Constitutional principle that exempts federal and state government agencies, activities, and property from taxation by one another.
The U.S. Constitution does not expressly immunize the federal government from state taxation, nor the states from federal taxation. However, in McCulloch v. Maryland
After McCulloch, however, the Court inferred state tax
These increasingly expansive interpretations deprived federal and state governments of substantial revenues and moved the Court to narrow the scope of intergovernmental tax immunities in the late 1930’s. In James v. Dravo Construction Co.
Federal tax immunity exists only when the legal incidence of the tax falls directly on the federal government, its property, or one of its entities. The Court further limited the immunity of federal employees from state taxation in United States v. County of Fresno
Private businesses that use federal property are no longer immune from nondiscriminatory state taxes. In Detroit v. Murray Corp.
Although the immunity of the federal government and its entities has not been at issue since 1937, the Court limited state tax immunity to the performance of its basic governmental functions. In New York v. United States
Cox, Archibald. The Court and the Constitution. Boston: Houghton-Mifflin, 1987. Gunther, Gerald, and Kathleen Sullivan. Constitutional Law. 14th ed. Westberry, N.Y.: Foundation Press, 1997. McCloskey, Robert G. The American Supreme Court. 2d ed. Chicago: University of Chicago Press, 1994.
General welfare clause
Graves v. New York ex rel. O’Keefe
McCulloch v. Maryland
Pollock v. Farmers’ Loan and Trust Co.
Taxing and spending clause