UNITED STATES v. COUNTY OF FRESNO
Legal provision: Article 6, Section 2: Supremacy Clause
Argument of Howard E. Shapiro
Chief Justice Warren E. Burger: We will hear arguments next in 75-1262, United States against City of Fresno.
Mr. Shapiro I think you may precede when you are ready.
Mr. Howard E. Shapiro: Mr. Chief Justice, may it please the court.
These cases are here on direct appeal by the United States and individual Forest Service Employees, from two decisions of the California Court of Appeals for the Fifth district.
The sole question is whether a California Tax on possessory interests in improvements on tax-exempt land may constitutionally be applied to the occupancy of government owned housing by employees of the United States Forest Service.
The amounts involved in these tax assessments are relatively small.
The principal could be quite far reaching in view of the extensive amount of housing which is supplied by the United States to employees not only of the forest service but also of various branches of the Department of Interior and most importantly of the Military.
Unknown Speaker: Let me put this to the outset Mr. Shapiro.
Suppose California and perhaps it does, but I am not aware of it, had a provision in an State Income Tax Law or a regulation that provided that whenever an employed person receives housing as part of his or her work, the reasonable value of that housing would be added to the net taxable income of the person portion of California income tax purposes.
Would that be a different situation constitutionally from what we have here.
Mr. Howard E. Shapiro: Yes, it would Your Honor.
In these cases the housing is not supplied free of charge.
The employee occupies the housing although as a tenant at will.
He pays compensation for it which is deducted from his salary.
Now he does not pay in advance for the housing, he pays for the housing he has occupied each two week period.
So this is not in any sense compensation to the employee.
Unknown Speaker: Mr. Shapiro could Congress declare this interest immune from taxation, could Congress do it, what do you think?
Mr. Howard E. Shapiro: We believe that Congress could.
It has not done so, because of the tax as we view it falls directly on in an incident of the employment of a federal employee, and hence a tax on the federal function itself.
The constitution therefore bars the imposition of the tax under the doctrine of M'Culloch v. Maryland.
Unknown Speaker: Do you think the constitution bars it to the extent that Congress could not permit California to tax it?
Mr. Howard E. Shapiro: I believe Congress can wave the immunity of M'Culloch v. Maryland, and I think it has, in some instances done so.
For example, with respect to national banks, there is some limited taxation of national banks.
On the other hand, that statute which permits national bank taxation is quite limited as this court held in the first agricultural credit a few terms back.
Unknown Speaker: So it is not the same kind of prohibitions, as one would find in the First Amendment, for example.
Mr. Howard E. Shapiro: No, it is within the reach of Congress.
But, Congress has given us some indication that it does not intend generally to wave the immunity of instrumentalities of the United States.
In a somewhat analogous area, the Buck Act of 1942 subjects or rather provides that certain state sales and use taxes maybe imposed in exclusive federal enclaves.
And the exclusivity of those federal enclaves is not bar to the imposition of that kind of a tax.
However, the same statute in Section 107 says, “This statute does not consent to the imposition of state taxes on instrumentalities of the United States or the property of the United States”.
And it is really that which is our position here, that here we are dealing with a tax on a federal function.
Unknown Speaker: Who the tax is levied on?
Mr. Howard E. Shapiro: The tax your honor is levied on the possessory interest that Forest Service Employees have in government supplied housing for which they pay …
Unknown Speaker: On their employees?
Mr. Howard E. Shapiro: On the Government employees.
Unknown Speaker: And it is only for the part of the property that they use as personal property.
Mr. Howard E. Shapiro: That is the claim.
Yes, Your Honor.
Unknown Speaker: But isn’t it true?
Mr. Howard E. Shapiro: No, that is what this states have contended.
Now our answer to that, now that is what the counties have contended, our answer to that is the possessory interest of the employee on the residential side cannot be in fact separated from the governmental use of this property and this is reflected we think in the findings of the trial court which reviewed the assessments involved.
The two trial courts here in Fresno County and in Tuolumne County, found that because of the inter-relationship between the residential and governmental aspects of the employees use and occupancy of this property, they had no possessory interest within the meaning of California law.
Now the fact that the Court Of Appeals in this case, reversed that as a matter of California law but of course we are dealing with the impact on a federal interest of the state tax.
And so the question of what that impact is, is not determined by the State Court’s decision.
