Court Opinion

ID: 9418932
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:43:25.699245+00
Date Added: 2024-06-11T17:22:13.235771
License: Public Domain

Mr. Justice Roberts,
dissenting.
I regret that I am unable to concur in the Court’s opinion. I should not set forth my views in detail were I not convinced the decision runs counter to the settled rule that a State may not, by taxation, burden or impede the United States in the exercise of its delegated powers. The judgment seems to me to overrule, sub silentio, a century of precedents, and to leave the application of the rule uncertain and unpredictable.
The doctrine which forbids a state to interfere with the exercise of federal powers does not have its origin in the *162common law exemption of the sovereign from regulation or taxation. It springs from the necessity of maintaining our dual system of government.1 “The attempt to use it [the power of taxation] on the means employed by the government of the Union, in pursuance of the constitution, is itself an abuse, because it is the usurpation of a power which the people of a single State cannot give. We find, then, on just theory, a total failure of this original right [of the states] to tax the means employed by the government of the Union, for the execution of its powers.”2 “The immunity is derived from the Constitution in the same sense and upon the same principle that it would be if expressed in so many words.” 3
This immunity was defined by Chief Justice Marshall in M’Culloch v. Maryland, 4 Wheat. 316, 436:
“ . . . the States have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control, the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government.”
In its application the principle forbids taxation by a state of property of the federal government,4 or of the office or salary of any of its officers.5
*163I agree that the gross receipts tax laid by West Virginia upon the appellee’s transactions with the United States is not upon the government as such, upon its property or upon its officers.
The government need not perform all its functions by the use of its property and the activity of its officers, but may establish agencies to these ends. Such an agency, created not for private gain but wholly devoted to governmental purposes and wholly owned by the United States, is as free from state taxation on its property and its activities as the government itself; and the exemption extends to the salaries of its officers.6 In the exertion of the powers conferred upon it by the Constitution, the United States may, in its discretion, erect corporations for private gain and employ them as its instrumentalities.7 No tax can be laid upon their franchises or operations,8 but their local property9 is subject to non-discriminating state taxation. In contrast, the bestowal of benefits, rights, privileges, or immunities or the imposition of duties by federal law upon a natural person or a corporation does not convert him or it into a federal agency exempt from uniform state excise or *164property taxes.10 Where the United States, by contract, constitutes a person or corporation its agent to fulfil a governmental obligation, a state tax upon such an agent is forbidden if it falls upon the avails of the operation in which the government has an interest, or is an excise or privilege tax upon the agent’s operations;11 but a general and uniform state property tax which falls only upon the agent’s property used in the performance of the contract is valid.12 The opinion of the court adverts to these distinctions, but, since admittedly the appellee is not an agency or instrumentality of the United States, a discussion of taxes laid upon the operations as contrasted with those imposed upon the property of such an agency or instrumentality is beside the point upon which the case turns.13
I agree that the challenged tax is not, in terms, laid upon the contract of the government, but I am of opinion that it directly burdens and impedes the operations of the United States within the reason and scope of the principle of immunity and according to the application of that principle in numerous decisions of the court. If this be so, the facts that the exaction is not in terms upon the contract with the government, that the appellee *165is an independent contractor, that the tax is non-discriminatory, or that it is not excessive in amount cannot serve to exculpate the statute from the charge that it transgresses the rule. These considerations, as repeatedly held, are irrelevant where the tax falls directly, immediately, and palpably upon an operation of the federal government or a. means chosen for the exercise of its powers. Many illustrations are available of exactions which plainly burden and impede in some degree the lawful operations of the United States. As the opinion of the court indicates, a tax in terms laid upon the contract would do so, — such as an excise for the privilege of making the contract or performing it,14 a stamp tax upon the documents evidencing the contract, or a requirement that the contract be recorded and a tax be paid upon its rec-ordation.15
The court has, moreover, repeatedly held a tax nominally upon one who contracts with the government was in effect and in fact imposed upon the operations of the latter. Thus an excise upon a telegraph company which, under contract with the United States, transmits government messages, whether the tax be at a given sum per message16 or in the form of a license tax upon all business, private and governmental,17 is prohibited because it imposes a burden upon the operations of. the United States. The cases so holding are sought to be distinguished by the circumstance that the telegraph companies carrying the messages of the United States were by federal statute given the privilege of using the post roads; and it is said that this in some way gave them a peculiar status which rendered their gross receipts un-*166taxable. But that was not the basis of decision. The ground of immunity was that the tax was in effect on the government’s transactions in the exertion of its lawful powers. Thus in Telegraph Co. v. Texas, 105 U. S. at p. 465, it was said “The tax is the same on every message sent, and because it is sent, . . . Clearly if a fixed tax for every two thousand pounds of freight carried is a tax on the freight, or for every measured ton of a vessel a tax on tonnage, or for every passenger carried a tax on the passenger, or for the sale of goods a tax on the goods, this must be a tax on the messages. ... As to the government messages, it is a tax by the State on the means employed by the government of the United States to execute its constitutional powers, and, therefore, void. It was so decided in McCulloch v. Maryland, (4 Wheat. 316) and has never been doubted since.”
