TAXATION-IMMUNITY OF FEDERAL BONDS TO STATE TAXATION

Authors

Lenamyra Saulson, University of Michigan Law SchoolFollow

Abstract

A New Jersey statute imposed a tax on domestic stock insurance corporations on the value of intangible property exclusive of tax-exempt property but required an assessment against all intangible property of not less than fifteen per cent of capital and surplus in excess of liabilities. In conformity with this statute, a tax was imposed on the appellant, a domestic stock insurance corporation, of fifteen per cent of the entire net worth, without deduction of the principal amount of tax-exempt United States bonds and accrued interest thereon. The appellant appealed to the United States Supreme Court on the ground that the tax statute was invalid as in conflict with Article I, section 8 of the Federal Constitution, since it interfered with power of Congress to ''borrow on the credit of the United States." The appellant also asserted the tax was in conflict with a federal statute, which generally exempts interest-bearing obligations of the United States from state taxation. Held, reversed. The Supreme Court found the New Jersey statute invalid as in conflict with the federal statute exempting such securities from state or local taxation; nor could it be sustained as a tax on the corporate franchise. Justice Black dissented. New Jersey Realty Title Insurance Co. v. Division of Tax Appeals in Department of Taxation and Finance of New Jersey, 338 U.S. 665, 70 S.Ct. 413 (1950).

Recommended Citation

Lenamyra Saulson, TAXATION-IMMUNITY OF FEDERAL BONDS TO STATE TAXATION, 49 Mich. L. Rev. 771 (1951).
Available at: https://repository.law.umich.edu/mlr/vol49/iss5/16