This is a question of federal law that has to be resolved.
Unknown Speaker: But we certainly take historical fact resolutions from the highest Court of the State, don't we, even in that situation?
Mr. Howard E. Shapiro: This is not really a very historical determination.
The real basis for the imposition of this tax was a California court decision in 1967, Caldwell & Klein against the camp (ph).
Unknown Speaker: I do not mean historical in the sense of time a memorial, but just determinations strictly of facts as opposed to law.
Mr. Howard E. Shapiro: Yes, well, the basic facts are not disputed here.
The conclusion from the facts which the Court Of Appeals drew is, namely, whether this possessory interest for purposes of determining impact of the tax on the federal function.
Unknown Speaker: What is the Government’s interest in this?
Mr. Howard E. Shapiro: The Government’s interest here is preventing the imposition of a tax on an incident of federal employment.
Unknown Speaker: On its employees.
Mr. Howard E. Shapiro: Well, when I say..
Unknown Speaker: The Government does not pay a nickel of this, right?
Mr. Howard E. Shapiro: No Your Honor, but that has not been the test in this court’s decision.
If in fact ..
Unknown Speaker: How are you going to know whether they would change the rules?
Mr. Howard E. Shapiro: No, I think we are staying within them, Your Honor.
Unknown Speaker: I do not understand that if a house with four rooms and one of them is used as an office and the other three were used as a living room, a bathroom and a bedroom.
Why they could not tax the three rooms and not tax the fourth room?
Mr. Howard E. Shapiro: Well, the County of Fresno purported to do that.
Now they purported in making their valuation here to exclude from the valuation, from the assessment, the office functions, if I may use that term, and the public areas surrounding the house.
The County of Tuolumne did not make that kind of distinction.
They did not exclude the office and public areas.
They simply limited the assessment on the basis of the term of occupancy.
But, I was about to tell Your Honor that the fact that the United States does not pay this tax out of its pocket is not the test -- this Court’s decision have clearly indicated that if …
Unknown Speaker: I did put that in my last question, my question was if the three rooms were used solely for personal reasons why that could not be taxed as personal reasons?
Mr. Howard E. Shapiro: Well, as I shall demonstrate when I go in to the facts Your Honor.
Unknown Speaker: That is what I am waiting for?
Mr. Howard E. Shapiro: The occupancy of the house is really not conveniently divisible into office and
Unknown Speaker: Because it is a 24 hour call?
Mr. Howard E. Shapiro: It is partly a 24 hour call, it is partly…
Unknown Speaker: Well, aren’t you not on 24 hour call?
Mr. Howard E. Shapiro: I do not live in government housing, your Honor.
Unknown Speaker: Yes, but aren’t you not on 24 hour call?
And you still pay taxes on your home don't you?
And you do not complain, do you?
Mr. Howard E. Shapiro: Not in this Court, Your Honor.
I think, I can illuminate my argument a little better by going into what facts the two trial courts found, and these basic facts have not been challenged.
The courts really found that the employees do not occupy the housing as private citizens or use it for their own profit.
They occupied as employees of the United States, and their right to occupy this housing is to serve the needs of the Forest Service.
The Trial Courts found that they did not have..
Unknown Speaker: Do they have a choice whether or not to live in the house?
Mr. Howard E. Shapiro: Some employees do and some do not.
Certain employees who are required to look after special equipment, who are on fire control duty or who serve the public during certain seasons must live in the government supplied house.
Unknown Speaker: Is there a distinction between those employees and those who could have a choice to live elsewhere?
Mr. Howard E. Shapiro: No, but there is a reason, there is a permissive category, however, the Forest Service requires that all of its housing be occupied in order to have people on the forest grounds, so that it will assign employees to that housing.
Now employees of certain categories can refuse, but someone is going to be assigned to occupy that housing.
Unknown Speaker: All of the employees pay something for the house.
Mr. Howard E. Shapiro: All pay, all are required.
Unknown Speaker: Even those who are sent there have no choice or option to refuse.
Mr. Howard E. Shapiro: That is correct.
They all pay for the right to use the house.
Unknown Speaker: Let me understand this.
They would at least ask to the Forest Service people, every occupant whether he was one who had the choice to live somewhere else or not, every occupant in effect is required to live in one of those.