That the privileges granted telegraph companies by federal law, had no bearing upon the validity of the tax is shown by Western Union Telegraph Co. v. Massachusetts, 125 U. S. 530 and Massachusetts v. Western Union Telegraph Co., 141 U. S. 40, in which state taxes on the property and franchises of companies, operating under, the same statute as the Telegraph Company in the Texas case were sustained because not on the transactions between the carrier and the United States.
Stock issued by the United States evidencing indebtedness to the holder cannot be taxed ad valorem by a state.18 A tax upon the assets of a corporation is bad if obligations of the United States are included in the assessment.19 A gross income tax is invalid to the extent *167that it is laid on income from federal securities.20 The reason is that “the tax ... is a tax upon the contract subsisting between the government and the individual. It bears directly upon that contract, while subsisting and in full force. The power operates upon the contract the instant it is framed, and must imply a right to affect that contract.” The government’s obligation is for the payment both of principal and interest, and an exaction which bears upon either of these features of the obligation is prohibited.
Certificates of indebtedness issued by the United States, payable at a future date, with interest, issued to creditors for supplies furnished by them to the nation, cannot be taxed by a state. They differ from the gross receipts here taxed only in the respect that they were issued to secure payment of past-due contractual obligations, whereas the cash paid the appellee was in solution of a present obligation of like nature. Of the tax-ability of these certificates it was said: 21
“ . . . But we fail to perceive . . . that such certificates, issued as a means of executing constitutional powers of the government other than of borrowing money, are not as much beyond control and limitation by the States through taxation, as bonds or other obligations issued for loans of money.”
Many sorts of imposts, however, which bear merely upon the obligee of a government contract for the exercise of a privilege having no relation to the contractual nexus between him and the government have been sus*168tained. So, a franchise or privilege tax measured by assets or by income is not rendered void by the circumstance that the taxpayer’s assets or income include federal securities or interest thereon.22 And a law which imposes an excise upon the privilege of transmission of property at death may include federal securities in the estate by which the tax is measured.23 Upon the like reasoning a tax upon moneys and credits in the assessment of which uncollected government checks are included is valid.24
There can be no difference in reason, or in practical effect, between taxation of government contracts to repay borrowed funds or written promises to pay for goods previously furnished and a contract to pay for goods and services as furnished, or any other form of contract whereby the government exercises its granted powers. The federal power to' contract for supplies or services is as necessary and as fundamental as the power to borrow money. Thus it has been said, speaking of a tax upon government obligations:25
“If the states and corporations throughout the union, possess the power to tax a contract for the loan of money, what shall arrest this principle in its application to every other contract? What measure can government adopt which will not be exposed to its influence?”
If the government, as guardian of an incompetent Indian, leases land to a mining company on a royalty consisting of a percentage of the gross proceeds derived from the sale of ores mined, a state ad valorem tax assessed to the lessee on the ores mined and in storage upon the *169leased land before any sale or segregation of the equitable interests of the government as guardian, is void as burdening and impeding an operation of the government.26 A sales tax on commodities sold to the government, though laid upon the seller at a given rate per unit sold, is also bad as directly burdening the government’s transactions.27 A tax on storage or withdrawal from storage essential to the sale of a commodity contracted to be delivered to the United States is in the same class as a tax on sales to the government.28 On the other hand, a sales tax upon articles purchased by a government contractor,29 or a net income tax laid upon his income, is valid.30 The reason is that exactions of the latter sort do not impinge upon or directly affect the transaction between him and the government; do not affect the government’s choice of means for executing its powers.
While a gross income tax upon receipts derived from a government contract would in itself be bad, if the exaction is in lieu of all property taxes and intended as a property tax, measured by receipts of the property, it is valid.31
Over a century ago the court said:32
“Can a contractor for supplying a military post with provisions, be restrained from making purchases within any State, or from transporting the provisions to the place at which the troops were stationed? or could he be *170fined or taxed for doing so? We have not yet heard these questions answered in the affirmative. It is true, that the property of the contractor may be taxed, as the property of other citizens; . . . But we do not admit that the act of purchasing, or of conveying the articles purchased, can be under State control.”
There is no distinction between a sales tax on goods sold to the federal government and a gross receipts tax upon the furnishing of goods and services under a contract with the government. As was said, in Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218, 221:
“The right of the United States to make such purchases is derived from the Constitution. The petitioner’s right to make sales to the United States was not given by the State and does not depend on state laws; it results from the authority of the national government under the Constitution to choose its own means and sources of supply. While Mississippi may impose charges upon petitioner for the privilege of carrying on trade that is subject to the power of the State, it may not lay any tax upon transactions by which the United States secures the things desired for its governmental purposes.”
