Document: 485 U.S. 351 108 S.Ct. 1179 99 L.Ed.2d 368 UNITED STATES, Appellantv.WELLS FARGO BANK et al. No. 86-1521. Argued Dec. 8, 1987. Decided March 23, 1988. Syllabus Under § 5(e) of the Housing Act 1937, certain state and local public housing agency obligations, commonly termed "Project Notes," are "exempt from all taxation . imposed by United States." It was generally assumed that this exemption applied only to federal income tax until, in 1984, a Federal District Court ruled Project Notes were also exempt estate taxes. Shortly thereafter, Congress enacted Deficit Reduction 1984 (DEFRA), 641 which eliminated purported foreclosed those who had already paid taxes on obtaining refund thereon. After Commissioner Internal Revenue denied appellee executors such refunds, they filed suit below, concluded their when returns. The court held DEFRA unconstitutionally appellees due process equal protection laws under Fifth Amendment. States appealed directly 28 U.S.C. 1252. Held: 1. Section does not taxation. settled presumption against implied exemptions applies here, particularly since 26 §§ 2001 2002 (1982 ed. Supp. III), define taxable for calculation, terms include Notes. Moreover, an property taxation, as contained 5(e), has long been understood apply direct tax, excise tax. various aspects legislative history relied indicia congressional intent insufficient demonstrate unambiguously contravention aforesaid meaning 5(e). Pp. 354-359. 2. Resolution question obviates need consider constitutionality DEFRA. P. 359. 86-2 USTC ¶ 13,703, reversed. BRENNAN, J., delivered opinion Court, other Members joined, except KENNEDY, took no part consideration or decision case. Lawrence G. Wallace, Washington, D.C., appellant. Robert H. Rotstein, Beverly Hills, Cal., appellees. Justice BRENNAN Court. 1 This case, consists two actions consolidated Wells Fargo Bank v. Rosenberg States, 13,703 (CD Cal.1986), presents issues: first, whether obligations (Project Notes) prior June 19, second, if so, 98 Stat. 939, forecloses any Notes, is unconstitutional. Relying Haffner 585 F.Supp. 354 (N.D.Ill.1984), aff'd, 757 F.2d 920 (CA7 1985), Central California exempt. further judgment pursuant We noted probable jurisdiction, sub nom. Crocker National Bank, 481 1047, 107 3207, 96 694 (1987), now reverse. 2 In late 1930's, Nation faced severe shortage. To meet crisis, 50 888 seq., designed stimulate financing projects empowering authorities issue tax-free Notes." For almost years after Act's passage, it exempted but See Committee Tax Exempt Financing, Taxation, ABA, Report Provisions 1937: Beyond Looking Glass, 33 Lawyer 71, 105 (1979); Rev.Rul. 81-63, 1981-1 Cum.Bull. 455. However, Northern Illinois well, basing its variety statutory construction tools. supra. Court's caused "rush market" prompted seek refunds. Within months ruling, DEFRA, which, effective Against backdrop, we turn facts instant appeal. 3 Jules C. Stein, died April 1981. Included with aggregate face value $9,550,000. They return listing these notes taxable, following decision, timely amended declaring claiming refund. rejected claim, brought California. 4 coexecutors Morris Folb, July 1982. values totaling $250,000 estate. Appellees return, and, like appellees, included assets them. August claim too California, where case Fargo. 5 On cross-motions summary concluded, mentioned above, returns filed, relying reasoning Haffner. guaranteed Although portion unconstitutional provides us appellate appeal brings entire before us. Locke, 471 84, 92, 1785, 1791, 85 64 (1985). our established practice resolve questions at outset do so might obviate constitutional issue. Ibid.; Ashwander TVA, 297 288, 347, 56 466, 483, 80 L.Ed. 688 (1936) (Brandeis, concurring). Therefore, first statute exempts 6 Informing examination principle be implied; must proved. E.g., Oklahoma Comm'n 319 598, 606, 63 1284, 1288, 87 1612 (1943); Trust Co. Helvering, 307 57, 60, 59 692, 693-694, 83 1104 (1939); Rapid Transit Corp. New York, 303 573, 592-593, 58 721, 731, 82 1024 (1938). dispute, however, Only referring outside Code, specifically 890, amended, 42 1437i(b), endeavor establish exemption. 