Document: 470 U.S. 583 105 S.Ct. 1516 84 L.Ed.2d 535 FIRST NATIONAL BANK OF ATLANTA, etc., Appellantv.BARTOW COUNTY BOARD TAX ASSESSORS et al. No. 83-1620. Argued Oct. 30, 1984. Decided March 19, 1985. Syllabus Prior to 1982, Rev.Stat. § 3701 provided that "[a]ll stocks, bonds, Treasury notes, and other obligations of the United States, shall be exempt from taxation by or under State municipal local authority," and, as amended in 1959, further such "exemption extends every form would require either interest thereon, both, considered, directly indirectly, computation tax," except nondiscriminatory franchise nonproperty taxes estate inheritance taxes. Effective 1980, a Georgia statute imposed property tax on fair market value shares stockholders banks. The bank's share was determined dividing net worth number outstanding shares. In calculating worth, bank not allowed deduct States it held. Appellant predecessor interest, nevertheless, its 1980 return deducted total federal securities Appellee Bartow County Board Tax Assessors disallowed deduction. county Superior Court agreed. Supreme construed allow full held but only percentage attributable assets. Held: Section is satisfied limited pro rata deduction for approved Court. Pp. 588-597. (a) American Bank & Trust Co. v. Dallas County, 463 855, 103 3369, 77 1072, authority allowing excluded assets before determined. That case—which prohibited imposing computed basis without any tax-exempt bank—addressed forms must an exemption obligations, scope provided. 588-589. (b) Government required Constitution exclusion, but, instead, may charging their related expenses burdens. 589-593. (c) 3701, no broader than which requires. 593-596. (d) shelter. Federal acquired, part, liabilities, when they are, method allocating liabilities does infringe upon constitutional statutory immunity enjoy. 596-597. 251 Ga. 831, 312 S.E.2d 102, affirmed. Charles T. Zink, Atlanta, Ga., appellant. Alan I. Horowitz, Washington, D.C., amicus curiae, special leave Grace E. Evans, Augusta, appellees. Justice BLACKMUN delivered opinion 1 Two Terms ago, this Court, 6-2 vote, ruled amended, 31 U.S.C. 742 (1976 ed.), bank. 1072 (1983). at time provided:1 2 case, we address question left open Bank, see U.S., 865, n. 10, S.Ct., 3376, 10: State, purposes, holds, excludes portion properly rather liabilities? 3 * January 1, banks banking associations. 1978 Ga.Laws, 795, 2, p. 523, codified Ga.Code Ann. 48-6-90(a)(1) (1982).2 "by adding together amount capital stock, paid-in capital, appropriated retained earnings, earnings . shown unconsolidated statement condition sum ." This represented worth. banks, calculation certain holdings, real taxed separately, 48-6-90(a)(1), did authorize 4 When appellant's predecessor-in-interest filed return, entitled "Determination Taxable Value Shares," with appellee Assessors, App. A-4. deduction, Equalization affirmed disallowance. then took case consolidated cases two banks: Citizens Southern National whose also had disallowed, different panel same allowed. favor disallowance, Bd. 248 703, 285 920 (1982). 5 appealed Court; vacated judgment remanded reconsideration light then-recent decision supra. 1221, 3563, 1402 On remand Georgia, parties conceded bank-share statute, if prohibit invalid principles announced Bank. court therefore sought save construing "the obligations." 834, (1984). explained 9.75 percent consisted reduce percent. Id., 835-836, S.E.2d, 106. According court, proportionate recognizes some are balance sheet while worth.3 Because assessed assets, reasoned, immunizes values, base—net worth—to extent there. 833, 105. rejected banks' argument order satisfied; indicated absolute insulate tax, requires, go beyond shelter taxable tax. 105.4 6 One three appellant First appealed.5 We noted probable jurisdiction pursuant 28 1257(2). 467 1214, 104 2654, 81 361 II 7 Until pertinent part: "[A]ll authority." year, however, Congress added second sentence 3701: "This exceptions relevant here. Pub.L. 86-346, 105(a), 73 Stat. 622, ed.). stated "sweeping" 862, 3374, word "considered" means "taken into account, included accounting." Ibid. contends those statements preclude because read mean unless determined, account included" computation, violated. 8 Contrary arguments, Bank's definition "considered," proper context, dispose issue whether applies. As prior 1959 addition consistently interests corporate shares, even though measured underlying including obligations. 858, 3372. "rejected set aside" "rather formalistic pre-1959 approach 3701." 3374. made clear provide "is barred regardless indirectly computing tax" (emphasis original). addressed obligations; examine III 9 An analysis requires begin Missouri ex rel. Ins. Gehner, 281 313, 50 326, 74 L.Ed. 870 (1930). struck down, violative personal insurance company. base Gehner calculated follows: (1) bonds insurer subtracted determine assets; (2) were divided obtain ratio (3) figure multiplied liabilities; (4) based. violated ownership denying thereby increased burden taxpayer. drew support holding recognized principle "a subject one greater his merely he owns government securities." 321, 327, citing Life 277 508, 48 591, 72 968 (1928). 10 Stone, sharp dissent, joined Justices Holmes Brandeis, have "does requiring all bonds. 323, 328. He argued Court's ignored fact liable debts taxpayer, incorrectly assumed alone contributed taxpayer's thought conclusion supportable. pointed out taxpayer who $200,000 $100,000 $100,000, $50,000 after latter liability reduced, increased, Stone full-deduction adopted purchasing equivalent more immunize taxation; "confers affirmative benefit expense taxing power state, relieving [taxpayer] measure contributed." 