OCTOBER TERM, 1998
Syllabus
JEFFERSON COUNTY, ALABAMA
v. ACKER, SENIOR JUDGE, UNITED
STATES DISTRICT COURT, NORTHERN DISTRICT OF
ALABAMA, ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
ELEVENTH CIRCUIT
No. 98-10. Argued March 29, 1999-Decided June 21,1999
Alabama has not authorized its counties to levy an income tax,
but it has authorized them to impose a "license or privilege tax"
upon persons who are not otherwise required to pay a license fee
under state law. Pursuant to this authorization, Jefferson County
enacted Ordinance No. 1120 (Ordinance), which imposes such an
occupational tax. The Ordinance declares it "unlawful ... to engage
in" a covered occupation without paying the tax; includes among
those subject to the tax, federal, state, and county officeholders;
measures the fee as a percentage of the taxpayer's "gross
receipts"; and defines "gross receipts" as,
inter alia,
"compensation." Respondents, two United States District Judges who
maintain their principal offices in Jefferson County, resist
payment of the tax on the ground that it violates the
intergovernmental tax immunity doctrine. The county instituted
collection suits in Alabama small claims court against the judges,
who removed the suits to the Federal District Court under the
federal officer removal statute, 28 U. S. C. § 1442. The federal
court denied the county's motions to remand and granted summary
judgment for respondents, holding the county tax unconstitutional
under the intergovernmental tax immunity doctrine to the extent
that it reached federal judges' compensation. The en banc Eleventh
Circuit affirmed. This Court granted certiorari and remanded for
further consideration of whether the Tax Injunction Act, § 1341,
deprived the District Court of jurisdiction to adjudicate the
matter. On remand, the Eleventh Circuit adhered to its prior en
banc decision.
Held:
1. The case was properly removed under the federal officer
removal statute. That provision permits a federal-court officer to
remove to federal district court any state-court civil action
commenced against the officer "for any act under color of office."
28 U. S. C. § 1442(a)(3). To qualify for removal, the officer must
both raise a colorable federal defense, see
Mesa v.
California, 489 U. S. 121, 139, and
establish that the
424
Syllabus
suit is
"for a[n] act under color of office," 28 U. S. C.
§ 1442(a)(3) (emphasis added). Here, the judges argued, and the
Eleventh Circuit held, that the county tax falls on the performance
of federal judicial duties in the county and risks interfering with
the Federal Judiciary's operation in violation of the
intergovernmental tax immunity doctrine. That argument, although
the Court ultimately rejects it, presents a colorable federal
defense. To establish that the suit is "for" an act under color of
office, the court officer must show a nexus, a "causal connection"
between the charged conduct and asserted official authority.
Willingham v.
Morgan, 395 U. S. 402, 409. The
judges' colorable federal defense rests on a statement in the
Ordinance declaring it "unlawful" for them to "engage in [their]
occupation" without paying the tax. Correspondingly, the judges see
the county's enforcement actions as suits "for" their having
"engage[d] in [their] occupation." The Court credits the judges'
theory of the case for purposes of the jurisdictional inquiry and
concludes that they have made an adequate threshold showing that
the suit is "for a[n] act under color of office." Pp. 430-433.
2. The Tax Injunction Act does not bar federal-court
adjudication of this case. That Act prohibits federal district
courts from "enjoin[ing], suspend[ing] or restrain[ing]" the
imposition or collection of any state tax where a plain, speedy,
and efficient remedy may be had in the State's courts. 28 U. S. C.
§ 1341. By its terms, the Act bars anticipatory relief. Recognizing
that there is little practical difference between an injunction and
anticipatory relief in the form of a declaratory judgment, the
Court has held that declaratory relief falls within the Act's
compass.
California v.
Grace Brethren Church,
457 U. S. 393,
408. But a suit to collect a tax is surely not brought to restrain
state action, and therefore does not fit the Act's description of
suits barred from federal district court adjudication. The Act was
modeled on state and federal provisions prohibiting anticipatory
actions by taxpayers to stop the initiation of collection
proceedings. See,
e. g., 26 U. S. C. § 7421(a). These
provisions were not designed to prevent taxpayers from defending
government collection suits. Pp. 433-435.
3. Jefferson County's tax operates as a nondiscriminatory tax on
the judges' compensation, to which the Public Salary Tax Act of
1939,4 U. S. C. § 111, consents when it allows States to tax the
pay federal employees receive "if the taxation does not
discriminate against [that] employee because of the source of the
payor compensation." Pp. 435-443.
(a) The Eleventh Circuit's holding that the tax violates the
intergovernmental tax immunity doctrine as applied to federal
judges extends that doctrine beyond the tight limits this Court has
set. Until 1938, the doctrine was expansively applied to prohibit
Federal and State
425
Governments from taxing the salaries of another sovereign's
employees. See,
e. g., Dobbins v.
Commissioners of Erie
Cty., 16 Pet. 435, 450. In
Graves v.
New York ex rel.
O'Keefe, 306 U.
S. 466, 486-487, the Court expressly overruled prior decisions
and held that a State's taxation of federal employees' salaries
lays no unconstitutional burden upon the Federal Government. Since
Graves, the Court has reaffirmed a narrow approach to
governmental tax immunity,
United States v.
New
Mexico, 455 U. S.
720, 735, closely confining the doctrine to bar only those
taxes that are imposed directly on one sovereign by the other or
that discriminate against a sovereign or those with whom it deals,
Davis v.
Michigan Dept. of Treasury, 489 U. S. 803, 811. In
contracting the doctrine, the Court has recognized that the area is
one over which Congress is the principal superintendent. See
New
Mexico, 455 U. S., at 737-738. Indeed, congressional action
coincided with the
Graves turnaround: The Public Salary Tax
Act was enacted shortly after release of the Court's decision in
Graves. In
Howard v.
Commissioners of Sinking Fund
of Louisville, 344 U. S. 624, 625, n. 2,
629, the Court concluded that a "license fee" similar in relevant
respects to Jefferson County's was an "income tax" for purposes of
a federal statute authorizing state taxation of federal employees'
incomes, even though the fee was styled as a tax upon the privilege
of working in a municipality, was not an "income tax" under state
law, and deviated from textbook income tax characteristics.
Id., at 628-629. As
Howard indicates, whether
Jefferson County's license tax fits within the Public Salary Tax
Act's allowance of nondiscriminatory state taxation of federal
employees' pay is a question of federal law. The practical impact,
not the State's name tag, determines the answer to that question.
Pp. 436-439.
(b) The Court rejects the judges' contention that two features
of the Ordinance remove the tax from the Public Salary Tax Act
shelter and render it an unconstitutional licensing scheme. The
Court finds unpersuasive the judges' first argument that the
Ordinance, by declaring it "unlawful ... to engage in" a covered
occupation, falls under
Johnson v.
Maryland, 254 U. S. 51, 57, which
held that a State could not require a federal postal employee to
obtain a state driver's license before performing his federal
duties. The incautious "unlawful ... to engage in" words likely
were written with nonfederal employees, the vast majority of the
occupational taxpayers, in front view. The Ordinance's actual
operation is the decisive factor. See
Detroit v.
Murray
Corp. of America, 355 U. S. 489, 492. In
practice, the county's license tax serves a revenue-raising, not a
regulatory, purpose. The county neither issues licenses to
taxpayers, nor in any way regulates them in the performance of
their duties based on their status as license taxpayers. Cf.,
e.
g., Johnson, 254 U. S., at 57. In response to the judges'
426
Syllabus
refusal to pay the tax, the county simply instituted collection
suits. Alabama has not endeavored to make it unlawful to carry out
the duties of a federal office without local permission. Also
unavailing is the judges' argument that the Ordinance's exemption
for those holding another state or county license reveals its true
character as a licensing scheme, not an income tax. The dispositive
measure is the Public Salary Tax Act, which does not require the
state tax to be a typical "income tax," but consents to any tax on
"payor compensation," which Jefferson County's surely is. Cf.
Howard, 344 U. S., at 629. Pp. 439-442.
(c) The Public Salary Tax Act's sole caveat is that the tax must
"not discriminate ... because of the [federal] source of the payor
compensation." 4 U. S. C. § 111. In
Davis, the Court held
the nondiscrimination requirement violated by a state tax exempting
retirement benefits paid by the State but not those paid by the
Federal Government. See 489 U. S., at 817-818. Jefferson County's
tax, by contrast, does not discriminate against federal judges in
particular, or federal officeholders in general, based on the
federal
source of their payor compensation. The tax is paid
by all state judges in Jefferson County. This Court rejects
respondents' contention that, as federal judges can never fit
within the county's exemption for those who hold licenses under
other state or county laws, that exemption unlawfully disfavors
them. The record shows no discrimination between similarly situated
federal and state employees. Cf.
id., at 814. There is no
sound reason to deny Alabama counties the right to tax with an even
hand the compensation of federal, state, and local officeholders
whose services are rendered within the county. See
United
States v.
County of Fresno, 429 U. S. 452, 462. Pp.
442-443.
137 F.3d
1314, reversed and remanded.