Mr. Howard E. Shapiro: In effect, he is required to live in and that brings us to the burdens of occupancy, which are common to all of the employees who live in the houses, whether the houses are required occupancy in the technical sense or permissive occupancy, in a sense they are all required to live in them.
Unknown Speaker: Mr. Shapiro, may I ask you a question about the computation of the tax.
As I understand it, the rental actually paid maybe less than the real rental value of the premises.
Mr. Howard E. Shapiro: Well, the formula for determining the rental actually paid is supposed to be on a comparable basis, comparable to the nearest established community.
Then this is reduced by two factors.
Unknown Speaker: Excuse me.
I do not need that.
I am not so much interested in how you compute the rentals, or how you compute the tax.
As I understand it, the tax is computed by capitalizing the economic rental value of the premises basically, is that right?
Mr. Howard E. Shapiro: That is how the…
Unknown Speaker: And if that is correct, am I also correct in believing that the tax would have been the same whether the rent was less, the same as or greater than the fair market value.
Mr. Howard E. Shapiro: That is correct, your Honor.
I should point out that the County of Fresno made an express effort to reduce the tax for this office function, the County of Tuolumne did not.
Going in to the nature of this occupancy, the first point is that the employees have no fixed right of occupancy or any lease or term of possession.
Their possession can be terminated temporarily or permanently at any time the needs of the service require this --their right of privacy is sharply diminished.
Forest Service personnel and Forest service business can enter the houses at any time, in fact it is common key system.
The District Ranger, for example, can walk into a house to inspect it.
The District Fire Control Officer can walk in to it, if it has a radio that is indented to be on 24 hour monitor service.
The result is that the employee has neither a full right of privacy, as someone in private housing would have, his housing is solely for government purposes, the occupant has no right to a fix term.
Unknown Speaker: From the City of Muskegon case, the person just had a permit rather than a lease didn’t they?
This court said it was still taxed.
Mr. Howard E. Shapiro: Yes, Muskegon, I think illustrates the distinction we are making here.
In Muskegon, someone had a right -- a private party had a right to use government property in the conduct of a commercial business.
And in the Muskegon case, the court expressly reserved the question of what would happen if you are dealing with a servant or an agent of the government.
Now, where the legal incident falls on a servant or agents of the government, the court has held that the tax is unconstitutional.
That is illustrated in the Kern-Limerick, Inc. v. Scurlock.
Unknown Speaker: You are not saying that is a general proposition are you.
So broadly and to sweep the state income tax, is it not.
Mr. Howard E. Shapiro: No, no
Unknown Speaker: Just in this context.
Mr. Howard E. Shapiro: In this context.
I say that the legal incidents falls on the federal function, I am talking about the -- I mean a federal function not on someone who is a federal employee.
For example, the courts long passed the taxability of..
Unknown Speaker: Mr. Shapiro, identify that federal function and indicate in what respect it is impelled or hindered by this tax.
Mr. Howard E. Shapiro: The federal function, your Honor, here is the federal function for which occupancy of the housing is made available.
The guardianship of the National Forest and the service to the public within the National Forest.
Unknown Speaker: Is what way is that handicapped or interfered with by the tax?
Mr. Howard E. Shapiro: Well, the tax can only have a relatively remote effect, in this case, on the carrying out of that function.
We have argued below that it affected employee morale that it could lead to resistance to assignments because of the imposition of the tax, since one would have to accept this less convenient housing.
Unknown Speaker: Do you have any evidence or finding (Inaudible) of the operation of that?
Mr. Howard E. Shapiro: No there is not, Your Honor.
In our major contention, there is not such evidence on that.
Our major contention does not turn on that.
Our real argument on that aspect of the case is that if the tax, the legal incidence of the tax, is in fact on the federal function, then the court does not inquire as to whether there is any additional burden or interference.
Unknown Speaker: The federal function is sleeping and eating?
Mr. Howard E. Shapiro: Part of it indeed, is Your Honor.
In order to keep this people on those premises for the period of time, it is necessary.
Unknown Speaker: And if they lived in a private home, they will pay all of these taxes.
Mr. Howard E. Shapiro: Yes, Your Honor.
And they would have the greater right of privacy which is attempted on the occupation of private (Inaudible).
Unknown Speaker: Mr. Shapiro, if they were not living on government owned land but were renting the equivalent apartment on private-owned land at exactly the same rent they would not pay the tax, wouldn’t they?
