Document: 429 U.S. 452 97 S.Ct. 699 50 L.Ed.2d 683 UNITED STATES et al., Appellants,v.COUNTY OF FRESNO al. No. 75-1262. Argued Nov. 8 and 9, 1976. Decided Jan. 25, 1977.* Syllabus Pursuant to California statutes authorizing counties impose an annual use or property tax on possessory interests in improvements tax-exempt land, appellee imposed a the of appellant United States Forest Service employees housing located national forests within owned supplied appellants by as part their compensation. Held: The is not barred Supremacy Clause state Federal Government federal property. Pp. 457-468. (a) A State may, effect, raise revenues basis long that being used private citizen it possession taxed. City Detroit v. Murray Corp., 355 489, 78 458, 2 441; Detroit, 466, 474, 424; Township Muskegon, 484, 483, 436. P. 462. (b) economic burden function those who deal with does render unconstitutional equally other similarly situated constituents State. 462-464. (c) "legal incidence" question falls neither nor but solely citizens work for threatens interfere laws relating Service's functions only insofar may reimburse its taxes owed or, failing reimbursement, remove advantage otherwise enjoyed employment market. 464. (d) discriminate against employees, fact real renters if owner exempt from taxation make discriminatory. supra. Since owners nonexempt passed lessees, are no worse off than employers rent houses sector. 464-465. (e) It cannot be properly contended required occupy sole benefit own personal benefit, since occupancy constitutes appellants' "compensation" services performed thus concededly employee, moreover itself purports measure employee collects such amount through deductions employee's paycheck. 465-467. Cal.App.3d 633, 123 Cal.Rptr. 548 (County Fresno judgment); County Tuolumne judgment affirmed. James B. Waterman, Fresno, Cal., Fresno. Stephen Dietrich, Jr., Sonora, Tuolumne. Howard E. Shapiro, Washington, D. C., appellants. Mr. Justice WHITE delivered opinion Court. 1 issue this case whether, consistent Government's immunity inherent Constitution, see McCulloch Maryland, 4 Wheat. 316, L.Ed. 579 (1819), them We hold may. * individual Service, branch Department Agriculture responsible administering forests. These Sierra, Sequoia, Stanislaus National Forests which Counties California. During year 1967 each lived his family house was built one these Appellants were live houses1 so they would nearer place where duties better able perform duties. Structurally, very similar residential same size available viewed partial compensation made deduction salary two-week pay period occupied house. fixed estimating fair rental value sector then discounting figure take account distance between nearest established community absence, any, any customary amenities near house.2 Adjustment also reserved right at time, enter without notice inspection purposes, all official purposes emergency. 3 16 U.S.C. § 480, retain civil criminal jurisdiction over notwithstanding Government. Under Revenue Taxation Code, §§ 104, 107 (West 1970), 21(b) Title 18 Administrative Code (1971), authorized land.3 federally counties. In computing imposed, estimated houses, discounted into essentially factors considered deducted salaries houses.4 paid under protest they, together States, sued refund courts Counties. They claimed, inter alia, interfered i. e., running discriminated therefore forbidden Constitution. g., trial sustained claims, holding, had taxable interest law. Court Appeal, Fifth Appellate District, reversed, (1975) case, followed (unreported)). held subject court Government, property, "federal function." Rather, "the citizen, citizen's usufructuary government land alone (City 436; 424.)" Id., 640, Cal.Rptr., 552. Consequently, held, Appeal rejected contention operates employees. Supreme denied review. noted probable review decision 425 970, 96 2165, 48 793 (1976). 5 argue "a levy upon activities States" because "for purpose discharging governmental forests." Brief 11. argues, doctrine announced M'Culloch Constitution properties, functions, instrumentalities disagree affirm below. II 6 relies principally landmark Maryland. There Maryland notes issued "any Bank ... authority State.5 bank created incorporated Act Congress order carry out Congress' enumerated powers. No issuance violate declares "supreme law land." An power "by exercised destroy it," Wheat., 427, consequently tax, admitted, could effectively repeal bank. If State's recognized principle, doubted ability exercise determine whether function. Finally, argument involves taxing abused, should simply trust abuse just must citizens. political check absent when function.6 can relied vote office legislature imposes abusively high them. motivated instead 7 careful limit reach decision. stated "extend institution [the bank], common description throughout State." (Emphasis added.) 9 M'Culloch, has adhered rule directly legal incidence Government.7 decisions have been less uniform taxes, full invalid. 10 For many years read forbidding contractual relationships whenever effect might increase cost performing functions.8 later years, however, departed interpretation M'Culloch. Dravo Contracting Co., 302 134 (1937), contractor sought occupation measured gross receipts, receipts received contract declared valid even Government" contract. 