As in the Panhandle case, so in the present, the receipt of the thing contracted for constitutes the transaction by which the tax is measured and on which the burden rests. We may thus paraphrase what was there said: to use the value and amount of the goods and services furnished to the United States as a measure of the tax is in substance and effect to tax the transaction itself. The amount of the tax rises and falls in direct ratio to the contract value of the goods and services rendered to the government. This is to tax the sale; and that is to tax the United States.
The Solicitor General as amicus curiae proposes a single test of the constitutionality of a state tax upon the operations of the United States, or the means chosen for *171the execution of its powers. That test is whether the taxing statute discriminates against the government and in favor of other taxpayers. He frankly admits that if the proposed criterion be adopted we must overrule Indian Motocycle Co. v. United States, 283 U. S. 570; Panhandle Oil Co. v. Mississippi ex rel. Knox, supra; and Graves v. Texas Company, 298 U. S. 393. He professes himself, as I am, unable to distinguish a sales tax or a tax upon storage preliminary to sale to the United States from a gross receipts tax upon goods and services furnished the government. In a brief filed as amicus curiae in Graves v. Texas Company, supra, he urged the court to hold such a tax imposed on gasoline under contract to the United States invalid as an unconstitutional impediment and burden upon the operations of the government.33 It is said that these cases have been distinguished. But in the cases distinguished from them the tax was found to be one on the property of a contractor with the United States, or on his net income, not on the gross receipts of his contract with the government. To distinguish them from the present case is not to rely upon any principle but upon the mere name or label given to a tax. Such distinctions only serve to confuse.
I do not think the Solicitor General in brief or argument answered the question propounded by the court in the present case: whether the tax is invalid as laying a burden upon the operations of the federal government. He responds that the tax is valid in spite of the fact that it lays such a burden. Thus he states: “We have indicated that a tax upon the contractor, the sole result of which is to increase the cost to the sovereign by the *172amount of the normal tax burden, presents no interference with its operations.” Again he says that the imposition of the tax in question “is in no sense a threat to the capacity of the government to perform its functions.”
Thus it appears that, in his view, a non-discriminatory state tax is to be judged not by the “burden” it imposes, but by the extent of its “interference” with the functioning of government. If this be the test, no tax, however great, can prevent such functioning, so long as the United States’ taxing and borrowing powers remain adequate to meet the ordinary expenses of its operations and the added cost of state taxes thereon. The adoption of any such theory would require the overruling not only of the three decisions the Solicitor General singles out for deletion, but literally scores of others, beginning with M’Culloch v. Maryland and ending with Graves v. Texas Company, 298 U. S. 393, decided at the 1935 term in accordance with the views then earnestly pressed upon us by the Solicitor General.
It is not clear to what extent the court’s opinion adopts the doctrine advocated by the government. It is said merely that the appellee is an independent contractor, that the tax is non-discriminatory and is not laid upon the contract of the government; and it is suggested that if in the view of Congress the burden of such a tax becomes too heavy, Congress has the means of redress. Whether one or all of these factors is requisite to justify the exaction we are not told.
The cases on which the opinion especially relies do not justify sustaining this tax. Metcalf & Eddy v. Mitchell, 269 U. S. 514, throws no light upon the problem presented. A contractor employed to advise a state and its municipal subdivisions sought exemption from a federal tax upon net income. The law imposing the tax did not discriminate against the receipts from the contract but treated them as part of the gross income upon which *173the taxable net income was to be calculated. In accordance with all of this court’s applicable decisions the tax was held not to be upon the state or its contract with the taxpayer, not upon an instrumentality or means chosen by the state for executing its powers, not directly upon the amount of the taxpayer’s compensation received from the state. The exaction was not, as here, of a proportion of each dollar paid by the government. It was upon net income remaining after allowable deductions from gross.
The decision in Fidelity & Deposit Co. v. Pennsylvania, 240 U. S. 319, relied on as sustaining the instant exaction, neither rules nor aids in the decision of the present cause. There a foreign surety company was required by law to pay an annual fee equal to two per cent, of its gross premiums, in order to be admitted to do business in Pennsylvania. Under a federal statute surety companies desiring to execute bonds running to the United States were required to obtain written authority from the Attorney General so to do. The Fidelity Company obtained such authority and became surety in Pennsylvania on a number of bonds insuring the faithful performance of official duties by federal employes. It challenged so much of the state tax as was laid upon the premiums received for writing these bonds. The challenge was not sustained. The claim that the company, by obtaining leave to execute bonds running to the United States, had become a federal instrumentality, was properly overruled.34 But it is said that, in sustaining the tax, the court held that an exaction on the gross receipts of government contracts is valid. A moment’s reflection will show that this is incorrect. The premiums received by the surety company were received from its clients — those for whom it wrote the bonds. It received no compensation from the United States and its transactions in essence were with *174citizens of the State of Pennsylvania as such. They did not differ from transactions with federal officers and employes whereby the latter procured any other sort of goods or service.35 Of course, the mere fact that a contractual relation — that of suretyship — was created between the Fidelity Company and the United States, was not in and of itself sufficient to relieve the company of the burden of paying a local tax for the privilege of doing business with its customers.