GINSBURG, J., delivered the opinion of the Court, Parts I and
III of which were unanimous, Part II of which was joined by
STEVENS, O'CONNOR, KENNEDY, and BREYER, JJ., and Part IV of which
was joined by REHNQUIST, C. J., and STEVENS, SCALIA, KENNEDY,
SOUTER, and THOMAS, JJ. SCALIA, J., filed an opinion concurring in
part and dissenting in part, in which REHNQUIST, C. J., and SOUTER
and THOMAS, JJ., joined,
post, p. 444. BREYER, J., filed an
opinion concurring in part and dissenting in part, in which
O'CONNOR, J., joined,
post, p. 448.
Jeffrey M. Sewell argued the cause for petitioner. With
him on the briefs was
Edwin A. Strickland.
Kent L. Jones argued the cause for the United States as
amicus curiae in support of petitioner. With him on the
427
brief were Solicitor General Waxman, Assistant Attorney General
Argrett, Deputy Solicitor General Wallace, and David English
Carmack.
Alan B. Morrison argued the cause for respondents.
With him on the brief were Irwin W Stolz, Jr., Seaton D. Purdom,
and David C. Vladeck.
*
JUSTICE GINSBURG delivered the opinion of the Court.t Jefferson
County, Alabama, imposes an occupational tax on persons working
within the county who are not otherwise required to pay a license
fee under state law. The controversy before us stems from
proceedings the county commenced to collect the tax from two
federal judges who hold court in the county. Preliminarily, the
parties dispute whether, as the federal judges assert, the
collection proceedings may be removed to, and adjudicated in,
federal court. On the merits, the judges maintain that they are
shielded from payment of the tax by the intergovernmental tax
immunity doctrine, while the county urges that the doctrine does
not apply unless the tax discriminates against an officeholder
because of the source of his payor compensation.
We hold that the case was properly removed under the federal
officer removal statute, 28 U. S. C. § 1442(a)(3), and that the Tax
Injunction Act, § 1341, does not bar federalcourt adjudication. We
further conclude that Jefferson County's tax operates as a
nondiscriminatory tax on the judges' compensation, to which the
Public Salary Tax Act of 1939, 4 U. S. C. § 111, consents.
*Charles DuBose Cole filed a brief for Seven United
States District Judges of the Northern District of Alabama as
amici curiae urging affirmance.
tFor the reasons stated in the opinion of JUSTICE SCALIA, THE
CHIEF JUSTICE, JUSTICE SCALIA, JUSTICE SOUTER, and JUSTICE THOMAS
do not believe this case was properly removed from state court. The
Court having concluded otherwise, they join Parts I, III, and IV of
this opinion.
428
I A
Alabama counties, as entities created by the State, can impose
no tax absent state authorization. See
Estes v.
Gadsden, 266 Ala. 166, 170, 94 So. 2d 744, 747 (1957).
Alabama, the parties to this litigation agree, has not authorized
its counties to levy an income tax. See
Jefferson County v.
Acker, 850 F. Supp. 1536, 1537-1538, n. 2 (ND Ala. 1994);
M cPheeter v.
Auburn, 288 Ala. 286, 292, 259 So. 2d
833, 837
(1972); Estes, 266 Ala., at 171-172, 94 So. 2d, at
748-750.1 In 1967, Alabama authorized its counties to levy a
"license or privilege tax" upon persons who do not pay any other
license tax to either the State or county. 1967 Ala. Acts 406, § 3.
As stated in the authorization, a county may impose the tax "upon
any person for engaging in any business" for which a license or
privilege tax is not required by either the State of Alabama or the
county under the laws of the State of Alabama. § 4.
Pursuant to Alabama's authorization, Jefferson County, in 1987,
enacted Ordinance Number 1120, "establish[ing] a license or
privilege tax on persons engaged in any vocation, occupation,
calling or profession in [the] County who is not required by law to
pay any license or privilege tax to either the State of Alabama or
the County." Ordinance No. 1120, preamble (1987) (Ordinance or
Ordinance No. 1120). The Ordinance declares it "unlawful ... to
engage in" a covered occupation without paying the tax. § 2.
Included among those subject to the tax are "hold[ers] of any kind
of office or position either by election or appointment, by any
federal, state, county or city officer or employee where the
services
1 Most States, it appears, like Alabama, have not authorized
local imposition of an "income tax." See J. Aronson & J.
Hilley, Financing State and Local Governments 149 (4th ed. 1986)
("Eleven states have authorized their local governments to levy
wage or income taxes."); cf. 1 CCH State Tax Guide ~ 15-100, p.
3512 (1998) (listing cities in 11 States that impose personal
income taxes).
429
of such official or employee are rendered within Jefferson
County." §
l(C). The fee is measured by one-half percent of
the "gross receipts" of the person subject to the tax. § 2.
"[G]ross receipts" is defined as having "the same meaning" as
"compensation," and includes "all salaries, wages, commissions,
[and] bonuses." § l(F). Ordinance No. 1120 thus implements the
taxing authority accorded counties by the Alabama Legislature. The
State's permission left no room for a local tax on compensation of
a different name or order.
B
Respondents William M. Acker, Jr., and U. W. Clemon are United
States District Judges for the Northern District of Alabama. Both
maintain their principal office in Jefferson County, and both
resist payment of the county's "license or privilege tax" on the
ground that it violates the intergovernmental tax immunity
doctrine. The county instituted a collection suit in Alabama small
claims court against each of the judges, which each removed to the
Federal District Court under the federal officer removal statute,
28 U. S. C. § 1442 (1994 ed. and Supp. III). After denying the
county's motions to remand, the federal court consolidated the
cases, and eventually granted summary judgment for respondents; the
court held Jefferson County's tax unconstitutional under the
intergovernmental tax immunity doctrine to the extent that the tax
reached the compensation of federal judges. See
Jefferson
County, 850 F. Supp., at 1537, 1545-1546.2
2 The District Court also held that applying the tax to the
judges diminished their pay and therefore violated the Compensation
Clause of Article III of the Constitution. See
Jefferson
County v.
Acker, 850 F. Supp., at 1548; U. S. Const.,
Art. III, § 1 (federal judges "shall ... receive for their
Services, a Compensation, which shall not be diminished during
their Continuance in Office"). The Court of Appeals declined to
address that question, and it is not before this Court. See
Jefferson County v.
Acker, 92
F.3d 1561, 1566 (CAll 1996) (en bane).
430
A panel of the United States Court of Appeals for the Eleventh
Circuit initially reversed the District Court's judgment,
Jefferson County v.
Acker, 61
F.3d 848 (1995), but the Circuit, sitting en banc, affirmed the
District Court's disposition,
Jefferson County v.
Acker, 92 F.3d
1561, 1576 (1996). We granted Jefferson County's initial
petition for certiorari and remanded the case for further
consideration of the question whether the Tax Injunction Act, 28 U.
S. C. § 1341, deprived the District Court of jurisdiction to
adjudicate the matter.
Jefferson County v.
Acker, 520
U. S. 1261 (1997). On remand, the Eleventh Circuit adhered to its
prior en banc decision. See
137 F.3d
1314, 1324 (1998) (en banc). We again granted certiorari to
consider both the threshold Tax Injunction Act issue and the merits
of the case. 525 U. S. 1039-1040 (1998). We take up as well an
anterior question raised by the Solicitor General: Was removal from
state court to federal court unauthorized by the federal officer
removal statute?
II
The federal officer removal provision at issue states:
"(a) A civil action or criminal prosecution commenced in a State
court against any of the following may be removed by them to the
district court of the United States for the district and division
embracing the place wherein it is pending:
"(3) Any officer of the courts of the United States, for any act
under color of office or in the performance of his duties." 28 U.
S. C. § 1442 (1994 ed. and Supp. III).3
It is the general rule that an action may be removed from state
court to federal court only if a federal district court would have
original jurisdiction over the claim in suit. See 28 U. S. C. §
1441(a). To remove a case as one falling within
3 Other subsections of § 1442 establish similar removal rights
for other federal officers. See 28 U. S. C. §§ 1442(a), (b) (1994
ed. and Supp. III).
431
federal-question jurisdiction, the federal question ordinarily
must appear on the face of a properly pleaded complaint; an
anticipated or actual federal defense generally does not qualify a
case for removal. See
Louisville &
Nashville R.
Co. v.
Mottley, 211 U. S. 149, 152
(1908). Suits against federal officers are exceptional in this
regard. Under the federal officer removal statute, suits against
federal officers may be removed despite the nonfederal cast of the
complaint; the federal-question element is met if the defense
depends on federal law.
To qualify for removal, an officer of the federal courts must
both raise a colorable federal defense, see
Mesa v.
California, 489 U. S. 121, 139
(1989), and establish that the suit is
"for a[n] act under
color of office," 28 U. S. C. § 1442(a)(3) (emphasis added). To
satisfy the latter requirement, the officer must show a nexus, a
"'causal connection' between the charged conduct and asserted
official authority."
Willingham v.
Morgan, 395 U. S. 402, 409 (1969)
(quoting
Maryland
In construing the colorable federal defense requirement, we have
rejected a "narrow, grudging interpretation" of the statute,
recognizing that "one of the most important reasons for removal is
to have the validity of the defense of official immunity tried in a
federal court." 395 U. S., at 407. We therefore do not require the
officer virtually to "win his case before he can have it removed."