160. So laid nondiscriminatory, id., 150, until otherwise. 161. Similarly, Graves New York ex rel. O'Keefe, 306 466 (1939), nondiscriminatory income thereby overruling Dobbins Commissioners Erie County, Pet. 435 (1842).9 See Alabama King & Boozer, 314 (1941), Panhandle Oil Co. Mississippi Knox, 277 218 (1928). 11 dispositively, 489 (1958), 484 companies machinery leased businesses -- though two cases cost-plus contracts requiring clear corporation Esso Standard Evans, 345 495 (1953). 12 derived Court's more recent decisions, then, State.10 This returns original intent found lacking present artificially entities;" foresaw unfairness forcing individuals beneficial others Accordingly, expressly excluded [n instrumentality] III 13 Applying set forth above, relatively simple. involved causing legally removing market.12 respect obstruct invalidated, discriminates do.13 14 Although vast majority reason governed (1958). city States. With none user. answering dealing said: 15 "As suggested before apparently trying equate enterprise using carried taxed Those greater placed business lessees." 473-474. here "passed Tax 17 argues nonetheless "[t]here accordingly constitutionally permissible way isolate 'personal residence' portion deemed unrelated employees." 18.14 odds concessions during lawsuit, treatment apart sense. complaint alleges conceding employee. At oral conceded capable severed accurately measured. virtually everyone country pays himself herself family, sense compels conclusion provided employer financial relieving him expense paying elsewhere.15 disadvantages attendant living affect unquestionably some him. Here both appellees total attributed interest. respect, Allegheny 322 174 (1944), n. 10, supra, heavily invalidated validated Government-owned effort segregate corporation's] it." 187. stated, however: "Actual custody nearly always someone acts behalf His advantages relationship salary, profit we held." 187-188. 19 statement ripened holdings 472, difference Muskegon complying there "profit" put "beneficial use." inconsequential. types taxable. 20 conclusion, said U.S., 495: 21 "There discrimination whom business. crippling obstruction sinister hamstring power, slightest interference Cf. 316. circumstances proper agency, pointed difficult policy necessarily determining what extent parties do given taxes." 22 Affirmed. 23 JUSTICE STEVENS, dissenting. 24 application employees' estate forest significantly different forms and, my opinion, creates kind potential friction sovereigns constitutional intended avoid. 25 imposing like others, plainly unconstitutional. 579. On hand, residents equally, tax. 59 595, 83 927. former latter 26 alternatives extremes posited. Instead special else; making base somewhat broader, entities, including organizations. Arguably, situation, enough voters provide type safeguard envisioned protect risk disparate treatment. protection illusory sovereign adjust avoid cause significant impact else. rationale protects well instrumentalities, discrimination. A. 27 compared persons private, adopted charging equal residences determined prevailing comparable vicinity forest.1 residing residence tenant home rent. But while 28 Whether collected over, under, premises, same.2 estate, valuation systems employed counties, regardless elects subsidize, whole part, analogy, ante, means permission inapplicable.3 29 eliminated not. owner's obligation determines doubt, correct say tenant. When public charged rent, surely justified exemption.4 To exemption significance, provides power; affirmative justification invalid tax.5 short, discriminatory tax; control case. B 30 apply users By terms applies "publicly property."6 not, example, hospitals, schools, religious organizations, California.7 appears state-owned houses. California, subdivisions, fix practical assessed Potentially, therefore, 31 Thus, tenants occupying taxpayers vulnerable 32 Whereas scheme exist, Michigan upheld Corp. America, 441, designed eliminate disparity equalize competing commercial enterprises conduct businesses.8 33 first applied every party included Governments, privately estate. undisputed evidence lessees foreclosing claim S.Ct., 478. third general indiscriminately State, 494, 461. 34 critical importance absence scheme, sharp contrast challenged apparent passage: 35 "It still remains true, beginning, fall deals. uses connection conducted gain. churches, charitable organizations great host entities. class defined arbitrary invidiously one. As lessees. equalization distinct preference neighboring competitors, escaping share local responsibility." 473-474, 478 (footnote omitted). 36 now us involve parties. Indeed, unlike identified "vital" engaged activities,9 performance traditional function: managing requires taxpayer-forester opinions imply service activity. I opinions, direct focus equality inequality users; inequality. 37 squarely controlled property.10 Apparently, parks treated sufficient save suppose soldier's Army barracks police officers resided quarters. Such submit, patently reasons servants most sovereign; create conflict territory. 