Print this Page
Case Basics
Docket No. 
South Carolina
Facts of the Case 

In 1982, Congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA). The statute removed the federal income tax exemption for interest earned on publicly offered long-term bonds issued by state and local governments unless they were issued in registered form. South Carolina declared that both bearer and registered bonds issued by states and municipalities had been free from taxation since Pollock v. Farmer's Loan and Trust Co (1895). The federal government claimed that the Act did not eliminate the state's power to issue bonds free from taxation; rather it regulated the types of bonds to be exempt.


Did the TEFRA violate the Tenth Amendment and intergovernmental tax immunity?

Decision: 7 votes for Baker, 1 vote(s) against
Legal provision: Internal Revenue Code

The Court found that its subsequent decisions overruled Pollock so that state bond interest is not immune from a nondiscriminatory federal tax. Therefore, the owners of state bonds have no constitutional authority to exempt taxes on the earned income. TEFRA imposes no direct tax on the states; it is only collected from bondholders. The Act is nondiscriminatory because the regulations are imposed on the federal government as well as the state governments.

Cite this Page
SOUTH CAROLINA v. BAKER. The Oyez Project at IIT Chicago-Kent College of Law. 25 August 2015. <>.
SOUTH CAROLINA v. BAKER, The Oyez Project at IIT Chicago-Kent College of Law, (last visited August 25, 2015).
"SOUTH CAROLINA v. BAKER," The Oyez Project at IIT Chicago-Kent College of Law, accessed August 25, 2015,