328, 330. 11 concede still authoritative decision, control indicates anything less fails Constitution. has vitality today, views expressed Stone. WHITE, writing unanimous flatly extension "condemn increase rate dollars owning securities" "soon repudiated." Atlas Co., 381 233, 245, 85 1379, 1386, 14 358 (1965). And just Term decided, upheld provisions Revenue Act 1921 taxpayers exclude gross income received state take paid indebtedness, indebtedness incurred continued purchase Denman Slayton, 282 514, 51 269, 75 500 (1931). Denman, supra, reaffirmed applied both tax-free paid. contrary: "While guaranteed exemptions strictly observed, obligation inconsistent reasonable classification designed payment fairly imposed." 519, 270. Echoing Stone's 330, theory immunity, could simple expedient borrowed money paying income. 519-520, Similarly, Helvering Independent 292 371, 54 758, 78 1311 (1934), Acts 1924 permitted depreciation buildings owned life companies company include otherwise nontaxable rental space occupied. value, permissible "apportionment expenses." 381, 760. 12 "affirm[ed] laws pay way" upholding Insurance Company Income (hereinafter Act). 247, 1387. Under provisions, company's investment policyholders' share, taxed, should earned, reasoning like dissent: 13 "Undoubtedly wholly ignore receipt arriving will exclusion [the reserve] interest. But result necessarily follows application burdens allocable it. last Atlas' insistence reserve exempt-income exclusions tantamount saying instead ones constitutionally per dollar securities. doctrine inter-governmental conferred bonds." 251, 1389. sum, ever since each concluded need burdens.6 seeks avoid import these arguing Constitution, Weston City Council Charleston, Pet. (27 U.S.) 449, 481 (1829), requirements 3701. It true Life, note been discredited "insofar rested implied immunity." 16, 16. "treated [§ 3701] principally restatement rule." Memphis Garner, 459 392, 397, 692, 696, 562 See Society Savings Bowers, 349 143, 144, 607, 608, 99 950 (1955); New Jersey Realty Title Division Appeals, 338 665, 672, 70 413, 417, 94 439 (1950). IV 15 broaden mandated interpreted Life. sparse legislative history certainly provides assertion intended exemption. 865-866, 3376-3377, catalyst amendment Idaho individual "according income." Code 63-3011 (1948). Even precluded position "gross income" derived. Noting Idaho's stance, Senate House Reports stated: "The bill makes obligation, it, considered tax." S.Rep. 909, 86th Cong., 1st Sess., (1959); H.R.Rep. 1148, (1959). discussion ensuing hearings confirms abolish distinction between underlay arguments. Public Debt Ceiling Interest Rate Bonds. Hearings Committee Ways Means, 69-72 (1959) (supplemental Secretary Robert B. Anderson). points nothing indicating understood actually exemption, well clarify applied. 16 enacted months adopting Its deliberations over extended debate satisfactorily protected values. 240-242, 1383-1384. deciding adequate, deductions. Given almost contemporaneous rejection arguments founded 's construction Building Maintenance Industries, 422 271, 277, 95 2150, 2154, 45 177 (1975), make sense assume that, amending sub silentio deductions.7 17 Further, recognized, chargeable many, most, commercial sufficient completely.8 Therefore, presume addition, virtually eliminate usefulness taxes, prevailing 1959.9 infer intent discussions troublesome constitute entire addition. hold V 18 depart established allocate values "just imposed" constitutional. There little add persuasive dissent 19 asserts rule here decrease attractiveness Smith Davis, 323 111, 117, 65 157, 160, 89 107 (1944). validity proposition, our view, highly questionable. Were likely unable raise worthwhile revenues through event, expect move specifically excepted proscriptions Counsel curiae oral know lesser Tr. Oral Arg. 18. far clear, therefore, diminish alternative adopt required. Indeed, associations briefs amici Georgia's here, part fear striking down uncertainty costs taxation. See, e.g., Brief Pennsylvania Bankers Association, Virginia Furthermore, point evidence difference cost significant enough prompt forgo advantages extreme liquidity safety, invest elsewhere. Association Amicus Curiae 15-18; 8-10. 20 21 22 so ordered. positive law until reformulated, said, "without substantive change." 97-258, 4(a), 96 1067. replaced 1982 reformulation 3124(a). levied pre-1982 technically controls case. authority. lieu thereof corporations taxes." 1984, repealed another providing "depository financial institutions manner business Georgia." 1983 524, 5, 1355, 48-6-90 (Supp.1984). declined decide entitle prove "actually purchased stock surplus." 3, 105, 3. Some similar formulated administrative practice. Pa.Stat.Ann.Tit. 72, 7701.1 (Purdon, Supp.1984-1985); Texas Research League, Status Shares Tax, A Report Joint Select (of Legislature) Fiscal Policy 11-12 Another now changed brief Schuylkill Pennsylvania, 296 113, 56 31, 80 91 (1935), state-trust-company discriminated against trust already national reach whether, absent discrimination, controlling relevance worthy Department advised pro-rata-deduction imposition insurers Cong.Rec. 8402 (letter David A. Lindsay, Assistant Treasury, Senator Harry F. Byrd, Chairman Finance). Only few later, mention revise described resolve controversy attempt distinguish Bonds, 1960, $82 billion securities, equity $21 billion. Banking, Housing Urban Affairs, Governors Reserve System, Local Taxation Banks, Study Law 91-156, 92d Part III, (Comm.Print 1971) Study). 1958, 27 excise, franchise, S. Leland, History Impact 5219 reprinted 309, 316.

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