Alward v. Johnson, 282 U. S. 509, is cited as an instance where a gross receipts tax incident upon the consideration paid the contractor by the United States was sustained. Examination of the case demonstrates that the contrary is true. Alward was engaged in operating an automotive stage line between points in California. In his business he employed automotive property and used the state highways. In classifying property for taxation the state separately classified property of persons carrying on such a business as his and laid a tax on this class of property, in lieu of all other taxes, at the rate of four and one-half per cent, of gross receipts. Other classes of property were taxed at a percentage of value. As the major portion of Alwardts gross receipts arose from a contract for carrying United States mails he insisted that the tax was invalid because, by virtue of his contract with the Government, he became a federal agency immune from taxation upon his gross receipts.
This court found that the Supreme Court of California had declared the tax one upon property in cases having no relation to its incidence upon federal instrumentalities or means. It further found that the challenged classification for taxation of automotive property used in a business transacted on the public roads was not arbitrary or unreasonable. The case was likened to those arising *175under the commerce clause in which the intrastate property of an interstate carrier was either directly taxed or was taxed by use of a percentage of gross receipts in lieu of all other taxes, including property taxes, in order to reach a fair measure of the taxable value of the carrier’s intrastate property. Pullman Co. v. Richardson, 261 U. S. 330; Hopkins v. Southern California Tel. Co., 275 U. S. 393. It was pointed out that the tax was not on gross receipts as such and did not bear upon the contract between the taxpayer and the government. In the instant case the tax is admittedly an excise for revenue imposed in addition to property taxes and foreign corporation fees paid by the appellee.
It may be considered, — though I do not think with reason, — that the conclusion of the court that the tax was a property tax and not a tax upon gross receipts as such was erroneous but, even if this be conceded, it cannot be contended that the case stands as authority for the proposition that a gross receipts tax as such upon the earnings of a government contractor, from his government contract, is not a burden or impediment upon the operations of the United States within the rule of federal immunity.
Much stress is laid by the Solicitor General upon the decision in Liggett & Myers Co. v. United States, 299 U. S. 383, and he suggests that the views therein stated be adopted in the present case in preference to those embodied in the Panhandle Oil case, supra. The suggestion implies, contrary to the fact, that the two decisions are contradictory. The Liggett & Myers Company, a manufacturer of tobacco, sold a portion of its product to a state. The company resisted the collection of a federal internal revenue tax laid “upon all tobacco and snuff manufactured in or imported into the United States, and hereafter sold by the manufacturer or importer, or removed for consumption or sale” at a flat rate in cents *176per pound “to be paid by the manufacturer or importer thereof.” Upon analysis of the statute it was concluded that the tax was upon the manufacture and that payment was merely postponed until removal or sale. The tax did not vary in amount with the price received for the tobacco and was not in terms upon its sale. Upon this ground the Indian Motocycle Co. case and the Panhandle case were distinguished.
It may be conceded that often it is difficult to determine whether a tax is laid upon the local operations of a manufacturer or contractor or upon the actual sale of his product. But such distinctions must be made. Indeed the court itself is required to make such an one in the instant case in determining that payment for what the appellee manufactured for the government in Pittsburgh, Pennsylvania, did not constitute a gross receipt in West Virginia under the contract. The court has repeatedly been confronted with the problem whether a tax was in fact on the sale of a commodity or upon some-prior dealing with it by the producer or supplier. While the distinctions drawn may seem somewhat nice, examination of the facts carries conviction that the distinctions are substantial.36
It is suggested that the appellee’s status as an independent contractor lifts the ban from the tax. This is to ignore the direct bearing of the exaction on the transaction between the contractor and the government. The fact that the tax is laid upon him who contracts with the government rather than upon the contract as such, or the government itself, is immaterial. Every purchaser of government obligations is an independent con*177tractor with the government. If the fact that the taxpayer is an independent contractor were significant, it would have validated every tax laid upon the ownership of government obligations or upon the interest received therefrom.37 It has been held that ores produced by an independent contractor for the government, though still in his possession, cannot be taxed by a state;38 and that a license tax upon an independent contractor cannot be measured by the gross receipts from his transactions with the government.39
What was said by Mr. Justice Bradley, dissenting in Railroad Company v. Peniston, 18 Wall. 5, 38, when read in the light of its context, has no bearing upon the issue here presented. In M’Culloch v. Maryland, in holding that a tax upon the operations of the United States Bank invaded the federal immunity, Chief Justice Marshall said:
“It [the immunity] does not extend to a tax paid by the real property of the bank, in common with the other real property within the State, . .