Mr. Howard E. Shapiro: If they were renting?
Unknown Speaker: Paying the same rent for the same facilities, but that property were located outside the forest preserve then the man would not pay any tax at all?
Mr. Howard E. Shapiro: The renter would not as this tax is drawn.
I think, there would of course be a property tax on the land owner.
Unknown Speaker: But not on the occupant?
Not on the tenant?
Mr. Howard E. Shapiro: On the rented property, that is correct.
Unknown Speaker: Your tenant pays the tax and no other tenant pays who does not live on federal properties?
Mr. Howard E. Shapiro: That is my understanding.
Now, we have not claimed here that there is discrimination.
Unknown Speaker: But the District Court did, didn’t it?
Mr. Howard E. Shapiro: The District Court found the discrimination.
We have found that the discrimination we claimed aroused from the discrimination between the treatment of State Foresters And Federal Foresters.
We found that that discrimination did not exist, so we withdrew our discrimination claim in this respect.
Our brief expressly withdrew it.
Unknown Speaker: Maybe I misunderstand the tax, but if I understand it correctly, if the forester lived off of government-owned property and had exactly the same premises, paid exactly the same rent, he would not pay this tax?
The theory being that the landlord pays it.
Here the landlord does not pay it because the landlord is United States Government?
Mr. Howard E. Shapiro: I believe that is how the tax is drawn.
Now before I …
Unknown Speaker: A federal employee with the same earnings pays the tax that a non-federal employee does not pay, if he lives elsewhere.
Mr. Howard E. Shapiro: Of course what we focused on in this case was the imposition of the tax as it is drawn, a tax on a possessory interest in tax exempt land.
That is the only kind of tax, we have been dealing with.
We did not compare it to a tax on occupancy of non-tax exempt land.
Unknown Speaker: Mr. Shapiro, you said that tax was on the employees, in the question that I asked you.
Mr. Howard E. Shapiro: Well, it is on the possessory interest of the employee and the housing he occupies.
Unknown Speaker: But it is on his interest in real estate.
In a possessory interest in a piece of real estate --
Mr. Howard E. Shapiro: Possessory interest on the improvement.
That is correct.
Unknown Speaker: Requirement (ph) for another piece of land.
Mr. Howard E. Shapiro: Well, the tax lies on the possessory interest of the employee’s occupation of the tax exempt land.
That is all we address are challenged to.
Unknown Speaker: Is any question raised here as to the computation of the amount of tax?
Mr. Howard E. Shapiro: No, the valuation is not an issue here, your Honor.
Unknown Speaker: And I take it you are not asking that any case for all of the Michigan trilogy be overruled.
Mr. Howard E. Shapiro: No your honor.
We distinguish the Michigan trilogy on the ground that in those cases we were dealing with the use by private parties in commercial businesses of government property, either that had been leased to them or given to them under a permit.
In this case, we are dealing with the imposition of a tax on a government employee for his possession and occupancy of government housing for a government purpose.
In short, we view that as a tax on a servant of the government for an incident of his employment.
We compare the case to Kern-Limerick, Inc. v. Scurlock, where a contractor using, acquiring government property was treated as an agent because those were the terms of his contract.
He was acting as an agent of the government.
The legal incidence of the tax fell on him and as a result, this court held in Kern-Limerick, Inc. v. Scurlock that the tax could not be sustained.
Even though the economic burden in that case of the tax was the same as an earlier case, Alabama v. King & Boozer in which a contractor was similarly using government property but was not an agent of the United States.
And that is why our central point here is that the employee’s occupation of the government owned housing here is factually inseparable from their duties as employees of the United States.
Unknown Speaker: Well we are (Inaudible) is that if they are servants of the United States and taxed by them, taxed by the United States.
Mr. Howard E. Shapiro: That is correct.
Unknown Speaker: Is that your central point?
Mr. Howard E. Shapiro: That is our central point.
Unknown Speaker: When is the tax imposed?
Mr. Howard E. Shapiro: This tax was first imposed in 1967.
Unknown Speaker: Was it imposed in advance?
Mr. Howard E. Shapiro: In advance of?
Unknown Speaker: Well, was it imposed at the end of the year or during the year?
Mr. Howard E. Shapiro: Well, this tax was imposed during the year.
I think it is an annual tax and it is intended to be imposed.