Ibid. Here, the judges argued, and the Eleventh Circuit
held, that Jefferson County's tax falls on "the performance of
federal judicial duties in Jefferson County" and "risk[s]
interfering with the operation of the federal judiciary" in
violation of the intergovernmental tax immunity doctrine; that
argument, although we ultimately reject it, see
infra, at
435-443, presents a colorable federal defense.
Jefferson
County, 92 F. 3d, at 1572. There is no dispute on this point.
See
post, at 448 (SCALIA, J., concurring in part and
dissenting in part).
432
We next consider whether the judges have shown that the county's
tax collection suits are
"for a[n] act under color of
office." 28 U. S. C. § 1442(a)(3) (emphasis added). The essence of
the judges' colorable defense is that Jefferson County's Ordinance
expressly declares it "unlawful" for them to "engage in [their]
occupation" without paying the tax, Ordinance No. 1120, § 2, and
thus subjects them to an impermissible licensing scheme. The judges
accordingly see Jefferson County's enforcement actions as suits
"for" their having "engage[d] in [their] occupation." The Solicitor
General, in contrast, argues that there is no causal connection
between the suits and the judges' official acts because "[t]he tax
... was imposed only upon [the judges] personally and not upon the
United States or upon any instrumentality of the United States."
Brief for United States as
Amicus Curiae 20. To choose
between those readings of the Ordinance is to decide the merits of
this case. Just as requiring a "clearly sustainable defense" rather
than a colorable defense would defeat the purpose of the removal
statute,
Willingham, 395 U. S., at 407, so would demanding
an airtight case on the merits in order to show the required causal
connection. Accordingly, we credit the judges' theory of the case
for purposes of both elements of our jurisdictional inquiry and
conclude that the judges have made an adequate threshold showing
that the suit is "for a[n] act under color of office." 28 U. S. C.
§ 1442(a)(3).
JUSTICE SCALIA maintains that the county's lawsuit was not
grandly "for" the judges' performance of their official duties, but
narrowly "for" their having refused to pay the tax. The judges'
resistance to payment of the tax, he states, was neither required
by the responsibilities of their offices nor undertaken in the
course of job performance. See
post, at 447. The county's
lawsuit, however, was not simply "for" a refusal; it was "for"
payment of a tax. The county asserted that the judges had failed to
comply with the Ordinance; read literally, as the judges urge and
as we accept
433
solely for purposes of this jurisdictional inquiry, that measure
required the judges to pay a license fee before "engag[ing] in
[their] occupation." Ordinance No. 1120, § 2. The circumstances
that gave rise to the tax liability, not just the taxpayers'
refusal to pay, "constitute the basis" for the tax collection
lawsuits at issue. See
Willingham, 395 U. S., at 409 (" It
is enough that [petitioners'] acts or [their] presence at the place
in performance of [their] official duty constitute the basis ... of
the state prosecution." (internal quotation marks omitted)). Here,
those circumstances encompass holding court in the county and
receiving income for that activity. In this light, we are satisfied
that the judges have shown the essential nexus between their
activity "under color of office" and the county's demand, in the
collection suits, for payment of the local tax.
III The Tax Injunction Act provides:
"The district courts shall not enjoin, suspend or restrain the
assessment, levy or collection of any tax under State law where a
plain, speedy and efficient remedy may be had in the courts of such
State." 28 U. S. C. § 1341.
This statutory text "is to be enforced according to its terms"
and should be interpreted to advance "its purpose" of "confin[ing]
federal-court intervention in state government."
Arkansas v.
Farm Credit Servs. of Central Ark., 520 U. S. 821,826-827
(1997). By its terms, the Act bars anticipatory relief, suits to
stop ("enjoin, suspend or restrain") the collection of taxes.
Recognizing that there is "little practical difference" between an
injunction and anticipatory relief in the form of a declaratory
judgment, the Court has held that declaratory relief falls within
the Act's compass.
California v.
Grace Brethren
Church, 457 U. S.
393, 408 (1982). But a suit to collect a tax is surely not
brought to restrain state
434
action, and therefore does not fit the Act's description of
suits barred from federal district court adjudication. See
Louisiana Land &
Exploration Co. v.
Pilot
Petroleum Corp., 900 F. 2d 816, 818
(CA5 1990) ("The Tax
Injunction Act does not bar federal court jurisdiction [of a] suit
... to collect a state tax.").
Nevertheless, in
Keleher v.
New England Telephone
& Telegraph Co.,
947 F.2d
547 (CA2 1991), the Court of Appeals concluded:
"[I]n removing the federal courts' power to 'enjoin, suspend or
restrain' state and local taxes, [Congress] necessarily intended
for federal courts to abstain from hearing tax enforcement actions
in which the validity of a state or local tax might reasonably be
raised as a defense." Id., at 551.4
We do not agree that the Act's purpose requires us to disregard
the text formulation Congress adopted.
Congress modeled the Tax Injunction Act, which passed in 1937,
upon previously enacted federal "statutes of similar import,"
measures that parallel state laws barring "actions in State courts
to enjoin the collection of State and county taxes." S. Rep. No.
1035, 75th Cong., 1st Sess., 1 (1937). The federal statute Congress
had in plain view was an 1867 measure depriving courts of
jurisdiction over suits brought "for the purpose of restraining the
assessment or collection" of any federal tax. Act of Mar. 2, 1867,
ch. 169, § 10, 14 Stat. 475, now codified at 26 U. S. C. § 7421(a)
(1994 ed., Supp. III). The 1867 provision, of course, does not bar
federal-court ad-
4 The Second Circuit further stated that "[e]ven if Congress did
not intend the Act's jurisdictional bar to reach so far, ... we
believe that general principles of federal court abstention would
nonetheless require us to stay our hand here." 947 F. 2d, at 551.
Keleher was a diversity action raising " 'difficult
questions of state law bearing on policy problems of substantial
public import.'''
Ibid. (quoting
Colorado River Water
Conservation Dist. v.
United States, 424 U. S. 800, 814
(1976)). See
infra, at 435, n. 5.
435
judication of suits initiated by the United States to collect
federal taxes; it precludes only suits brought by taxpayers to
restrain the United States from assessing or collecting such taxes.
Similarly, the state laws to which Congress referred surely do not
preclude the States from enforcing their taxes in court.
The Tax Injunction Act was thus shaped by state and federal
provisions barring anticipatory actions by taxpayers to stop the
tax collector from initiating collection proceedings. It was not
the design of these provisions to prohibit taxpayers from defending
suits brought by a government to obtain collection of a tax.
Congress, it appears, sought particularly to stop out-of-state
corporations from using diversity jurisdiction to gain injunctive
relief against a state tax in federal court, an advantage
unavailable to in-state taxpayers denied anticipatory relief under
state law. See S. Rep. No. 1035,
supra, at 2. In sum, we
hold that the Tax Injunction Act, as indicated by its terms and
purpose, does not bar collection suits, nor does it prevent
taxpayers from urging defenses in such suits that the tax for which
collection is sought is invalid.5
IV
The Eleventh Circuit held that Jefferson County's license tax,
as applied to federal judges, amounts to "a direct tax on the
federal government or its instrumentalities" in violation of the
intergovernmental tax immunity doctrine.
Jefferson
5 As noted in
Keleher v.
New England Telephone
&
Telegraph Co., 947 F. 2d 547, 551
(CA2 1991),
see
supra, at 434, n. 4, abstention and stay doctrines may
counsel federal courts to withhold adjudication, according priority
to state courts on questions concerning the meaning and proper
application of a state tax law. Cf.
Burford v.
Sun Oil
Co., 319 U. S.
315, 332-334 (1943);
Quackenbush v.
Allstate Ins.
Co., 517 U. S.
706,719-721 (1996) (in a case seeking damages, rather than
equitable relief, a federal court may not abstain, but can stay the
action pending resolution of the state-law issue). No one has
argued for the application of such doctrines here.
436
County, 92 F. 3d, at 1576. That ruling extends the
doctrine beyond the tight limits this Court has set and is
inconsistent with the controlling federal statute. The county's
Ordinance lays no "demands directly on the Federal Government,"
United States v.
New Mexico, 455 U. S. 720, 735
(1982); it is, and operates as, a tax on employees' compensation.
The Public Salary Tax Act allows a State and its taxing authorities
to tax the pay federal employees receive "if the taxation does not
discriminate against the [federal] employee because of the source
of the payor compensation." 4 U. S. C. § 111. We hold that
Jefferson County's tax falls within that allowance.
A
Until 1938, the intergovernmental tax immunity doctrine was
expansively applied to prohibit Federal and State Governments from
taxing the salaries of another sovereign's employees. See,
e. g., Dobbins v.
Commissioners of Erie
Cty., 16 Pet. 435, 450 (1842);
Collector v.
Day,
11 Wall. 113, 124 (1871). In
Graves v.
New York ex rel.
O'Keefe, 306 U.
S. 466, 486-487 (1939), the Court expressly overruled prior
decisions and held that a State's imposition of a tax on federal
employees' salaries "lays [no] unconstitutional burden upon [the
Federal Government]." 6 Although taxes "upon the incomes of
employees of a government, state or national, ... may be passed on
economically to that government," the Court reasoned, the federal
design tolerates such "indirect [and] incidental" burdens.
Id., at 487. Since
Graves, we
6 Graves carried out the doctrinal contraction presaged
in
Helvering v.