In the Peniston case the question was whether a uniform ad valorem state tax could lawfully be assessed upon the intrastate property of the railroad, a federal corporation. The court held that it could. The correctness of the decision has never been doubted. Justices Bradley and Field, however, thought that the scope of the immunity was so broad as to exempt even the local property of a federal instrumentality from such a uniform local tax. It is to be observed that no other kind of exaction was involved. Mr. Justice Bradley insisted that while *178such a tax might lawfully be laid upon the property of one who was a mere contractor with the United States it could not be laid upon the local assets of a federal corporate instrumentality. The challenged tax was not upon the franchise of the corporation granted by the government, not on its right to exist within the state, nor upon the gross receipts from its operations. Confessedly the property of a contractor with the government is more remote from the government’s operations than is the property of a government instrumentality. If the latter may be locally taxed a fortiori the former may, and the language of Mr. Justice Bradley applied only to that situation, and not to a gross receipts tax such as we have here.
Does the fact that the tax is non-discriminatory save it? The Solicitor General, as we have seen, so argues. He says that both the appellee and the United States derive substantial benefits in connection with the federal projects located in the State and adds that it seems these benefits should not be free. Though he does not overlook the fact that when the work is completed the United States will continue to receive benefits from the State, he contends that a non-discriminatory tax upon the gross receipts of the contractor is but a method of reimbursing the State for benefits conferred. The argument proves .too much. It requires that equal and uniform state taxation upon federal property on which stand customs houses, post offices, forts, arsenals, et id omne genus, be upheld. In every instance of the ownership and use of property within a state, according to the argument, the federal government receives substantial benefits for which it should pay. The Solicitor General balks at the result of his position. He says: “We recognize that the logic of our analysis of benefits received would lead to taxation of the sovereign itself. But the attributes of sovereignty may be such as to prevent a tax from being *179imposed upon the government itself. Certainly, the principle of the tax immunity of the sovereign itself is too firmly established now to be reexamined.”
The short answer is that the immunity from state taxation upon the means, the operations, and the instruments of the government is just as firmly established as is the immunity from taxation of the government’s property or offices or posts created by it, and that neither class of taxation can be justified by the fact that the burden on the government is uniform with that laid on others.
Taxes condemned by the court’s decisions which were imposed upon the principal and interest of federal securities, upon the product of mining lessees, in which the government had an interest, upon storage and sale of property sold to the government, upon the operation and franchises of federal instrumentalities, such as national banks, were non-discriminatory. They bore equally and alike upon property and operations in which the government was interested and those which were alien to it, but they were voided as illegally burdening the operations of the United States. The fact that taxes upon government property and upon property of wholly owned government corporations were non-discriminatory did not suffice to save them. Taxes on franchises granted by the federal government, taxes upon the office or salary of a federal official, though non-discriminatory, nevertheless fell under the ban. It was said in Johnson v. Maryland, 254 U. S. 51, 55:
“Here the question is whether the State can interrupt the acts of the general government itself. With regard to taxation, no matter how reasonable, or how universal and undiscriminating, the State’s inability to interfere has been regarded as established since McCulloch v. Maryland, 4 Wheat. 316.”
The element of discrimination becomes important only in a case where a tax which would otherwise be per*180missible is aimed at the taxpayer because of his relation to the government. Of course a state cannot lay a heavier burden upon those contracting with the government simply because they are such contractors. A discrimination of that nature on its face spells a hostile purpose, an intent to hinder and burden the government, to impede its operations, and to discourage dealing with it. But the question of discrimination has no place in the consideration of the legality of an exaction laid directly upon the government, upon its operations, or upon the means or instrumentalities it has chosen for executing its powers.
As we have seen, the Solicitor General suggests that the tax should be sustained, although it lays a burden on the United States, because the burden is a “normal tax burden” and the United States can bear it. The opinion of the court suggests the same thought and adds that if West Virginia ever imposes a gross receipts tax uniform in its incidence, but inordinately heavy, Congress has power to relieve the government from such interference. Both suggestions are in the teeth of all that has been said by the court on the subject of federal immunity. The necessity for enforcement of the doctrine was embodied in the phrase of Chief Justice Marshall in M’Culloch v. Maryland, supra, that “the power to tax involves the power to destroy.” As was said in Knowlton v. Moore, 178 U. S. 41, 60:
“This principle is pertinent only when there is no power to tax a particular subject, and has no relation to a case where such right exists. In other words, the power to destroy which may be the consequence of taxation is a reason why the right to tax should be confined to subjects which may be lawfully embraced therein, even although it happens that in some particular instance no great harm may be caused by the exercise of the taxing authority as to a subject which is beyond its scope.”
*181Chief Justice Marshall denied the existence of the power. From that day to this the court has consistently held that the question is not one of quantum, not one of the weight of the burden, but one of power. The court has said that the attempt to tax the means employed by the Government is “the usurpation of a power which the people of a single State cannot give.” Referring to the decision in M’Culloch v. Maryland, it was said:
“The decision in that case was not put upon any consideration of degree but upon the entire absence of power on the part of the States to touch, in that way at least, the instrumentalities of the United States; 4 Wheat. 429, 430; and that is the law today.”40
Again the court has said:
“It is obvious, that the same power which imposes a light duty, can impose a very heavy one, one which amounts to a prohibition. Questions of power do not depend on the degree to which it may be exercised. If it may be exercised at all, it must be exercised at the will of those in whose hands it is placed. If the tax may be levied in this form by a State, it may be levied to an extent which will defeat the revenue by impost, so far as it is drawn from importations into the particular State.”41
Again it was recently said:
“Where the principle applies it is not affected by the amount of the particular tax or the extent of the resulting interference, but is absolute. McCulloch v. Maryland, 4 Wheat. 316, 430; United States v. Baltimore & Ohio R. Co., 17 Wall. 322, 327; Johnson v. Maryland, 254 U. S. 51, 55-56; Gillespie v. Oklahoma, 257 U. S. 501, 505; Crandall v. Nevada, 6 Wall. 35, 44-46.” 42
No one denies the competence of the Congress to waive the immunity in whole or in part.43 But this is the *182reverse of saying the power to tax federal means and operations exists in the states subject to veto by Congress of any exorbitant exercise of the power. And it may be pertinent to suggest that, if, as the court has always held, the immunity is reciprocal, the state legislatures, by a parity of reasoning, ought to have the power to prohibit federal taxes upon state operations, if they be deemed immoderate.
It must be evident that if the principle of federal immunity is to be preserved, if all that the court has said respecting it is not to be set aside, the gross receipts tax under review cannot be rescued from condemnation by the circumstances that it bears upon an independent contractor, does not discriminate, and is not so burdensome as seriously to interfere with governmental functions.
Such a tax upon gross receipts has been contrasted in all the decisions, including those dealing with burdens upon commerce, with a tax upon net income; the one being held a forbidden burden and the other a permissible exaction. Despite the fact that the court has repeatedly applied the same tests of validity to taxes alleged to burden interstate commerce as it has to exactions said to burden the operations of the federal government,44 it is said in the opinion:
“Respondent invokes our decisions in the field of interstate commerce, where a tax upon the gross income of the *183taxpayer derived from interstate commerce has long been held to be an unconstitutional burden. . . .
“But the difference is plain. Persons have a constitutional right to engage in interstate commerce free from burdens imposed by a state tax upon the business which constitutes such commerce or the privilege of engaging in it or the receipts as such derived from it.”
As has been pointed out, the doctrine of federal immunity from state taxation is based upon the right of the federal government to carry on its lawful operations free from burden or impediment imposed by a state upon the business which constitute such operations or the privilege of engaging in them. The Constitution contains no clause forbidding the states to burden, impede, or interfere with the operations of the federal government. In express terms it confers upon that government power to conduct those operations. Nor does the Constitution contain any clause prohibiting the states from burdening or interfering with the conduct of interstate commerce. In express terms it confers upon Congress the power to regulate that commerce. In each case there is implied from the federal power delegated by the people an immunity from interference or burden by the states. The cases are entirely analogous. Comparing the immunity of interstate commerce from state taxation with the like immunity of the federal government, the court has said:
“The rule as to instrumentalities of the United States on the other hand is absolute in form and at least stricter in substance.” 45
The cases in our reports respecting the immunity of interstate' commerce from burden by state taxation are the complete analogue of those dealing with the federal immunity from the like burden. As in the case of a private corporation employed as an agency of the United *184States, so in the case of a private corporation engaged in interstate commerce, the states are free to lay a uniform and nondiscriminatory tax upon the property employed in the business within their jurisdiction.46
A tax upon the gross receipts of corporations derived both from intrastate and interstate commerce is bad because it burdens the latter.47 A franchise tax upon a corporation transacting an interstate business, measured by its interstate business or its property without the state, is void, on the same principle that a tax laid upon the franchise of a corporation which is a federal agency or instrumentality is void.48
A sales tax on gasoline sold within a state is invalid as it affects gasoline purchased outside the state for use therein, for the same reason a sales tax upon sales to the United States is invalid.49 A tax upon the gross receipts of one engaged in interstate commerce is bad be*185cause a direct burden on that commerce in the same sense that a tax on the gross receipts of business done with the United States is a direct burden on the transaction with the federal government.50 In contrast, a tax on the net income of one engaged in interstate commerce is not upon his transactions in that commerce, but so remote therefrom as not to burden it, just as a net income tax upon one who contracts with the federal government is inoffensive to the rule of federal immunity.51
A state may not lay an occupation tax upon the act of engaging in interstate commerce, for the same reason that it may not lay a similar tax upon the employment of an officer of the United States.52 The same considerations of remoteness sustain taxes upon the mere purchase of articles intended for use in interstate commerce or for the fulfilment of government contracts.53
I conclude, then, that the tax in question is plainly imposed upon the operations of the federal government; that it falls squarely within .the definition of such a burden and is prohibited upon the principle announced *186in M’Culloch v. Maryland and ever since consistently applied in the decisions of the court. I think that the judgment should be affirmed.
These views with respect to the nature of the tax render it unnecessary to express any opinion as to the asserted exclusive federal jurisdiction over the area within which the appellee pursued the activities which are the subject of the exaction.
MR. Justice McReynolds, Mr. Justice Sutherland and Mr. Justice Butler join in this opinion.