Unknown Speaker: So a person with a day-to-day occupancy pays the tax for the entire year?
Mr. Howard E. Shapiro: The tax is reduced by its actual occupancy, as my understanding, it is measured by its actual occupancy.
Unknown Speaker: That is why the tax is such a small amount for each person.
Mr. Howard E. Shapiro: Well, in computing it, in fact, our findings of fact here show that these houses tend to be occupied three to four years at a time, and this was taken into account in the valuation process by the Counties.
Unknown Speaker: So, if some person is transferred in the middle of the year, will two different people be tax by the use of this property?
Mr. Howard E. Shapiro: I assume that would be -- how it would be applied.
Now we have been litigating the tax since it was -- it’s a relatively new innovation, this is the first case under it.
It was imposed in 1967.
This is the 1967 tax we are litigating.
Unknown Speaker: Mr. Shapiro, surely, I perhaps misunderstood your answer to my Brother Brennan’s question, but a tax on servants of the United States is not a tax on the United States is it?
There are all sorts of taxes imposed upon government employees.
Mr. Howard E. Shapiro: Yes, I only meant servants of employees being taxed for an incident of their employment, not their compensation or not any other aspect of their lives, except so much of the taxes falls on their government functions, if as we contend here, the occupancy of the housing is inseparable from the government duties of the employees, and we think it is, then there is just no basis for trying to distinguish them constitutionally and therefore it is a tax on employees as an incident of their federal employment.
That can not be done.
If, for example, the county have not attempted to do this, imposed a possessory interest tax on government employees working in government offices saying, “Well, 5% of the time you are doing personal business on government time, we will tax you for that 5%.”
We would argue that that is just inextricable from their government functions and hence is a tax on the government employee for an incident of his government employment.
Unknown Speaker: You made a de minimis argument which is what California makes it here that does so little of the use of these buildings as public and governmental use, so much of it is residential use, they are entitled to tax you?
Mr. Howard E. Shapiro: Well, this goes to something that the Court Of Appeals attempted to do here.
The Court Of Appeals rejected the conclusion of the Trial Court because they said that while government business was sometimes conducted from the unit, the business was completely incidental to the main use of the property.
So it made the test of taxability turn on whether the government or the residential interest was dominant.
Now we submit that this is not a proper standard for determining the constitutionality of state taxation of federal interest, that it leads to a great deal of confusion because you have to try and measure which is dominant when the employee is in the house 24 hours.
Unknown Speaker: But he did live there, he had a kitchen and a bathroom and a bedroom and the other rooms that my Brother Marshall described.
There is his residence and that of his wife, because there was a preference given to married employees, isn’t that correct?
Mr. Howard E. Shapiro: Yes, there is a residential interest without doubt, and we do not deny that.
Our argument is that that residential interest exists solely for the purposes of the government.
He is in the house to serve a government purpose.
Unknown Speaker: He pays rent.
Mr. Howard E. Shapiro: He pays rent to use the house.
Unknown Speaker: It is not like putting that in a watchtower or something like that.
Mr. Howard E. Shapiro: No, the watchtower would be a workplace and the county does not purport to tax the workplaces.
But this also was a workplace, as the findings of the Trial Court, in fact the findings of the Court Of Appeals which agreed with that aspect of it, reflect
Unknown Speaker: I suppose your answer would be the same to this hypothetical.
The government sometimes increasingly, decreasingly so, allows employees who use automobiles to take the automobile home at night so that they can be on call.
And, if the State of California tried to tax that use from, let us say, 6 o'clock onward, you would say they were taxing a federal instrumentality?
Mr. Howard E. Shapiro: Yes, because I would assume that the availability of the automobile in the evening would have to be justified for government purpose.
So really the heart of our contention is that the residential and the governmental functions of occupancy of this housing are inextricably interrelated.
Unknown Speaker: Mr. Shapiro, you could lose this case without depriving Congress of power to prevent this tax, you wanted to.
Mr. Howard E. Shapiro: Congress, I think can always speak directly to the questions in M'Culloch either way.
They can wave the M'Culloch immunity or they could probably broaden their indications in the courts decision.
Unknown Speaker: If we decided against you, you think that Congress the next day could say, well, the states may no longer tax this possessory interest of the employees?
Mr. Howard E. Shapiro: Yes, they could, but to use this as a standard of constitutional adjudication would mean that the Congress would have to stay one step ahead of the state tax laws in every one of the jurisdictions.
