The Power to Tax

Handing down one of the basic decisions of U.S. constitutional law, the Supreme Court ruled in McCulloch v. Maryland, back in 1819, that the Constitution exempts the Federal Government from state taxation. Setting forth his renowned dictum that "the power to tax involves the power to destroy," Chief Justice John Marshall declared that the states (and, by inference, local governments) "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."

Last week a five-man Supreme Court majority (Chief Justice Earl Warren, Justices Hugo Black, William O. Douglas, Tom Clark and William J. Brennan) handed down a decision that seemed to jostle McCulloch v. Maryland in the eyes of the four dissenting members (Felix Frankfurter, John Marshall Harlan, Harold Burton, Charles E. Whittaker). At issue: a property tax levied by the city of Detroit on the Murray Corp., a subcontractor manufacturing airplane parts for the U.S. Air Force. The city assessor counted as taxable property some $2,000,000 worth of parts, materials, etc., which were chargeable to the U.S. Government and were labeled as U.S. property. Ruled the court majority, in effect: the city was taxing not the federal property, but Murray's "possession" of it--a ruling that opened up for local taxation billions of dollars of federal property held or leased by defense plants. Dissented Justice Frankfurter: "I cannot believe that the Court is prepared frankly to jettison what has been part of our constitutional system for almost 150 years."

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