Court Opinion

ID: 3511251
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:21:59.841382+00
Date Added: 2024-06-11T13:14:19.493357
License: Public Domain

Our former opinion is for the time being the law of the case. For that reason and because I can see nothing of substance to be gained by the proposed answer, I concur in the result.
But as to the merits, I am confirmed in the view expressed when the case was first here.
Although "reciprocity of immunity" may have restrictions in favor of the federal government which cannot be invoked by a state, it remains apparent that in a large area of the field of inquiry the irresistible logic of facts works as effectively for states as for nation.
In that respect the argument supporting decision in Helvering v. Gerhardt, 304 U.S. 405, 58 S. Ct. 969, 82 L. ed. 1427, appears to me controlling. Brush v. Commr. of Int. Rev.300 U.S. 352, 57 S. Ct. 495, 81 L. ed. 691, 108 A.L.R. 1428, was expressly limited by "what is now decided." In the opinion of Justices McReynolds and Butler the Brush case was overruled. They considered that it was "futile to attempt to distinguish" the two cases.
The Gerhardt decision was that federal taxation of officers and employes of the Port of New York Authority in respect to compensation paid them thereby was not forbidden. The reason was this [304 U.S. 424]:
"So much of the burden of the tax laid upon respondents' income as may reach the state is but a necessary incident to the co-existence within the same organized government of the two taxing sovereigns, *Page 111 
and hence is a burden the existence of which the Constitution presupposes. The immunity, if allowed, would impose to an inadmissible extent a restriction upon the taxing power which the Constitution has granted to the federal government."
Why does that reasoning not apply with equal force in favor of the taxing power of a state? To me it seems inescapable that so much of the burden of a personal tax, laid upon officers and employes of a federal reserve bank, as may ultimately reach the national government, is also and just as merely "a necessary incident" to the dual sovereignty under which we live. If so, it is presupposed by the federal constitution, although the tax may have some conjectural and insignificant incidence on the federal government.
In such cases, because of the trivial character of its effect, immunity in favor of the states is denied because, and only because, its allowance would impose an inadmissible burden on the federal government's granted power of taxation. Equally, then, such an immunity cannot be allowed in favor of the federal government, for it would impose an inadmissible burden on the reserved taxing powers of the states.
Officials and employes of the federal government who are residents of a state are not by reason of their status immunized from obligation to support the state government. Generally, they have no immunity from either the property or personal taxes imposed by the state. They enjoy the protection of its laws and have access to its courts.
In similar fashion, a federal reserve bank is in much the same local status as any other corporation. A nondiscriminatory state tax, laid in personam against its officials and employes, can [304 U.S. 420] "by no reasonable probability be considered to preclude [or embarrass in the slightest] the performance of the function" which federal law has assigned it. Following further the reasoning of the Gerhardt case [304 U.S. 421], the burden of such a tax, so far as it reaches federal functions, is conjectural and remote rather than "actual and substantial." *Page 112 
Applicable as much against the federal government as that of a state is the proposition that [304 U.S. 422] "the mere fact that the economic burden of such taxes may be passed on to a state government and thus increase to some extent, here wholly conjectural, the expense of its operation, infringes no constitutional immunity."
The immunity here claimed, if allowed, will relieve officials and employes, not of the federal government, but of its mere instrumentalities and ordinary business agencies [304 U.S. 421] "of their duty of financial support" to the state governments, in order to secure to the federal government "a theoretical advantage so speculative in its character and measurement as to be unsubstantial. A tax immunity devised for protection" of the national government may not, and certainly should not, be "pressed so far."
For these reasons I repeat my submission on the merits, that there is no reason in law or fact for relieving officials and employes of a mere business agency of the federal government of any of the obligations, which are theirs because they are its citizens and residents, to support the government of the state. It is certainly not the purpose of the fundamental law of our federal system to endow any favored class of citizens with a special privilege so substantial and so detrimental to the general welfare.