 Indian Motocycle Co. v. United States, 283 U. S. 570, 575; Board of Trustees v. United States, 289 U. S. 48, 59; Helvering v. Powers, 293 U. S. 214, 225.

 M’Culloch v. Maryland, 4 Wheat. 316, 430; Weston v. Charleston, 2 Pet. 449, 467.

 Clallam County v. United States, 263 U. S. 341, 344.

 McGoon v. Scales, 9 Wall. 23, 27; Tucker v. Ferguson, 22 Wall. 527, 572; Van Brocklin v. Tennessee, 117 U. S. 151; Wisconsin Central R. Co. v. Price County, 133 U. S. 496, 504; Irwin v. Wright, 258 U. S. 219, 228. But property acquired from the Government, upon its severance, loses the immunity in the hands of the transferee. Forbes v. Gracey, 94 U. S. 762; Group No. 1 Oil Corp. v. Bass, 283 U. S. 279; Indian Territory Oil Co. v. Board, 288 U. S. 325.

 Dobbins v. Commissioners, 16 Pet. 435; Collector v. Day, 11 Wall. 113. But the exemption does not extend to taxes laid upon his pri*163vately owned property or a sales tax on his personal purchases, even though they be of articles he uses in connection with his performance of his government work. Dyer v. City of Melrose, 215 U. S. 594; Tirrell v. Johnston, 293 U. S. 533; 86 N. H. 530.

 Clallam County v. United States, 263 U. S. 341; New Brunswick v. United States, 276 U. S. 547; New York ex rel. Rogers v. Graves, 299 U. S. 401. For the same reason a state tax which burdens the fiscal operations of a territory must fall: Farmers & Mechanics Savings Bank v. Minnesota, 232 U. S. 516.

 Interstate railroad: Railroad Company v. Peniston, 18 Wall. 5. National banks: M’Culloch v. Maryland, 4 Wheat. 316; Smith v. Kansas City Title & T. Co., 255 U. S. 180.

 Osborn v. Bank, 9 Wheat. 738; Railroad Company v. Peniston, 18 Wall. 5; Owensboro National Bank v. Owensboro, 173 U. S. 664.

 Railroad Company v. Peniston, 18 Wall. 5; Indian Territory Oil Co. v. Board, 288 U. S. 325, 327, 328.

 Thomson v. Pacific Railroad, 9 Wall. 579; Western Union Tel. Co. v. Massachusetts, 125 U. S. 530; Massachusetts v. Western Union Tel. Co., 141 U. S. 40; Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375; Fidelity & Deposit Co. v. Pennsylvania, 240 U. S. 319; Choctaw, O. & G. R. Co. v. Mackey, 256 U. S. 531; Susquehanna Power Co. v. Tax Commission, 283 U. S. 291; Broad River Power Co. v. Query, 288 U. S. 178; Federal Compress Co. v. McLean, 291 U. S. 17.

 Choctaw & Gulf R. Co. v. Harrison, 235 U. S. 292; Gillespie v. Oklahoma, 257 U. S. 501; Jaybird Mining Co. v. Weir, 271 U. S. 609.

 Indian Territory Oil Co. v. Board, 288 U. S. 325; Taber v. Indian Territory Oil Co., 300 U. S. 1.

 The Solicitor General's argument, noticed later, would, however, validate a tax of any description imposed upon federal instrumentalities, provided the exaction were non-discriminatory.

 Osborn v. Bank, 9 Wheat. 738, 867.

 Federal Land Bank v. Crosland, 261 U. S. 374.

 Telegraph Co. v. Texas, 105 U. S. 460.

 Leloup v. Port of Mobile, 127 U. S. 640; Williams v. Talladega, 226 U. S. 404.

 Weston v. Charleston, 2 Pet. 449, 465.

 Bank of Commerce v. New York City, 2 Black 620; Bank Tax Case, 2 Wall. 200; Bank v. Supervisors, 7 Wall. 26; Home Savings Bank v. Des Moines, 205 U. S. 503; Missouri v. Gehner, 281 U. S 313.

 Northwestern Ins. Co. v. Wisconsin, 275 U. S. 136; National Life Ins. Co. v. United States, 277 U. S. 508. And no form of words or subterfuge can save an act the intent of which is to reach the income from federal bonds. Miller v. Milwaukee, 272 U. S. 713; Macollen Co. v. Massachusetts, 279 U. S. 620, 629.

 The Banks v. The Mayor, 7 Wall. 16, 25.

 Home Ins. Co. v. New York, 119 U. S. 129; Home Ins. Co. v. New York, 134 U. S. 594.

 Plummer v. Coler, 178 U. S. 115; Greiner v. Lewellyn, 258 U. S. 384.

 Hibernia Savings Society v. San Francisco, 200 U. S. 310.

 Weston v. Charleston, 2 Pet. 449, 465.

 Jaybird Mining Co. v. Weir, 271 U. S. 609.

 Indian Motocycle Co. v. United States, 283 U. S. 570; Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218; Graysburg Oil Co. v. Texas, 278 U. S. 582; 3 S. W. (2d) 427. Compare Brown v. Maryland, 12 Wheat. 419, 440.

 Graves v. Texas Company, 298 U. S. 393.

 Trinityfarm Construction Co. v. Grosjean, 291 U. S. 466.

 General Construction Co. v. Fisher, 295 U. S. 715; 149 Ore. 84; 39 P. (2d) 358; Burnet v. A. T. Jergins Trust, 288 U. S. 508.

 Alward v. Johnson, 282 U. S. 509.

 Osborn v. Bank, 9 Wheat. 738, 867.

 In this brief the Solicitor General stated that figured upon the estimated purchases of the Government for the then current fiscal year, state sales taxes on gasoline of four cents per gallon, imposed by all the states, would impose an added burden upon the United States of $4,479,661.

 See the cases cited in note 10, supra.

 See note 5, supra.

