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Constitutional Law • State Taxation of Federal Gov
CONLAW#046
Legal Definition
A state may not directly tax federal instrumentalities without consent of Congress. However, nondiscriminatory taxes are permissible if they do not unreasonably burden the federal government.
Plain English Explanation
A state can't charge taxes directly on things the U.S. federal government owns or uses unless the U.S. government says it's okay. But, if a tax treats everyone the same and doesn't make it too hard for the U.S. government to do its job, then it's allowed.
Hypothetical
Hypo 1: New Hypoland introduces a new sales tax that applies to all goods sold within the state, including goods sold at a federal museum's gift shop. Result: This tax is permissible because it's nondiscriminatory, meaning it applies to all sales equally, and does not unreasonably burden the federal government.
Hypo 2: Hypofornia, has imposed a special income tax on all federal employees working within the state. Result: This tax would likely be seen as an unreasonable burden on the federal government and its employees, making it an improper tax without Congress's consent.
Hypo 3: Sam works at a federal park in New Hypoland, which recently passed a utility tax that increases rates on water and electricity for all consumers, including federal buildings. Result: Since the utility tax applies equally to all consumers and does not specifically target federal properties or operations, it is a permissible tax that does not unreasonably burden the federal government.
Hypo 2: Hypofornia, has imposed a special income tax on all federal employees working within the state. Result: This tax would likely be seen as an unreasonable burden on the federal government and its employees, making it an improper tax without Congress's consent.
Hypo 3: Sam works at a federal park in New Hypoland, which recently passed a utility tax that increases rates on water and electricity for all consumers, including federal buildings. Result: Since the utility tax applies equally to all consumers and does not specifically target federal properties or operations, it is a permissible tax that does not unreasonably burden the federal government.