Gerhardt, 304 U. S. 405, 424
(1938), which held that the Federal Government could tax the
salaries of employees of the Port of New York Authority. See also
James v.
Dravo Contracting Co., 302 U. S. 134, 138, 149,
159-161 (1937) (in determining that a state "privilege ta[x]" on
federal contractors did not violate the intergovernmental tax
immunity doctrine, the Court rejected the theory that a tax on
income is a tax on its source (internal quotation marks
omitted)).
437
have reaffirmed "a narrow approach to governmental tax
immunity,"
New Mexico, 455 U. S., at 735; 7 we have closely
confined the doctrine to "ba[r] only those taxes that [are] imposed
directly on one sovereign by the other or that discriminat[e]
against a sovereign or those with whom it deal[s],"
Davis v.
Michigan Dept. of Treasury, 489 U. S. 803, 811
(1989). In contracting the once expansive intergovernmental tax
immunity doctrine, we have recognized that the area is one over
which Congress is the principal superintendent. See
New
Mexico, 455 U. S., at 737-738.
Indeed, congressional action coincided with the
Graves
turnaround. In the Public Salary Tax Act, under consideration
before
Graves was announced and enacted shortly thereafter,
see
Davis, 489 U. S., at 811-812, Congress consented to
nondiscriminatory state and local taxation of federal employees'
"payor compensation for personal service," 4 U. S. C. § 111.8
Section 111 effectively "codified the result in
Graves," and
thereby "foreclosed the possibility that subsequent judicial
reconsideration ... might reestablish the broader interpretation of
the immunity doctrine."
Davis, 489 U. S., at 812; see also
id., at 813 (the immunity for which § 111 provides is
"coextensive with the prohibition against discriminatory taxes
embodied in the modern constitutional doctrine of intergovernmental
tax immunity").
7
New Mexico held that New Mexico transgressed no
constitutional limit when it required federal contractors to pay
the State's gross receipts tax for the "privilege" of doing
business with the Federal Government in the State. 455 U. S., at
727, 744 (internal quotation marks omitted).
8 Section 111 provides:
"The United States consents to the taxation of payor
compensation for personal service as an officer or employee of the
United States, a territory or possession or political subdivision
thereof, the government of the District of Columbia, or an agency
or instrumentality of one or more of the foregoing, by a duly
constituted taxing authority having jurisdiction, if the taxation
does not discriminate against the officer or employee because of
the source of the payor compensation."
438
In
Howard v.
Commissioners of Sinking Fund of
Louisville, 344
U. S. 624 (1953), the Court held that a "license fee" similar
in relevant respects to Jefferson County's was an "income tax" for
purposes of a federal statute that defines "income tax" as "any tax
levied on, with respect to, or measured by, net income, gross
income, or gross receipts," 4 U. S. C. § llO(c). See 344 U. S., at
625, n. 2, 629.9 The Court so concluded even though the local tax
was styled as "a tax upon the privilege of working within [the
municipality]," was not an "income tax" under state law, and
deviated from textbook income tax characteristics.
Id., at
628-629; see also
id., at 629 (Douglas, J., dissenting)
("Many kinds of income are excluded,
e. g.,
dividends, interest, capital gains. The exclusions emphasize that
the tax is on the
privilege of working or doing business in
[the municipality].").l0
9 Howard construed the Buck Act, which authorizes state
and local governments to collect "income tax[es]" from individuals
who work in a "Federal area" "to the same extent ... as though such
area was not a Federal area." 4 U. S. C. § 106(a). The Buck Act
defines "Federal area" to mean "any lands or premises held or
acquired by or for the use of the United States." § 1l0(e). The
United States submits that "[t]his definition appears, by its
terms, to encompass premises used by the United States for the
purposes of operating a federal courthouse," but further notes that
the "origin and purpose of the Buck Act ... were ... limited ... to
ensur[ing] that federal officers and employees who reside or work
within exclusive federal enclaves would be treated equally with
those who reside and work outside such areas." Brief for United
States as
Amicus Curiae 28, n. 8 (citing S. Rep. No. 1625,
76th Cong., 3d Sess., 3 (1940)). As we conclude that the Public
Salary Tax Act consents to Jefferson County's tax, we need not
decide whether the Buck Act applies to this case.
10 JUSTICE BREYER both recapitulates the reasoning of Justice
Douglas' dissenting opinion in
Howard and endeavors to
distinguish the Court's decision in that case as involving "only
[a] jurisdictional issue."
Post, at 457 (opinion concurring
in part and dissenting in part). One of the two questions on which
the Court granted certiorari in
Howard, however, explicitly
asked the Court to determine "[t]he validity of the Louisville
occupational tax or license fee ordinance as applied to employees
of the [Naval] Ordnance Plant." 344 U. S., at 625. The Court
squarely held: "[T]he tax is valid."
Id., at 629.
439
As
Howard indicates, whether Jefferson County's license
tax fits within the Public Salary Tax Act's allowance is a question
of federal law. The practical impact, not the State's name tag,
determines the answer to that question. See also
Detroit v.
Murray Corp. of America, 355 U. S. 489, 492 (1958)
("[I]n determining whether thee] ta[x] violate[s] the Government's
constitutional immunity we must look through form and behind labels
to substance."); cf.
Ohio Oil Co. v.
Conway, 281 U. S. 146, 159 (1930)
(compatibly with the Fourteenth Amendment, a State "may impose
different specific taxes upon different trades and professions";
"[i]n levying such taxes, the State is not required to resort to
close distinctions or to maintain a precise, scientific uniformity
with reference to composition, use or value"). This much is beyond
genuine debate.
B
The judges acknowledge that Jefferson County's Ordinance is
valid if it "impose[s] a true tax on ... income," but argue that
the Ordinance ranks instead as an impermissible licensing scheme.
Brief for Respondents 13-14, 27-33. Two aspects of the Ordinance,
they say, remove the tax from the Public Salary Tax Act shelter for
"taxation of payor compensation for personal service," 4 U. S. C. §
111, and render the tax unconstitutional. First, the judges urge,
the very words of the Ordinance make it unlawful for them and
others to engage in their occupations without paying the license
fee. Second, they maintain, the complete exclusion of persons who
hold other Alabama licenses, however low the fee in comparison to
Jefferson County's tax, is inconsistent with a true tax on income,
but entirely consistent with a regulatory scheme requiring persons
to have one and only one occupational license in a State. We are
not persuaded.
Jefferson County's Ordinance declares it "unlawful ... to engage
in" a covered occupation (as pertinent here, to carry out the
duties of a federal judge) without paying the license fee.
Ordinance No. 1120, § 2. Based on the quoted words,
440
the respondent judges urge, as the Eleventh Circuit ruled, that
the Ordinance is invalid under
Johnson v.
Maryland,
254 U. S. 51, 57
(1920), which held that a State could not require a federal postal
employee to obtain a state driver's license before performing his
federal duties. See
Jefferson County, 92 F. 3d, at
1572-1573. In reading the Ordinance to impose a license requirement
resembling the driver's license at issue in
Johnson, the
judges stress the Ordinance's incautious "unlawful ... to engage
in" language. Those words, however, likely were written with
nonfederal employees, the vast majority of the occupational
taxpayers, in front view. As earlier observed, see
supra, at
439, the actual operation of the Ordinance, i.
e., its
practical impact, is critical. See
Murray Corp., 355 U. S.,
at 492.
In practice, Jefferson County's license tax serves a
revenue-raising, not a regulatory, purpose. Jefferson County
neither issues licenses to taxpayers, nor in any way regulates them
in the performance of their duties based on their status as
licensed taxpayers. Cf.
Johnson, 254 U. S., at 57 ("[The
state license requirement] lays hold of [Federal Government
employees] in their specific attempt to obey [federal] orders and
requires qualifications in addition to those that the [Federal]
Government has pronounced sufficient.");
Leslie Miller, Inc.
v.
Arkansas, 352 U. S. 187, 189, 190
(1956)
(per curiam) (holding that private contractors,
seeking to bid on federal contracts, cannot be required first to
submit to state licensing procedures that "determin[e]" a
contractor's "qualifications"; such state regulation is
inconsistent with the governing federal procurement statute and
regulations, which provide standards for judging the
"responsibility" of competitive bidders (internal quotation marks
omitted)). In response to the judges' refusal to pay the tax,
Jefferson County has done no more than institute a collection suit.
See
Jefferson County, 92 F. 3d, at 1565. Alabama, of course,
cannot make it unlawful to carry out the
441
duties of a federal office without local permission, and in fact
does not endeavor to do soY
We consider next the judges' argument that the wholesale
exemption for those who hold another state or county license
reveals the Ordinance's true character as a licensing scheme, not
an income tax. If the tax were genuinely an income tax, they urge,
those license holders would not be excluded, although they might be
allowed to claim their other license fees as credits or deductions
against the county tax. Alabama's enabling Act does not allow its
counties to so provide; those otherwise subject to license or
privilege taxes under
11 The shortcomings JUSTICE BREYER identifies in his first three
objections,
post, at 449-452, are of a sort this Court
routinely rejects as cause for federal curtailment of the taxing
power of state and local governments. See
Ohio Oil Co. v.
Conway, 281 U.