38 explained Frankfurter separate 503-504, 491: 39 "A principle uninterrupted historic longevity attributable momentum reflects, detailed exposition considerations demanded our system, certainly deep instinct considerations, distinction person privilege 'empty formalism.' embodies minimum necessary essential hindrance another That particular powers point. avoiding potentialities furthering smooth operation complicated finds explanation justification." specific draws paragraph support validity person" forest. course, know regarded "third whose am convinced, he articulated supports respectfully dissent. Together Tuolumne, appeal (see Rule 15(3)). Some permitted outside elected. However, volunteered, perhaps appellants, there. light disposition unimportant will refer again. Examples are, according testimony official: "Paved streets, street lighting least intersections, sidewalks, lawns, trees landscaping, attractiveness neighborhood, sanitation services, reliability adequacy water safe household use, (sic ) electrical service, telephone fuel heating, hot cooking, protection, fire unusual design features dwelling, disturbing noises offensive odors standards maintenance." App. 32. Section 107, Cal.Rev. Tax. provides: " 'Possessory interests' following: "(a) Possession of, to, improvements, except coupled ownership person." Cal.Adm. (1971) 'Taxable interest' nontaxable publicly section 104 . ." 'Real estate' 'real property' includes: All agree e. g. 174, 64 908, 88 1209 either non-tax-exempt owner. renter land. presumably reflected indirectly. appellant's occupancy. five years' length time average remained form forced purchase stamped paper printed. avoided lump-sum payment $15,000. stated: "[Normally in] constituents. security erroneous oppressive taxation. "The people give themselves resting confidently legislator, influence representatives, guard abuse." 428. "...When chartered institutions constituents; uniform. But, operations created, constituents, control. 435. concluded: result conviction otherwise, retard, impede, burden, manner control, enacted execution vested government. is, think, unavoidable consequence supremacy constitution declared." Thus seller liquor pose exchanges collect markup equivalent post exchange remit Commission. Comm'n, 421 599 (1975). There, although nominally seller, seller. First Agricultural Nat. 392 339 (1968). Kern-Limerick, Inc. Scurlock, 347 110 (1954), stands proposition 122. sales purchasers. Inc., Navy purchases furtherance Navy, Kern-Limerick acting agent. purchaser state-tax question, unenforceable. Land Bismarck Lumber 95 (1941); Van Brocklin Tennessee, 117 151 (1886). E.g., (1842) (holding employee); (1928) Government); Gillespie Oklahoma, 257 501 (1922) generated Government). Rickert, 188 432 (1903). Graves, theory, once won qualified approval, economically source, longer tenable." 480. "[T]he possible implying agency tantamount functions." 481. immunizing taxation: confer benefits contributing government, enjoy, enabling engage lower employers, prevent undue burdens other. "[A] members assumed [a entity] undertaken perform, cast them, which, extent, incapable measurement economists, tend price level labor materials." 483-484. "So much non-discriminatory incomes national, materials, normal incident organization territory governments, possessing power." 487. single arguable departure 1937 (1944). Mesta Machine Company produce field guns War 1941. produced Mesta. limitation Mesta's machinery: "leasehold [in machines] qualification gun manufacture burdened conditions." 186-187. Pennsylvania, factory located, attached thereto, ruled invalid, stating: "Mesta bailee mutual benefit. view appropriate proceedings decide [T]he machinery] it. interest, whatever appraisal attribute leasehold, assessment." Ibid. Insofar holds never it, overruled companion cases. (Frankfurter, J., concurring dissenting). restrictions valuable user, here. Appellee reduced assessments limitations escalated unable hire anyone prohibitively salaries. danger arise, giving indirectly landlord abandoned below, treats differently factually accurate run afoul Clause. 316 (1819); 473. attempt ax job tower inhabited daytime question. "'beneficial use,'" "'profit'" "'salary.'" 471. 14, below endorsed finding litigation arose. 637, 548, 550 notes, personal, non-job-related, affects character. alleged constituted "compensation," proof found, 1, receives higher net rents landlords status avoids how states them" market, entail represented taxes. Appellees methods 456 4. Once interests, rates actual dollar owns administrative unique operating myriad due dates immense. judgment, why runs Moreover, believe surrender understand relevance so-called quoted 455 3. Cedars Lebanon Hospital Los Angeles, Cal.2d 729, 221 P.2d (1950) (private hospital); Church Divinity School Alameda, 152 Cal.App.2d 496, 209 (1957) (college-level school); Serra Retreat 755, (1950), Saint Germain Foundation Siskiyou, 212 911, 393 (1963) (religious organizations). asks strike down statute lessee statute, Public 189 1953, property." 467, 475. vital thing think permissibly so, Continental activities. gain called 'servant' terms. assimilated become constituent parts. free broad limits thought advantageous convenient maximizing profits them." 486, 485. profit, 467-468, 493, 460, emphasis taxpayer "in course business." group state-operated subsidize instrumentality accorded

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