US SUPREME COURT DECISIONS

1. A State cannot lay a gross receipts tax on business carried on in another State. P. 302 U. S. 138.

2. A State has no power to tax in a place within the State over which the United States has acquired exclusive jurisdiction. P. 302 U. S. 140.

3. The title to beds of navigable streams within a State is vested in the State, subject to the right of the United States to use the land for the improvement of navigation. P. 302 U. S. 140.

Occupation of the river bed by the United States for the purpose of improving navigation does not divest the State of its title.

4. Locks and dams erected by the United States for the improvement of navigation are "needful buildings" within the meaning of the Const., Art. I, § 8, Cl. 17. P. 302 U. S. 141.

Clause 17 provides that Congress shall have power "to exercise exclusive legislation" over

"all places purchased by the consent of the legislature of the State in which the same shall be, for the erection of forts, magazines, arsenals, dock-yards, and other needful buildings."

"Exclusive legislation" is consistent only with exclusive jurisdiction. chanrobles.com-red

Page 302 U. S. 135

5. West Va.Code of 1931, Art. 1, Ch. 1, § 3, gives the consent of the State to acquisition by the United States of land within the State for locks, dams, needful buildings, works for improvement of the navigation of any water course, or for any other purpose for which the same may be required by the Government of the United States; authorizes gifts of land to the United States by municipalities for such described purposes; cedes to the United States "concurrent jurisdiction with this State in and over any land so acquired . . . for all purposes;" provides that the jurisdiction so ceded is to continue only during the ownership of the United States and is to cease if the United States fails for five consecutive years to use any such land for the purposes of the grant, and reserves to the State the right to execute process within the limits of the land acquired

"and such other jurisdiction and authority over the same as is not inconsistent with the jurisdiction ceded to the United States by virtue of such acquisition."

Held:

(1) The provision as to concurrent jurisdiction qualifies the provision giving consent, and applies to lands acquired by purchase or condemnation, as well as to lands given by municipalities. P. 302 U. S. 143.

(2) The provision reserving merely the right to execute process, repeated from an earlier statute, does not derogate from the broader reservation of jurisdiction in the statute as amended. P. 302 U. S. 145.

6. When a State gives the legislative consent as contemplated by the Const., Art. I, § 8, Cl. 17, to purchase of land by the United States for "needful buildings," as when, after prior purchase or condemnation by the United States, it cedes jurisdiction, it may reserve such a concurrent jurisdiction as will not operate to deprive the United States of the enjoyment of the property for the purposes for which it is acquired. P. 302 U. S. 146.

West Virginia, by a reservation qualifying her consent to their acquisition, retained her jurisdiction to tax over lands purchased or condemned by the United States for navigation improvements on a river.

7. An independent contractor engaged under his contract with the Government in the construction of locks and dams for the improvement of navigation is not an instrumentality of the Government. P. 302 U. S. 149.

8. As applied to such a contractor, a nondiscriminatory state tax on his gross receipts under the contract is not unconstitutional as a chanrobles.com-red

Page 302 U. S. 136

tax laid on the contract itself, or as otherwise directly burdening the Government. P. 302 U. S. 149.

9. Application of the principle that governmental instrumentalities of the United States are immune from taxation by the States, and vice-versa, requires close distinctions in order to maintain the essential freedom of government in performing its functions without unduly limiting the taxing power which is equally essential to both Nation and State under our dual system. P. 302 U. S. 150.

Decisions on immunity of government bonds and of government purchases of commodities held inapplicable in case of tax on earnings of independent contractor rendering services to the Government. Pp. 302 U. S. 150-153.

10. The question of the taxability of a contractor upon the fruits of his services to the Government is closely analogous to that of the taxability of his property used in performing the services. His earnings flow from his work; his property is employed in securing them. In both cases, the taxes increase the cost of the work, and diminish his profits. P. 302 U. S. 153.

11. The fact that the tax in this case was on gross, rather than net, receipts does not prove it an unconstitutional burden on the Government. P. 302 U. S. 157.

Distinguished from cases where taxes on gross receipts of individuals engaged in interstate commerce have been held invalid under the commerce clause.

12. Assuming (what is not necessarily so) that a state tax on contractor's gross receipts may increase cost of service to the Government, that fact would not invalidate the tax any more than it would a tax on the contractor's property equipment used in the performance of the contract. P. 302 U. S. 159.

13. Semble that Congress has power to prevent interference with the operations of the Government through state taxation laid on receipts of those who render it services under contracts. P. 302 U. S. 160.

16 F.Supp. 527 reversed.

Appeal from a final decree of the three-judge District Court enjoining the collection of a State tax. chanrobles.com-red

Page 302 U. S. 137