Document: 437 U.S. 255 98 S.Ct. 2333 57 L.Ed.2d 187 FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF BOSTON et al., Appellants,v.STATE TAX COMMISSION al. No. 77-334. Argued March 21, 1978. Decided June 15, Syllabus Appellants brought suit in a Massachusetts court challenging the State's power to impose an excise tax on federal savings and loan associations as measured by their net operating income, claiming that violates § 5(h) of Home Owners' Loan Act 1933, which provides no association shall be "greater than imposed" State similar local thrift home financing institutions. claimed state income exceeds imposed institutions because deduction available nder statute for "minimum additions its guaranty fund or surplus, required law appropriate supervisory authorities" is generally lower also contended does not apply credit unions, which, appellants maintained, are "similar" associations, entitled unions' exemptions. The Supreme Judicial Court upheld statute. Held: 1. discriminatory face. amount depends varying regulatory practices reserves must but invalid it recognizes regulations may differ. Nor record show any discrimination fact, statutory purpose (federal reserve requirements were high when was enacted). Pp. 257-260. 2. Credit unions within meaning 5(h), clear only from distinctions between two under both fact banks cooperative more competitive with are. Congress recognized States might classify own various ways, has done excluding large classification includes closely resembling associations. 260-262. 372 Mass. 478, 363 N.E.2d 474, affirmed. Chester M. Howe, Boston, Mass., appellants. S. Stephen Rosenfeld, appellees. Mr. Justice STEVENS delivered opinion Court. 1 This appeal challenges Relying forbidding heavily institutions, contend discriminates against because: (1) subject allowed larger (2) believe 2 In authorized creation federally chartered 48 Stat. 128. Section Act, amended, 76 984, 12 U.S.C. 1464(h) (1976 ed.), provides: 3 "No State, county, municipal, taxing authority such franchise, capital, reserves, loans, greater other mutual institutions." 4 As enacted 1966, tax, deposits banks, 1966 Acts, ch. 14, 11. 1973, aspect invalidated discriminatory. United v. Tax Comm'n, 481 F.2d 963 (CA1 1973). See n. 3, infra. present case, 1975, tax. It presented stipulated facts Massachusetts, 474 (1977). We affirm. 5 * allows financial institution deduct taxable . surplus authorities." Mass.Gen.Laws Ann., 63, 11(b ) (West Supp.1977). expected, regulators precisely same. Before 1970, each adopt charter providing minimum equal 10% association's capital. CFR 544.1 as, than, maintain.1 delete provision charters, change dropped requirement 5% checking account balances. 35 Fed.Reg. 4044 (1970); §§ 544.8(c)(1), 563.13 (1977); 1726(b) ed.). More three-quarters adopted few months new regulation, all four have now amended charters. those set For this reason, argue deductions smaller institutions; they disparity sort been proscribed law. 6 1933 "unequivocally bars taxation Federal Savings Associations." Laurens & Assn. South Carolina 365 517, 523, 81 719, 722, 749. one several laws passed protect "unequal unfriendly competition" caused favoring state-chartered institutions.2 On face, however, Massachusetts' scheme applies single neutral standard alike. practices, There reason intended force regulation into same mold.3 7 Notwithstanding language, associat ons fact. They not, established unfairly burdensome "practical operation." Michigan Nat. Bank Michigan, 467, 476, 659, 664, 710. indicate suffered significant handicap competing policies thwarted.4 requirement, making funds dividends, well give advantage, despite Certainly associations' rush amend charters 1970 lends support conclusion. Any suggestion foreclosed requirements. II 8 unions. Arguing claim entitlement exemption. 9 indeed similarities these kinds example, characterized ownership control; 171, 10, 13, 24 1971 Supp. 1977); empowered make loans secured real estate. 1464(c) ed.); 1977). But far identical. 10 long treated differently giving exemption taxes. 1768 establishing insurance programs members' deposits, distinguished 1726(a) 1781(a) Moreover, courts jurisdictions rejected associations.5 11 found validity well. By law, preference small personal 1977), while primary lending role "to provide homes." 