Farmers and Mechanics Sav. Bank of Minneapolis v. Minnesota

Citations

• 232 U.S. 516
• 34 S. Ct. 354
• 58 L. Ed. 706
• 1914 U.S. LEXIS 1383

Syllabus

<p>A question though novel itself may be solved by the application of principles long established.</p> <p>The entire independence of the General Government from any control by the respective States is fundamental; and States may not tax agencies of the Federal Government. M’Culloch v. Maryland, 4 Wheat. 316. ' ,</p> <p>Territories are instrumentalities established by Congress for the gov-eminent of the people within their respective borders, with authority to subdelegate the governmental power to the municipal corporations therein, and the latter are therefore instrumentalities of the Federal Government.</p> <p>A tax upon the exercise of the function of issuing bonds is a tax upon the operations of the municipal government; and to tax the bonds as property in the hands of the holder is in effect a tax upon the right of the municipality to issue them.'</p> <p>A tax to any extent on bonds issued by a government or subdivision thereof, however inconsiderable, is a burden on the operation of that government. If allowed at all it may be carried to an extent which shall entirely arrest such operations. M’Culloch v. Maryland, 4 Wheat. 316.</p> <p>A State may not tax bonds issued by a municipality of a Territory of ' the United States. And so held as to an attempt by the State of Minnesota to tax bonds issued by municipalities of the Indian Territory and the Territory of Oklahoma held by corporations in Minnesota.</p> <p>There is no provision of law that makes obligations of municipalities within the Indian Territory or the Territory of Oklahoma obligations of the Territory, nor were such obligations assumed by the State of Oklahoma on admission to Statehood.</p> <p>Exemption from taxation is. a material element in the obligation of a bond issued by a municipality, and it will not be presumed that Congress would enact legislation that would impair that obligation by eliminating the exemption without the clearest legislative language expressing it.</p> <p>Where bonds are exe