7 Of course, begin analysis language itself. section states "[Project Notes], including interest thereon, shall hereafter Well passed, meaning: privileges ownership, right transfer property, could taxed. Underlying doctrine distinction between levied upon use even though measured property's value, former historically permitted latter constitutionally statutorily forbidden. form Greiner Lewellyn, 258 384, 324, 66 676 (1922) (municipal bonds subject notwithstanding intergovernmental immunity barring bond); Murdock Ward, 178 139, 148, 20 775, 779, 44 1009 (1900) (federal did extend death); Plummer Coler, 115, 829, 998 (State may calculate based total passing through estate, State). supra, U.S., S.Ct., 693-694 (applying rule Greiner, Murdock, hold general "all taxation" would tax); Treas.Reg. 20.2033-1, CFR 20.2033-1 (Supp.1964) (statutes exempting refer taxation). Cf. West Comm'n, 334 717, 727, 68 1223, 1228, 92 1676 (1948) (recognizing taxes); Reinecke Co., 278 339, 49 123, 125, 73 410 (1929) (same). Consistent understanding, rare occasions adverted explicitly rather than generically taxation." 1934, 404, 48 754, repealed 1962, 18, 76 1052. Placed context, then, stand appellees' proposition intended taxes; stands exactly opposite. 8 attempt bolster contrary view alleged intent. considerations found compelling Haffner, conclude, Estate Egger Commissioner, 89 T.C. 726 factors rely upon, considered alone combination, demonstration unambiguous disfavoring exemptions. 9 Appellees' argument centers 898, later repealed, gave newly created Authority power obligations. 20(b) provided "[s]uch exempt, both principal interest, (except surtaxes, inheritance, gift taxes) imposed. ." familiar goes knew how limit scope wanted so; limiting light express limitation 20(b), demonstrates 10 withstand careful scrutiny. what comprised parts: "normal" set flat percent, graduated "surtax" rates reaching up 75 percent. As plain normal Yet surtax direct, simply making much. Thus, "excepted" surtaxes But exception, left itself, have own anomaly: strict application "expressio unius est exclusio alterius"—i.e., expression one exclusion others—would resulted taxes, indirect, surtax. avoid particular pitfall, excepted 20(b). Such commonplace sought items Home Owners' Loan 1933, 4(c), 130; Farm Credit 63, 267. 11 contrast, needed parenthetical exception. fully well thus them "from stated precision will. cannot attribute break new ground law cleverly hiding exemption, discernable comparing unrelated provisions Act. Nor make sense legislate bizarre fashion. If really create especially broad assert, expect notoriously enough attract investors, surreptitiously evade detection half century. 12 second indicator statement made Senator Walsh during floor debate. midst lengthy speech, he stated: "Obligations, issued agencies, States. words, bill gives agencies tax-exempt bonds, means free surtax, gift, inheritance taxes." 81 Cong.Rec. 8085 (1937). If, appears statement's structure, offer definition "tax-exempt bonds," then conclude misspoke, demonstrated, presumed Even if, solely deem his relevant passage comes middle similar debate document. short, isolated comment overcome 13 assert Congress' can discerned reference administration proposal, analogue unpersuaded contention Finance Committee's indicates desire Equally plausible omitted exception unnecessary. Further, neither administration, Committee, nor single difference worthy comment, although numerous variations proposals received attention. 14 Finally, point Warren J. Vinton, became Chief Economist Authority, American Federation Authorities shortly passed. He Investments nature getting country." Brief 15 (emphasis added brief omitted). time uttered Vinton yet employed Authority. aura contemporaneous interpretation. powerful put forward Accordingly, 1937 therefore 16 Reversed. 17 KENNEDY

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