S. 146, 159 (1930). His fourth objection,
post, at
452-453, speaks of burdens Jefferson County imposes directly on the
Federal Government-obligations to withhold the tax, to make
complicated calculations, to keep detailed records. JUSTICE BREYER
overlooks that it is the actual operation of the Ordinance-what is
and not what might be-that counts in determining the merits of this
case. See
Detroit v.
Murray Corp. of America,
355 U. S. 489,
492 (1958).
As a matter of undisputed fact, the burdens JUSTICE BREYER
posits are hypothetical, not real. As the parties stipulated,
"[a]ll active judges of the Northern District of Alabama except
[respondents] have paid the County Occupational Tax on differing
percentages of their judicial salaries," but "neither the
Administrative Office of the United States Courts nor any Article
III judge in the Northern District of Alabama ... has ever made an
oath certifying the alleged amounts of a federal judge's salary
earned within and without Jefferson County," and "[t]he
Administrative Office ... has never withheld County Occupational
Tax from any federal judge or court employee."
Jefferson
County, 850 F. Supp., at 1549; see also 5 U. S. C. § 5520(a)
(authorizing the Secretary of the Treasury to enter into tax
withholding agreements with local taxing authorities). Should
Jefferson County someday exceed constitutional limits in its
enforcement endeavors, a federal court would no doubt conserve what
is constitutional, in line with the severability clauses contained
in the state law and county Ordinance. See 1967 Ala. Acts 406, § 8;
Jefferson County Ordinance No. 1120, § 13 (1987).
442
Alabama's laws may not be reached by a county's occupational
tax. See 1967 Ala. Acts 406, § 4.12 The dispositive measure,
however, is the Public Salary Tax Act, which does not require the
local tax to be a typical "income tax." Just as the statute in
Howard consented broadly to
"any tax measured by net
income, gross income, or gross receipts," 344 U. S., at 629, the
Public Salary Tax Act consents to any tax on "payor compensation,"
which Jefferson County's surely is. The sole caveat is that the tax
"not discriminate ... because of the [federal] source of the payor
compensation," 4 U. S. C. § 111, and we next consider that matter.
13
C
In
Davis, the Court held that a state tax exempting
retirement benefits paid by the State but not those paid by the
Federal Government violated the Public Salary Tax Act's
nondiscrimination requirement. See 489 U. S., at 817-818. Jefferson
County's tax, by contrast, does not discriminate
12JU8TICE BREYER observes that these exemptions are various,
numerous, and large. See
post, at 451-452, 458-464. In this
regard, we note the representation of counsel for Jefferson County
at oral argument that "92 percent of the people who earn wages in
[the] county pay [the] tax." Tr. of Oral Arg. 14. Counsel further
stated that federal employees are at least proportionately
represented among the eight percent exempt from the county's tax
because they pay license fees to the State of Alabama. These
figures are not in the record, counsel explained, "because this
issue was never raised until we got to this Court."
Ibid.;
see also
id., at 14-15 (counsel for Jefferson County
represented that of 12,000 federal employees in the county, 1,209
pay state license taxes and do not pay the county's occupational
tax).
13 The District Court ruled that the judges had failed to
establish that the county's tax discriminates against federal
officers or employees because of the source of their payor
compensation. See
Jefferson County, 850 F. Supp., at
1539-1540. On appeal there was no contention that this
determination was erroneous. See
Jefferson County, 92 F. 3d,
at 1566, n. 9. The judges nevertheless press the argument that the
tax is discriminatory as an alternative ground for affirmance. See
Brief for Respondents 34-37.
443
against federal judges in particular, or federal officeholders
in general, based on the federal
source of their payor
compensation. The tax is paid by all State District and Circuit
Court judges in Jefferson County and the three State Supreme Court
justices who have satellite offices in the county. See
Jefferson
County, 850 F. Supp., at 1549.
The judges urge that, as federal judges can never fit within the
county's exemption for those who hold licenses under other state or
county laws, that exemption unlawfully disfavors them. See Brief
for Respondents 14-15. The record shows no discrimination, however,
between similarly situated federal and state employees. Cf.
Davis, 489 U. S., at 814 ("It is undisputed that Michigan's
tax system discriminates in favor of retired state employees and
against retired federal employees."). Should Alabama or Jefferson
County authorities take to exempting state officials while leaving
federal officials (or a subcategory of them) subject to the tax,
that would indeed present a starkly different case. Here, however,
there is no sound reason to deny Alabama counties the right to tax
with an even hand the compensation of federal, state, and local
officeholders whose services are rendered within the county. See
United States v.
County of Fresno, 429 U. S. 452, 462 (1977)
(upholding requirement that employees of U. S. Forest Service pay
California property tax on homes located on federal land and
provided to employees as part of their compensation; Court observed
that state tax does not discriminate unconstitutionally against
federal employees if the tax is "imposed equally on ... similarly
situated constituents of the State").
***
For the reasons stated, the judgment of the Court of Appeals is
reversed, and the case is remanded for proceedings consistent with
this opinion.
It is so ordered.
444
Opinion of SCALIA, J.
JUSTICE SCALIA, with whom THE CHIEF JUSTICE, JusTICE SOUTER, and
JUSTICE THOMAS join, concurring in part and dissenting in part.
An officer of the federal courts may remove an action commenced
against him in state court
"for any act under color of
office or in the performance of his duties." 28 U. S. C. §
1442(a)(3) (emphasis added). In my view, respondents have failed to
show a "'causal connection' between the charged conduct and
asserted official authority,"
Willingham v.
Morgan,
395 U. S. 402,
409 (1969). I therefore dissent from Part II of the Court's
opinion.
Respondents read Ordinance No. 1120 as creating more than tax
liability; in their view, the ordinance makes it unlawful to work
if the tax goes unpaid. Building upon this reading, they assert
that the county has sued them for performing their duties without a
license, a complaint that would clearly establish the causal
connection required by 28 U. S. C. § 1442(a)(3). This theory,
however, is simply inconsistent with the complaints the county
filed. It may perhaps be possible under Alabama law for the county
to bring a misdemeanor prosecution against one who engages in a
business or profession without having paid the required license
fee; and the county may perhaps have a right to enjoin the conduct
of a business or the practice of a profession when the license fee
has not been paid. But no such action is before us here. Instead,
the county has sued each of these respondents for refusing to pay
the fee, as evidenced by the fact that the only relief it sought
was the money due. See Complaints in Nos. DV9209643 and DV9209695
(Jefferson County District Court). When identifying, for purposes
of § 1442(a)(3), what a suit is "for," it is necessary to focus,
not on grounds of liability that the plaintiff
could assert,
but on the ground
actually asserted. Regardless of whether
Ordinance No. 1120 also purports to proscribe working without a
license,
these suits were only about respondents' refusal to
pay the tax. That refusal is thus the act to which
445
we should look in determining whether these suits were brought
"for any act under color of office or in the performance of
[official] duties."
Refusing to pay a tax, even an unconstitutional one, is not an
action required by respondents' official duties, nor an action
taken in the
course of performing their official duties (as
was, for example, the alleged physical abuse of an inmate by prison
officials in
Willingham, supra). Judges Acker and Clemon may
well have been motivated by a desire to vindicate the interests of
the Federal Judiciary. But their refusal to turn over money from
their personal funds was not related to the responsibilities of
their judicial office.
The opinion for the Court does not dispute this. Instead, it
claims that holding the causation requirement unsatisfied would
merge the merits issue with the removal issue.
Ante, at 432.
Since, the Court appears to reason, this fee might be
unconstitutional if it is imposed upon the function of being a
federal judge (the merits question), holding that these suits were
not brought "for" their being federal judges would in effect decide
the merits. That is illogical. What the
fee is imposed
upon, and what the
suits are
for are two
different questions.1 If the cases were remanded to state court,
respondents would remain free to argue that the burden of this
exaction is upon the function of being a federal judge, rather than
upon income. To be sure, the facts would be more favorable for that
argument if the ordinance had been enforced by a different sort of
suit, which
would have qualified for removal-for example,
suits seeking to en-
1 Some confusion may have resulted from the fact that the
Government argued this issue in a way that did conflate the merits
with removal. See
ante, at 432. It said that there was no
causal connection because "[t]he tax ... was imposed only upon [the
judges] personally and not upon the United States or upon any
instrumentality of the United States." Brief for United States as
Amicus Curiae 20. As I explain above, however, proving who
the fee was imposed
upon does not answer the question of
what the suit is
for.
446
Opinion of SCALIA, J.
join respondents from performing their duties rather than suits
to collect the unpaid "license fee." But even in the present suits,
which do not qualify for removal, respondents could argue that this
is a charge prohibited by the intergovernmental tax immunity
doctrine. Deciding that the cases were improperly removed would
simply mean that that defense would have to be made in state court.
For although the removal statute creates an exception to the
wellpleaded-complaint doctrine, the exception is not for all
federal-question defenses asserted by federal officials, but rather
for all suits
"for any act under color of office or in the
performance of [official] duties."
It is enough for the Court that respondents have identified some
connection, albeit remote, with their federal offices. See
ibid. The majority says that all the circumstances giving
rise to these suits must be considered, and "those circumstances
encompass holding court in the county and receiving income for that
activity."
Ante, at 433. In other words,
but for the
judges' working-an act unquestionably within the scope of their
official duties-they would not have owed taxes under Ordinance No.