1464(a) lend members, so limited. And, individual exceptions, there major differences actual class class.6 Of importance differences, closest competitors. much common do unions; business unquestionably associations.7 These important segment community.8 favoritism shown falls harshly them Nonetheless, Legislature concluded 13 When placed certainly did assume every home-financing association. (1964 ways. excluded most composition satisfies statute's central protecting treatment. conclude institutions.9 14 Accordingly, judgment 15 So ordered. 16 BLACKMUN, concurring part dissenting part. 17 reads: 18 19 Court, speaking statute, said: "This unequivocally 749 (1961). 20 I agree Court's ruling today first issue, namely, lesser itself demonstrate pay banks. 21 second am disagreement and, extent, dissent opinion. focus word "similar," measure Commonwealth's allowable "on 22 argument here "local institutions," 5(h). 1971). found, 492, 483 (1977), challenge finding made here. question, then, whether If similar, would entities, see Supp.1977), at 23 construing Rev.Stat. 5219, 548(1)(b), had barred shares national "at rate assessed upon moneyed capital coming competition banks," higher highest rates corporations, observed prohibit systems discriminate practical operation banking shareholders class." Tradesmens Oklahoma 309 560, 567, 60 688, 692, 84 L.Ed. 947 (1940); 473, 710 policy obviously assure put disadvantage respect term usually, here, mean "identical."1 union fundamental elements. Each mutuality control. pronounced ability attract savings. mortgage residential estate substantially terms approximately extent. mortgages up 30 years, 90% value property, maximum $40,000. 24(B)(a)(4) (b)(8) (west supp.1977-1978), 1977 Mas .Acts, 20. A 80% $55,000. 545.6-1(a)(1)(i) 25 Although union, sure, members "preference" "personal loans," distinction minor association, limitation membership self-imposed conditions residence, occupation, 7(c) 1971), deposit will qualify prospective borrower member. addition, enforcement favor loans. observed, 493-494, N.E.2d, 484, 1972 30.1% total dollar investments mortgages, 42% mortgages.2 end $329 million outstanding Large invest assets 24(B)(b)(7) supp.1977). 26 All leads me pertinent respects dissimilar, association.3 Both perform functions interest, substantial amounts follows, my view, that, similarities, renders invalid, applied 27 therefore reverse Massachusetts. aside 71/2% deposits. 168, 58 assets. Ch. 170, 38. spelled out Cf., 93, 34 Mercantile New York, 121 138, 155, 826, 835, 895. 548 ed.) (national banks); 627 (corporations engage foreign banking). Indeed, protects being forced mold. partly apparently provisions calculated permitted take out-of-state if property 50 miles institution's office. limit reflected restrictions 963, 968-969, 100 home. treating though limits, exacted tended time follow rather regulations. difficult conceive nondiscriminatory 50-mile deductions. reasons, Appeals First Circuit held F.2d, 970. Cf. supra. sparse evidence introduced point ambiguous best. three seven years 1968 proportion dominant From through contributions simply consuming built stringent pre-1970 Manchester 105, N.H. 17, 191 A.2d 529 (1963); Connelly, 142 Conn. 483, 115 455 (1955), dismissed, 350 927, 305, 811; Minnesota Assn., 218 Minn. 229, N.W.2d 568 (1944). noted: "In 1972, (in dollars) mortgages. ass ciations 87.7% almost 98% hand, about mortgages." 484 See, e. g., Commissioner Corporations Taxation Flaherty, 306 461, 28 433 Springfield Institution Worcester 329 184, 107 315 (1952). 97% 95% Cooperative 80.4% 65.3% figure 87.7%. 493, 484. Their greatly exceed $18.5 billion 1973; $3 assets; $2.5 billion; over $1 billion. App. 131-132; Annual Report Banks, Commonwealth Division Banks Agencies, Sec. B (Credit Unions), iv (1973). Only remaining attacks deserve mention. enumerated taxes approved "tax [federal] income." Whether "franchise" "income" "on" ambit Commerce Clause creating risk multiple taxation. some neighboring future attempt State. wholly speculative u supported record. Fontain, 127 452, 454 (1879); Chicago Vaccarro, 408 Ill. 587, 601, 97 766, 773 (1951); Thomas Consumers Power Co., Mich.App. 486, 228 786, 790 (1975); Miller Allstate Ins. 66 Wash.2d 871, 875, 405 P.2d 712, 714 (1965). Message President Reduction Reform, Jan. 20, 1978, Weekly Comp. Pres. Docs. 158, 172.

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