 Cornell v. Coyne, 192 U. S. 418; Hope Natural Gas Co. v. Hall, 274 U. S. 284; Wheeler Lumber Co. v. United States, 281 U. S. 572. The same problem arises in connection with taxation alleged to burden interstate commerce. See American Manufacturing Co. v. St. Louis, 250 U. S. 459.

 See the cases cited in notes 17, 18 and 19.

 Jaybird Mining Co. v. Weir, 271 U. S. 609.

 Western Union Tel. Co. v. Texas, 105 U. S. 460; Williams v. Talladega, 226 U. S. 404; Indian Motocycle Co. v. United States, 283 U. S. 570; Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218; Graves v. Texas Company, 298 U. S. 393.

 Johnson v. Maryland, 254 U. S. 51, 55.

 Brown v. Maryland, 12 Wheat. 419, 439.

 Indian Motocycle Co. v. United States, 283 U. S. 570, 575.

 Van Allen v. Assessors, 3 Wall. 573.

 Telegraph Co. v. Texas, 105 U. S. 460, 465; Western Union Telegraph Co. v. Taggart, 163 U. S. 1, 14; Western Union Telegraph Co. v. Kansas, 216 U. S. 1, 32; U. S. Express Co. v. Minnesota, 223 U. S. 335, 344; Choctaw, O. & G. R. Co. v. Harrison, 235 U. S. 292, 299; Kansas City, F. S. & M. Ry. Co. v. Botkin, 240 U. S. 227, 232; Gillespie v. Oklahoma, 257 U. S. 501, 504-5; Northwestern Mutual Life Ins. Co. v. Wisconsin, 275 U. S. 136, 140; Macollen Co. v. Massachusetts, 279 U. S. 620, 627; Indian Motocycle Co. v. United States, 283 U. S. 570, 575; Eastern Air Transport v. South Carolina Tax Comm’n, 285 U. S. 147, 152; Fox Film Corp. v. Doyal, 286 U. S. 123, 126; Liggett & Myers Tobacco Co. v. United States, 299 U. S. 383, 387.

 Gillespie v. Oklahoma, 257 U. S. 501, 505.

 Pullman’s Palace Car Co. v. Pennsylvania, 141 U. S. 18; Western Union Tel. Co. v. Taggart, 163 U. S. 1; Old Dominion S. S. Co. v. Virginia, 198 U. S. 299; United States Express Co. v. Minnesota, 223 U. S. 335; Pullman Co. v. Richardson, 261 U. S. 330. And as in the case of agents of the federal government or contractors with it, a state may measure the value of the property within its borders by a receipts tax in lieu of all property taxes. Compare United States Express Co. v. Minnesota, 223 U. S. 335; Cudahy Packing Co. v. Minnesota, 246 U. S. 450; Pullman Co. v. Richardson, 261 U. S. 330, with Alward v. Johnson, 282 U. S. 509.

 Philadelphia & Southern S. S. Co. v. Pennsylvania, 122 U. S. 326; Galveston, H. & S. A. Ry. Co. v. Texas, 210 U. S. 217; Meyer v. Wells, Fargo & Co., 223 U. S. 298.

 Compare Western Union Tel. Co. v. Kansas, 216 U. S. 1, and Ozark Pipe Line Corp. v. Monier, 266 U. S. 555, with California v. Central Pacific R. Co., 127 U. S. 1; Owensboro National Bank v. Owensboro, 173 U. S. 664; Third National Bank v. Stone, 174 U. S. 432; and Louisville v. Third National Bank, 174 U. S. 435.

 Compare Cook v. Pennsylvania, 97 U. S. 566, and Bowman v. Continental Oil Co., 256 U. S. 642, with Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218.

 Compare Cook v. Pennsylvania, 97 U. S. 566, Fargo v. Michigan, 121 U. S. 230, Crew Levick Co. v. Pennsylvania, 245 U. S. 292, New Jersey Bell Tel. Co. v. State Board, 280 U. S. 338, Fisher’s Blend Station v. State Tax Comm’n, 297 U. S. 650, Puget Sound Co. v. Tax Comm’n, ante, p. 90, with Western Union Tel. Co. v. Texas, 105 U. S. 460.

 Compare Shaffer v. Carter, 252 U. S. 37, United States Glue Co. v. Oak Creek, 247 U. S. 321, and Atlantic Coast Line v. Daughton, 262 U. S. 413, with General Construction Co. v. Fisher, 295 U. S. 715 (149 Ore. 84; 39 P. (2d) 358), and Burnet v. A. T. Jergins Trust, 288 U. S. 508. But see Gillespie v. Oklahoma, 257 U. S. 501, and Burnet v. Coronado Oil & Gas Co., 285 U. S. 393.

 Compare East Ohio Gas Co. v. Tax Commission, 283 U. S. 465, with Dobbins v. Commissioners, 16 Pet. 435, and New York ex rel. Rogers v. Graves, 299 U. S. 401.

 Compare Eastern Air Transport v. South Carolina Tax Comm’n, 285 U. S. 147, with Trinityfarm Construction Co. v. Grosjean, 291 U. S, 466, and Tirrell v. Johnston, 293 U. S. 533.