1120 and thus would not have been sued. "But for" causation,
however, is not enough.
In
Maryland v.
Soper (No.2), 270 U. S. 36 (1926), four
prohibition agents and their chauffeur were prosecuted in state
court for lying under oath to the state coroner, and they sought to
remove the case under a predecessor of the current federal-officer
removal statute.2 According to the
2 Section 33 of the Judicial Code provided:
"That when any civil suit or criminal prosecution is commenced
in any court of a State against any officer appointed under or
acting by authority of any revenue law of the United States ... or
against any person acting under or by authority of any such
officer, on account of any act done under color of his office ...
the said suit or prosecution may at any time before the trial or
final hearing thereof be removed for trial into the district court
next to be holden in the district where the same is pending .... "
39 Stat. 532, ch. 399.
447
agents, they were on their way to report to their superior about
a freshly discovered illegal still when they came upon a mortally
wounded man in the road. Had they not been
en route to their
superior, the agents argued, they would never have made the
discovery that required them to testify before the coroner. We
rejected the argument that this established a sufficient connection
between their official duty and the obstruction-of-justice
prosecution. Although reporting to their superior was certainly
among their official duties, the act of testifying before the
coroner was not, and it was
the latter act "on account of"
which (or in the terms of the current removal statute, "for" which)
they were prosecuted.
I d., at 42. So also here, it is not
enough that respondents' performance of their judicial duties was a
link in the chain of events that brought about these suits-that had
they not performed their official duties, the fee would not have
been assessed, and had the fee not been assessed they would not
have been sued for failure to pay it. Acker and Clemon were sued
for their refusal to pay the tax-and that, as I have said,
is not an act required by, or even performed in connection with,
cf.
Willingham v.
Morgan, 395 U. S. 402 (1969), the
duties of their judicial office.
None of this is to suggest, of course, that removal is justified
only when the federal officer can prove that the act prompting suit
is, beyond doubt, an official one. If that were the case, the
merits truly would be subsumed within the jurisdictional question
of removal; the defense of qualified immunity, for example, would
always be resolved as a threshold jurisdictional question-an odd
result when the main point of 28 U. S. C. § 1443 is to give
officers a federal forum in which to litigate the merits of
immunity defenses. See
Willingham v.
Morgan, supra,
at 407. The point is only that the officer should have to identify
as the gravamen of the suit an act that was, if not required by, at
least closely connected with, the performance of his official
functions. 28
448
Opinion of BREYER, J.
u. S. C. § 1443;
Maryland v.
Soper (No.1),
270 U. S. 9, 33
(1926);
Willingham v.
Morgan, supra, at 407-409. What
should defeat respondents here is that even though their federal
defense is colorable, their claim to have acted in official
capacity in not paying the fee is not.
***
For the foregoing reasons, I would hold that this case was
improperly removed. In view, however, of the decision of a majority
of the Court to reach the merits, I join Parts I, III, and IV of
the Court's opinion. Cf.
Edgar v.
MITE Corp.,
457 U. S. 624,
646 (1982) (Powell, J., concurring in part);
United States
v.
Jorn, 400
U. S. 470, 488 (1971) (Black, J., concurring in judgment).
JUSTICE BREYER, with whom JUSTICE O'CONNOR joins, concurring in
part and dissenting in part.
I agree that we have jurisdiction to hear the merits of this
case, and I join Parts I, II, and III of the Court's opinion. I do
not agree with the majority, however, about the constitutionality
of the tax.
If Jefferson County's license fee amounts to a tax imposed
directly upon a federal official's performance of his official
duties, it runs afoul of the intergovernmental tax immunity
doctrine. See
United States v.
New Mexico, 455 U. S.
720, 733 (1982) ("[A] State may not, consistent with the Supremacy
Clause, U. S. Const., Art. VI, cl. 2, lay a tax 'directly upon the
United States'" (citation omitted));
James v.
Dravo
Contracting Co., 302 U. S. 134, 157
(1937);
e. g., Leslie Miller, Inc. v.
Arkansas,
352 U. S. 187,
190 (1956)
(per curiam) (" '[I]mmunity''' of federal"
'instruments'" from state control in performance of duties extends
to state requirement that "'they desist from performance'" until
they take an examination to satisfy the State "'that they are
competent'"
and "'pay a fee for permission to go on''')
(quoting
Johnson v.
Maryland, 254 U. S. 51, 57 (1920)).
On the other
449
hand, if Jefferson County's license fee amounts to an income
tax, there is no constitutional problem. See
Graves v.
New York ex rel. O'Keefe, 306 U. S. 466, 486
(1939); Public Salary Tax Act of 1939, 4 U. S. C. § 111. The
question here is whether Jefferson County's license fee is a fee
for the performance of official federal duties or, rather, whether
it is an income tax on federal employees. In my view, it is the
former.
I
I concede that Jefferson County measures the amount of its tax
by taking a small percentage of the "gross receipts" or income
derived from the licensed activity. Jefferson County Ordinance No.
1120, § l(F) (1987). The way in which a State measures a tax,
however, is only one relevant feature. A state law, for example,
that imposed fines upon all appellate judges who took too long in
issuing decisions, cf. Cal. Govt. Code Ann. § 68210 (West 1997)
(salary withheld from tardy judges), would not suddenly become an
"income tax" if the State began to measure the tax or fine, say, in
terms of a small percentage of the judge's federal income tax
liability. Nor would a similar tax imposed upon a judge each time
he administers an official oath automatically become an "income
tax." Neither would a driver's license fee or a motor vehicle
license fee become an "income tax" should imaginative state
legislators make the fees "progressive" by devising some similar
system of measurement. Consequently, one must look beyond that
single feature of measurement in order to determine the nature of
the tax as it operates in practice. Cf.
Lawrence v.
State
Tax Comm'n of Miss.,
286 U. S. 276, 280
(1932). And four specific features of this rather unusual tax,
taken together, convince me that it is not an "income tax."
First, the language, structure, and purpose of the ordinance
indicate that it imposes a fee upon the performance of work, not a
tax upon income. The ordinance is entitled "Occupational Tax." It
describes its purpose as establishing
450
Opinion of BREYER, J.
a "license ... tax" or a "tax" on the "privilege" of engaging in
a "vocation, occupation, calling or profession." Ordinance No.
1120, preamble. And its operative language speaks in terms of a
condition imposed upon work, not of a tax upon income. It says that
it
"shall be unlawful for any person to engage in or
follow [with certain exceptions] any vocation, occupation, calling
or profession ... without paying license fees to the County for the
privilege of engaging in or following such vocation, occupation,
calling or profession .... " § 2 (emphasis added).
The state law that authorizes the county's tax describes its own
purpose as one of "equaliz[ing] the burden of taxation," and it
authorizes the county "to levy a license or privilege tax upon any
person for engaging in any business"
other than a business
already subject to other state or county licensing fees, liability
for which is triggered, not by income, but by engaging in the work.
See 1967 Ala. Acts 406, §§ 3, 4; see generally Appendix,
infra, at 458-464. Indeed, the Alabama Supreme Court has
found as a matter of state law that a municipal tax very similar in
substance to Jefferson County's tax was an occupational license
tax, rather than an income tax. See
McPheeter v.
Auburn, 288 Ala. 286, 292, 259 So. 2d 833, 837 (1972).
Second, the tax, as measured, works more like a licensing fee
than an income tax. On the one hand, the tax calculation
does
not include many kinds of
income, such as retirement
income, dividends, interest, or other unearned income, or earned
income if that income is earned outside the county-irrespective of
how much income is involved. See Ordinance No. 1120, § l(F). On the
other hand, by the terms of the ordinance, not only a county
resident but also a nonresident who works some of the time in
Jefferson County, §§ l(B), 3, must pay the tax as long as he
becomes "entitled to receive" pay for his work, even if he receives
that pay
451
only in a later year or
never receives any income at all,
see § l(F). And, of course, as I mentioned earlier, the event that
triggers liability is not the receipt of income but the person's
"engag[ingJ" in certain work. § 2.
Third, Jefferson County's tax is riddled with exceptions, which
make sense only if one sees the tax as part of a statewide
occupational
licensing scheme, not as an income tax. See
1967 Ala. Acts 406, § 4 (authorizing counties to impose a license
tax only in respect to occupations not subject to state, or other
county, licensing taxes). The ordinance excludes from its
definition of "vocation, occupation, calling and profession"
domestic servants, those engaged in occupations licensed elsewhere
by the county, and those engaged in the more than 150 occupations
licensed by the State. Ordinance No. 1120, § l(B). This
last-mentioned category is large. Its members range from architects
to amusement park operators, from detectives to dentists, from
laundry owners to lawyers, from sewing machine operators to
scientists. See generally Ala. Code § 40-12-41
et seq.
(1993); Appendix,
infra, at 458-464. And the licensing
fees that the State exacts from this range of individuals are, with
only a few exceptions, all unrelated to income. Each attorney, for
example, pays "an annual license tax to the state" in the amount of
$250, § 40-12-49; each civil, electrical, or mechanical engineer
pays $20, §40-12-99; and each ticket scalper pays $100, §40-12-167.
