trial granted appellant's motion for summary judgment. Supreme Court reversed, holding fell within exception taxes" set forth 742. Held: violates immunity taxation. cannot be characterized nondiscriminatory It discriminates favor securities issued by subdivisions against including base income while excluding otherwise comparable improperly Federal Government those with whom it deals. Pp. 395-399. 624 S.W.2d 551, (Tenn.1981), reversed remanded.* K. Martin Worthy, Washington, D.C., appellant. Jimmy G. Creecy, Deputy Atty. Gen., Nashville, Tenn., appellee William M. Leech, Jr. J. Minor Tait, Jr., Memphis, appellees Riley Garner Glen E. Foster. Justice MARSHALL delivered opinion Court. 1 exclude Tenn.Code Ann. 67-751. This appeal presents question whether 2 * Memphis Bank Trust Company (Memphis Bank) this $56,696.81 covering years 1977 1978 which had been assessed pursuant 67-751.1 Each is required 67-751 pay governments State 3% bank's preceding fiscal year, less portion ad valorem year.2 Under statute, instrumentalities, well bonds states than Tennessee, subdivisions.3 3 alleged it, 742, parties stipulated amount appellant based entirely primarily notes bills Treasury Credit Banks.4 They also if such were excluded computation, would owe no question. 4 Chancery Bank's judgment, 742 prohibits inclusion computation taxable "net earnings" tax. reversed. 551 (1981). held We noted probable jurisdiction, --- ----, 102 2005, 72 464 (1982), we reverse. II 5 establishes broad exemption taxation: 6 "Except provided law, all stocks, bonds, notes, States, shall exempt municipal authority. extends every form require either thereon, both, considered, directly indirectly, corporations taxes." 7 established applies only bills, Banks. Cf. Smith v. Davis, 323 111, 117, 65 157, 160, 89 L.Ed. 107 (1944) ("other obligations" must interpreted "in accord long Congressional intent prevent diminish slightest degree market value investment attractiveness effort secure necessary credit"). Because statutes have "otherwise provided," types Bank.5 Therefore, impermissible unless thereof" 742.6 8 previously occasion determine "nondiscriminatory" meaning However, frequently considered concept our decisions concerning constitutional government property, securities, States. Our treated principally restatement rule. See, e.g., New Jersey Realty Title Ins. Co. Division Tax Appeals, 338 665, 672, 70 413, 417, 94 439 (1950); Missouri Gehner, 281 313, 321-322, 50 326, 328, 870 (1930). 9 rule M'Culloch Maryland, Wheat. 316, 579 (1819), "States may impose Government, nor they legal incidence falls Government." Fresno, 429 452, 459, 97 699, 703, 683 (1977) (footnote omitted). Where, here, economic generally does violate discriminate holders property supra, at 459-464, 703-05; City Detroit, 355 466, 473, 78 474, 478, 424 (1958); Werner Machine Director Taxation, 350 492, 76 534, 100 634 (1956); Tradesmens National Oklahoma Comm'n, 309 560, 564, 60 688, 691, 84 947 (1940).7 10 greater burden similar impermissibly obligations. See U.S., 462, S.Ct., 704 ("a who deal Government" "is [un]equally similarly situated constituents State"). cases establish, however, "tax remains same whatever character [property] be, claim can sustained taxing obligations." 493-94, 535 (1956). In Schuylkill Pennsylvania, 296 113, 119-120, 56 31, 34-35, 80 91 (1935), invalid Pennsylvania levied upon shares trust company measured company's assets. calculating assets, owned included found discriminated 11 Similarly, Phillips Chemical Dumas Independent School District, 361 376, 384 (1960), private lessees estimated full leased premises. real "discriminates unconstitutionally lessee." Id., 387, 481. 12 clear principles previous cases, so obligations.8 conclude, therefore, 13 judgment case remanded further proceedings inconsistent opinion. 14 ordered. Briefs amici curiae urging reversal filed Solicitor General Lee, Acting Assistant Attorney Hamblen, Stuart A. Smith, Ernest Brown States; Henry W. Howard Elizabeth S. Salveson Capital Preservation Fund, Inc., al.; Mac Asbill, Warren N. Davis Farm "Excise earnings—Rate.—There hereby created subclassification intangible personal designated 'shares banking associations.' All taxed following manner: Commencing each year thereafter, assessment according excise three percent (3%) next ten (10%) tangible year. calculated manner prescribed chapter 27 title 67. herein redeemable cash their outstanding capital stock, customer savings checking accounts, certificates deposit investment, name called, corporate association nonetheless continue subject 67 currently subject." "minimum tax" provides 60% book value. 67-752. apparently did consider described 67-752 alternative basis liability event unconstitutional. Accordingly, courts below constitutionality do reach For purposes term defined "federal income" specified adjustments. 67-2704. "Federal includes 26 103. 67-2704(a)(2) adjusts adding "[i]nterest subdivisions, allowable amortization." adjustment made definition There 37 Banks: Land Banks, Intermediate Banks Cooperatives. designed provide reliable source credit agriculture. Pub.L. 92-181, 85 Stat. 583, 2001 seq. Mississippi Corp., 405 298, 301-305, 92 908, 910-12, 217 (1972). part Farmers Home Administration Mortgage Association. establishing Congress these immune §§ 2055, 2079 2134. provisions broader note, immunity, distinction between Commission, (1940); (1935); Crosland, 261 374, 43 385, 703 (1923); Macallen Massachusetts, 279 620, 49 432, 73 874 (1929); Kansas Co., 255 180, 41 243, 577 (1921). nondiscrimination requirement both taxes. S.Rep. 909, 86th Cong., 1st Sess. (1959). hold need "franchise thereof." Although scope Government's has more narrowly recent years, there departure principle constitutionally Government. Mexico, n. 11, 1373, 1383, 71 580 (1982). regard impact discrimination de minimis. According argued amicus support reversal, enacted incur additional annual borrowing costs $280 million rate 12%. Brief Amicus Curiae 2.

Category: 7