City of Detroit v. Murray Corp., 355 U.S. 489 (1958)

City of Detroit v. Murray Corporation of America

No. 18

Argued November 13-14, 1957
Decided March 3, 1958 *
355 U.S. 489

APPEAL FROM THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

Michigan municipalities assessed a tax against a subcontractor under a prime contract between the United States and two other private corporations for the manufacture of airplanes and airplane parts. The tax was based in part on the value of materials and work in process actually in the possession of the subcontractor but legal title to which had paid to the United States under the terms of the subcontract upon the making of partial payments therefor.

Held: this tax does not infringe the Federal Government’s constitutional immunity from state taxation or discriminate against the Government, its property or those with whom it does business. United States v. City of Detroit, ante, p. 466; United States v. Township of Muskegon, ante, p. 484. Pp. 490-495.

(a) As applied, these taxes were not levied against the United States or its property, but were levied on a private party possessing government property which it was using or possessing in the course of its own business. Pp. 492-493.

(b) So far as constitutional tax immunity is concerned, there is no essential difference between taxing a private party for using property he possesses and taxing him for possessing property he uses when, in both instances, he uses the property for his own private ends. P. 493.

(c) The particular state taxing statutes involved here do not expressly state that the person in possession is taxed "for the privilege of using or possessing" personal property; but to strike down a tax on the possessor because of such verbal omission would only prove a victory for empty formalisms. P. 493.

(d) The Government eventually will feel the financial burden of at least some of this tax, but the imposition of an increased financial burden on the Government does not, by itself, invalidate a state tax. P. 494.

(e) United States v. Allegheny County, 322 U.S. 174, distinguished. Pp. 494-495.

(f) This tax involves no discrimination against the Federal Government, its property or those with whom it does business, no crippling obstruction of any of its functions, no sinister effort to hamstring its power, and not even the slightest interference with its property. P. 495.

234 F.2d 380, reversed and remanded.