Some fees vary depending upon special industry-related features,
such as population
(e. g., advertising, § 40-12-45;
amusement park operators, § 40-1247), number of employees
(e.
g., automobile garages or shops, § 40-12-54), or business size
(e. g., soft-drink bottlers, number of bottles per minute, §
40-12-65; construction companies, value of orders accepted, §
40-12-84; vending machine operators, total sales, § 40-12-176).
License fees for a handful of businesses are measured by the income
or gross receipts of the company (not of a private person). See §
4016-4 (certain financial institutions); §§ 40-21-50, 40-21-53
452
Opinion of BREYER, J.
(public utilities); § 40-21-57 (railroad operators); § 40-21-60
("express" shipping companies).
These many exceptions to the ordinance mean that individuals
with identical pay earned from work performed within Jefferson
County will pay very different amounts in license fees. Such
differences are not surprising where occupational licensing fees
are at issue, as different license charges with different
legislative pedigrees and applied to different industries often
vary dramatically one to the next. Cf.
Ohio Oil Co. v.
Conway, 281 U.
S. 146, 159 (1930) (State "may impose different specific taxes
upon different trades and professions and may vary the rates of
excise upon various products" without violating the Fourteenth
Amendment's Equal Protection and Due Process Clauses). But I am not
aware of any
income tax that would produce such widespread
differences in the tax owed by persons with identical incomes. Nor
can Jefferson County separate its own tax from the rest of the
State's licensing system by claiming that its own tax is different
in kind. It would not make sense for a county income tax to exempt
an engineer entirely, simply because he had paid the State $20 for
a license; at most a county income tax might provide a $20
deduction from, or credit against, the amount of income tax due to
the county. But, of course, if the county's tax is simply another
licensing fee, then this structure makes sense. The engineer
does not pay the county anything at all, because he has already
paid a licensing fee to the State; the county charge would be
redundant. The empirical significance of these factors depends upon
the makeup of the work force in Jefferson County
(e. g., to
what extent is Jefferson County made up of bedroom communities
whose residents work elsewhere), a matter about which the record
tells us nothing.
Fourth, Jefferson County's ordinance directly imposes upon the
Federal Government (the federal official's employer) burdens that
to a limited extent exceed those imposed by an ordinary state or
local income tax. The ordi-
453
nance requires the employer, obliged to withhold the tax, to
determine where the employee has spent each working day and
apportion related wages accordingly. Ordinance No. 1120, §§ 3, 4.
The task of apportioning an employee's workday is more complicated
and more closely connected to official duties than simply
determining where an employee resides-the conventional "income tax"
recordkeeping requirement. Similarly, a tax liability that arises
from having worked on a particular day in a particular place,
together with related and complex recordkeeping requirements,
creates a risk that the tax will have a practical influence upon
official decisions in a way that an ordinary income tax will not.
(Consider, for example, a federal criminal case in which the
defendant seeks a change of venue to Jefferson County.
E.
g., United States v.
Tokars, 839 F. Supp. 1578
(ND Ga. 1993); see
Jefferson County v.
Acker,
92 F.3d
1561, 1573, and n. 18
(CAll 1996).) Further, the
ordinance's language says it is unlawful for a federal employee who
has not paid the tax to perform his work-that is, it prohibits
"engag[ingJ" in that work. Ordinance No. 1120, § 2. This language,
which I assume could not actually authorize an injunction against
the performance of federal work, could nonetheless have an
unwelcome impact on a conscientious but tax-delinquent judge who
has sworn to uphold the law.
I recognize that one might find income taxes that embody one or
two of the features that I have just discussed. Income taxes come
in many shapes and sizes. But I do not claim that anyone or two of
the considerations I have mentioned is sufficient to prove my
point. Rather, it is all these features taken together that tip the
balance.
The majority either ignores or attempts to distinguish each of
these features on its own, as by itself potentially unconsitutional
or found in other income taxes.
Ante, at 439-442. But it is
a consideration of the whole, not of each separate part, that leads
to my conclusion. To properly characterize a tax, all of its
distinguishing features must be
454
Opinion of BREYER, J.
properly taken into account. Each of the features discussed
above seems an
odd or
unusual feature of an income
tax but an
ordinary feature of a licensing fee.
Taken
together, these features show that the tax before us is so
different from an ordinary income tax, and so much like a licensing
fee, that for federal constitutional purposes I must conclude that
Jefferson County has imposed an occupational or license taxthat is,
a fee for obtaining a license to engage in official work-just as
the county in its ordinance purports to do.
II
Jefferson County argues that, in any event, the United States
has consented to the imposition of the tax. It points first to the
Public Salary Tax Act of 1939, which grants federal consent "to the
taxation of payor compensation for personal service as an officer
or employee of the United States ... by a duly constituted taxing
authority." 4 U. S. C. § 111.
This statute cannot help Jefferson County, however, because in
Graves, this Court held only that the intergovernmental tax
immunity doctrine does not prevent a State from imposing a
nondiscriminatory tax upon "the salaries of officers or employees
of the national ... government." 306 U. S., at 486. And the Public
Salary Tax Act
"simply codified the result in Graves and foreclosed the
possibility that subsequent judicial reconsideration of that case
might reestablish the broader interpretation of the immunity
doctrine." Davis v. Michigan Dept. of Treasury,
489 U. S. 803,
812 (1989).
See also
id., at 811-812 ("[D]uring most of the
legislative process leading to adoption of the Act it was unclear
whether state taxation of federal employees was still barred by
intergovernmental tax immunity"); H. R. Rep. No. 26, 76th Cong.,
1st Sess., 2 (1939). If Jefferson County's tax is not an income tax
and hence falls outside the scope of
Graves, this statute
cannot save it.
455
The second statute upon which the county relies, the Buck
Act, presents a more difficult question. It says:
"No person shall be relieved from liability for any income tax
levied by any State, or by any duly constituted taxing authority
therein ... by reason of his residing within a federal area or
receiving income from transactions occurring or services performed
in such area; and such ... taxing authority shall have full
jurisdiction and power to levy and collect such tax in any Federal
area ... to the same extent and with the same effect as though such
area was not a Federal area." 4 U. S. C. § 106(a).
A special definitional provision, which applies through
cross-reference to the Buck Act (but
not to the Public
Salary Tax Act) defines the term "income tax" broadly to include
"any tax ... measured by ... income, or ... gross receipts." §
1l0(c). And in
Howard v.
Commissioners of Sinking Fund of
Louisville, 344
U. S. 624, 628-629 (1953), this Court held that a city's
"license fee" measured by income and levied on employees working at
a federal plant fell within this definition.
Nonetheless, the Buck Act does not apply here. Congress passed
the Buck Act in 1940 because it was uncertain whether the consent
to taxation provided in the 1939 Public Salary Tax Act would extend
to income taxes on those who lived or worked in federal areas;
Congress feared that these taxes would be barred for a special
reason-namely, that States might lack jurisdiction to apply their
laws to those who lived or worked in such areas. See S. Rep. No.
1625, 76th Cong., 3d Sess., 3 (1940). Consequently, the Buck Act's
language consents to nothing. Rather, it says "[n]o person shall be
relieved" of liability for "any income tax" by virtue of a
particular circumstance, specifically, "by reason of" that person's
"residing within a Federal area" or his "receiving income from
transactions occurring or services performed"
456
Opinion of BREYER, J.
in that "area." 4 U. S. C. § l06(a) (emphasis added). The Buck
Act seeks to prevent a person who lives or works in a federal area
from making a certain kind of legal defense to taxation, namely,
the defense that the State lacks jurisdiction to impose an income
tax upon a person who lives or works in such an area.
The Buck Act's very next phrase makes clear that the Act is
limited so as to accomplish only the purpose I have just described.
It says that the state or local
"taxing authority shall have full jurisdiction and power to levy
and collect such tax in any Federal area ... to the same
extent and with the same effect as though such area was not a
Federal area." Ibid. (emphasis added).
And the Buck Act adds that in any event, it "shall not be deemed
to authorize the levy or collection of any tax on ... the United
States." § l07(a). Thus, the Buck Act's own language indicates that
the Act is not intended to alter the contours of the
intergovernmental tax immunity doctrine itself.
The case before us falls outside the Buck Act because no one
here has asked to "be relieved" of tax liability
"by reason
of his residing within a Federal area or receiving income from ...
services performed in such area." § l06(a). Rather, the respondents
claim that Jefferson County's ordinance is unconstitutional, not by
reason of the federal nature of
where they work, but by
reason of the federal nature of
what they do. And for the
reasons discussed above, the county's ordinance would violate the
intergovernmental tax immunity doctrine
whether or not the
respondents lived or worked in a federal area. The Buck Act cannot
help the county's claim because it gives the State power to tax
income earned in a federal area only "to the same extent" and "with
the same effect as," not to a greater extent than, if that income
were earned elsewhere.
Ibid. Indeed, for the reasons I
discussed earlier, Jefferson County's tax falls outside the Act
because it is a "tax on ... the United States." § l07(a).
457
Nor does the Court's decision in
Howard govern the
outcome here. As an initial matter,
Howard considered only
the jurisdictional issue I have referred to above and did not
expressly discuss whether Louisville's tax nonetheless violated the
intergovernmental tax immunity doctrine for reasons independent of
where the federal employees lived or worked. 344 U. S., at
627-629; see also
id., at 626 (taxpayers argued that the tax
was "invalid" as applied to them because the plant, being a federal
enclave, was "not within the City");
id., at 629 (taxpayers
"conceded" that the city could "levy such a tax within its
boundaries outside the federal area").