Keeping an eye out to see what new federal interest is subject to tax?
Now, Congress instead has done the other way, as the Buck Act indicates, they have said, well, we will start with M'Culloch and Maryland which bars state taxation of federal instrumentalities and federal functions.
And then we will decide when we want to wave it, that has been the approach and that is what the Buck Act strongly reflects.
In fact, that was the basis of the courts decision in the Mississippi liquor case.
Unknown Speaker: Do you think this case would govern the taxation of military personnel living on government bases?
Mr. Howard E. Shapiro: We believe that it could, I hesitate to go into that because our record does not develop the facts.
Unknown Speaker: I see.
Mr. Howard E. Shapiro: But the reason we are here in large part is because of our concern that this kind of possessory interest tax will be extended to the military, which is the biggest body of government supplied housing.
Chief Justice Warren E. Burger: Mr. Shapiro, I think you may be covering up you five minute signal.
Mr. Howard E. Shapiro: I would like to reserve the remainder of that time.
Mr. Howard E. Shapiro: Mr. Waterman?
Argument of James B. Waterman
Mr. James B. Waterman: Mr. Chief Justice and may it please the court.
My name is James B. Waterman, deputy County Council for the County of Fresno, California, and one of the appellees in this matter.
I would like to take a few minutes to answer some of the questions that were asked at Mr. Shapiro, I guess, I am little more familiar with the taxing situation in California.
There was a question as to whether or not an employee who resided in a private home or who rented a private home outside of the forest would pay tax.
And the answer to that is you would pay tax but not directly.
Anytime a person who owns a private property and leases it, they try to recover, of course, all that cost.
The tax is assessed to the owner of the real property.
And as a part of that income, the tax that the lessor would pay, would be included in the rental amount and I think that is the answer to that.
Unknown Speaker: The problem is, gives a tax on that government property.
Mr. James B. Waterman: Yes sir, because the government property itself is exempted, there is no questions.
Unknown Speaker: You just want to attack the United States government property.
Mr. James B. Waterman: No sir.
Unknown Speaker: I thought you said yes.
Mr. James B. Waterman: No, if I said that I misstated it.
Unknown Speaker: Isn’t that what you are after?
Mr. James B. Waterman: No sir, we want to equalize the obligation of people.
Unknown Speaker: The federal government had paid taxes on this property, you would not bother to (Inaudible).
Mr. James B. Waterman: As a matter of fact, the federal government..
Unknown Speaker: Is that right?
Mr. James B. Waterman: Yes sir, the federal government in effect; this was not brought out but there was a finding that and there is a regulation that the federal government where they do not have governmental housing sufficient to staff their people in the National Forest, they do have the option to go outside and rent private housing at the prevailing rates, and thereby put their employee into that house.
The employee does not thereupon pay the same rate.
He pays the rate that is determined by the rental survey and all of the things that Mr. Shapiro mentioned concerning accessibility and amenities in this sort of thing.
Unknown Speaker: But Mr. Waterman, if they take your example of one just off the reservation, one on the reservation, they both pay a $100 a month rent.
So, you say the man who is living in the privately owned home in effect is paying tax because he reimburses the landlord for his tax.
Mr. James B. Waterman: Yes sir.
Unknown Speaker: Well, why isn’t the same true as to the man on the reservation?
Mr. James B. Waterman: Because that’s taxation for possessory interest in California.
Unknown Speaker: Because the Government has given some taxation.
Mr. James B. Waterman: That is correct.
Because the government does not pay the tax.
Unknown Speaker: But both tenants have exactly the same economic burden.
Mr. James B. Waterman: Right, and if this tax is upheld , he government employee will pay his fare share of tax whereby he does not now.
Unknown Speaker: So he will pay like a $105 and the man who lives in private property will pay $100?
Mr. James B. Waterman: That is correct, but it is build into the ..
Unknown Speaker: Simply because he lives on government property.
Mr. James B. Waterman: That is correct.
Now, I would like to address the M'Culloch v. Maryland argument in California possession of tax exempt property for your own personal beneficial use is a form of property and is so defined by the California statutes.
M'Culloch v. Maryland prohibited only a state tax against an operation or function or an activity of the federal government.
Chief Justice Warren E. Burger: We will resume there first thing in the morning like 10 o'clock.