More importantly, the tax at issue in
Howard, though
styled a "license fee for the privilege of engaging in [certain]
activities," Louisville Ordinance No. 83, § 1 (1950) (attachment to
Lodging of Respondents, Mar. 25, 1999), differed from the tax at
issue here in two critical ways. First, the Louisville ordinance at
issue in
Howard did not make it "unlawful" to
engage in
work without paying the tax. Compare Louisville Ordinance No.
83, § 1, with Jefferson County Ordinance No. 1120, § 2. And second,
the Louisville ordinance did not exempt everyone who paid license
fees under state law. Indeed, the ordinance specified that its
license fee was to be paid
in addition to certain other
license fees imposed by the city or the State. Compare Louisville
Ordinance No. 83, § 12, with Jefferson County Ordinance No. 1120,
preamble, § l(B). Thus, the provisions of the Louisville ordinance
made clear that the tax it imposed was a separate and additional
tax-not an alternative-to the licensing scheme already in
place.
The Jefferson County ordinance is different from the Louisville
ordinance in these significant respects. And as I have explained,
it is the cumulative nature of the unusual aspects of the Jefferson
County tax that make it an occupational or licensing tax.
***
For these reasons, I would affirm the decision of the Court of
Appeals.
458
Appendix to opinion of BREYER, J.
APPENDIX TO OPINION OF BREYER, J.
Persons and Businesses Subject to Alabama License
or Privilege Taxes*
Persons engaged in furnishing abstracts of title Persons
manufacturing acetylene gas and carbide Actuaries, auditors, and
public accountants
Persons engaged in selling adding machines, calculating
machines, typewriters, etc.
Persons engaged in advertising
Persons who sell or install air-conditioning with water
connections
Persons who sell or install air-conditioning without water
connections
Owners/operators of amusement parks Architects
Attorneys
Auctioneers
Dealers in automobiles, trucks, or other self-propelled
vehicles
Automobile accessory dealers Automobile garages or shops
Automobile storage garages
Automobile storage other than in garages Automobile tire
retreading shops
Barbers
Owners/lessees of baseball parks Battery shops
Battery manufacturers Beauty parlor operators
Persons who deal in, rent, or hire bicycles or motorcycles
Persons engaged in the business of making blueprints
*See Ala. Code §§40-12-40
et seq., 40-16-4, 40-21-50,
40-21-52 through 40-21-55, 40-21-57 through 40-21-60 (1993); Ala.
Code §27-4-9 (1986). Each of these provisions is specifically
mentioned among the exclusions in Jefferson County Ordinance No.
1120, § l(B) (1987).
459
Bond makers
Persons engaged in manufacturing, producing, or bottling soda
water, soft drinks, or fruit juices
Bowling alleys and tenpin alleys
Agents and brokers of iron or railway, furnace, or mining
supplies
Persons operating plants that manufacture brooms, brushes, mops,
etc.
Persons engaged in selling cereal or soft drinks in sealed
containers at retail
Persons engaged in selling soft drinks via dispensing
devices
or taps
Persons engaged in selling soft drinks at wholesale Certified
public accountants
Retail dealers in cigars, cigarettes, snuff, tobacco, etc.
Wholesalers of cigars, cigarettes, snuff, tobacco, etc. Persons
operating circuses
Persons operating cleaning or pressing establishments
(e.
g., dry cleaners)
Persons dealing in coal or coke and maintaining one or more
"yards"
Persons who sell, distribute, haul, or deliver coal or coke
by
truck
Manufacturers of coffins or caskets
People who sell or solicit orders for coffins or caskets
Collection agencies
Commission merchants and merchandise brokers
Operators of for-profit concerts, public lectures, and musical
entertainment
Persons engaged in discounting or buying conditional sales
contracts, drafts, notes, or mortgages
Persons who engage in lending money on salaries or making
industrial or personal loans
Contractors and construction companies
Persons whose principal business is buying cotton
460
Appendix to opinion of BREYER, J.
Persons operating a compress for the purpose of compress-
ing cotton
Persons operating various types of mills and factories Persons
who operate cotton warehouses
Credit agencies
Persons operating creosoting or other preservative wood
treatment plants Delicatessens Dentists
Persons operating detective agencies or companies doing business
as such
Persons engaged in developing and printing films or photo-
graphic plates
Devices for testing skill and strength used for profit Persons
compiling, selling, or offering for sale directories Dealers in
refrigerators, heaters, and stoves, and repair
shops for such devices Embalmers
Engineers
Owners/operators of fertilizer factories Fertilizer mixing
plants
Persons selling goods in insurance, bankruptcy, or close-out
sales, or persons selling goods damaged by fire, etc.
Fireworks dealers
Flying jennies, merry-go-rounds, roller coasters, etc.
Fortunetellers, palmists, clairvoyants, astrologers, phrenolo-
gists, and crystal gazers
Fruit dealers (selling from fruit stands or stores) Persons
operating gas stations or pumps
Persons who sell glass
Persons operating golf or miniature golf courses Persons
operating hat-cleaning establishments
Dealers in hides or furs, other than cattle, sheep, goat, or
horse hides
461
Horse shows, rodeos, or dog and pony shows
Persons engaged in buying, selling, or exchanging horses,
mules, or donkeys
Wholesale ice cream manufacturers Ice factories
Innkeepers and hotels
Junk dealers
Persons renting or supplying laundered towels, aprons,
coats, or linens (not including diapers) Persons furnishing
diaper service
Persons or other entities operating power or steam laundries
Self-service laundries
Hand-power laundries
Exhibitions of feats of sleight of hand Persons who sell or
install lightning rods
Persons who sell or install lightning rods, though not as a
primary business
Wholesale dealers of lumber and timber Persons operating
lumberyards
Persons operating machinery repair shops Manicurists,
hairdressers, etc.
Persons engaged in manufacturing, cleaning, or upholstering
cushions, mattresses, pillows, or rugs
Persons engaged in the practice of medicine, chemistry,
bacteriology, etc., except chemists employed full time by doctors
or nonprofits and doctors who work full time at medical schools
Persons engaged in selling mimeographs, duplicating machines,
dictaphones, teletypes, etc.
Persons engaged in iron ore mining
Persons who sell or erect monuments or tombstones (other than
fraternal associations)
Persons operating transient moving picture shows (in tents or
otherwise)
Persons operating moving picture shows
462
Appendix to opinion of BREYER, J.
Persons operating newsstands Oculists, optometrists, and
opticians Osteopaths and chiropractors
Cold storage plants, packinghouses, and refrigerated
warehouses
Pawnbrokers
Itinerant vendors and peddlers who sell drugs, ointments, or
medicines claimed to treat or cure diseases
Itinerant vendors and peddlers who sell spices, toilet articles,
and household remedies, etc.
Photographers and photograph galleries
Transient or traveling photographers with no fixed place of
business
Persons who sell, rent, or deliver pianos, organs, and small
musical instruments
General merchants who sell small musical instruments Pig iron
storage operators
Persons dealing in handguns, knives, and other similar
weapons
Persons and other entities that sell, store, use, or
otherwise
consume packages of playing cards
Plumbers, steam fitters, tin shop operators, etc. Pool tables in
commercial establishments
Owners of racetracks, athletic fields, etc., charging more than
$0.50 admission
Persons who sell radios, etc.
Real estate brokers and agents dealing in realty within the
State
Real estate brokers and agents dealing in realty outside
the State
Restaurants, cafes, cafeterias, etc. Roadhouses, nightclubs, and
dance halls
Sandwich shops, barbecue stands, and hamburger or hot dog
stands
Persons and corporations who operate sawmills, heading mills, or
stave mills
463
Scientists, naturopaths, and chiropodists Persons selling or
delivering sewing machines Operators of shooting galleries
Persons dealing in shotguns, rifles, and ammunition for
such weapons Skating rink operators Soliciting brokers
Persons selling eyeglasses, other than nonprescription
sunglasses
Stock and bond brokers
Operators of street fairs or carnivals
Owners, conductors, and people in charge of railroad supply cars
from which goods are sold
Operators of syrup or sugar factories, plants, or refineries
Persons engaged in conducting a theater, vaudeville, or vari-
ety show or other performance Ticket scalpers
Persons operating public tourist camps Dealers in tractors, road
machinery, or trailers
Persons who issue or sell trading stamps or similar
certificates
Persons transferring freight Transient dealers
Persons operating transient theatrical and vaudeville shows
Transient vendors and peddlers, traveling by animal or using
a vehicle other than a motor vehicle Persons operating
turpentine stills
Persons and other entities operating vending machines Persons
and other entities engaged in the operation of
veneer mills or any other factories where lumber or timber is
made into a finished product
Veterinary surgeons
Persons operating warehouses or storage yards
Persons who purchase and receive or collect grease and animal
bypro ducts for rendering or recycling
Persons operating public utilities
464
Appendix to opinion of BREYER, J.
Persons and other entities operating freight lines or equip-
ment companies (i.
e., by rail) Railroad operators
Persons operating "express" shipping companies Financial
institutions
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