United States v. City of Detroit
355 U.S. 466 (1958)

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U.S. Supreme Court

United States v. City of Detroit, 355 U.S. 466 (1958)

United States v. City of Detroit

No. 26

Argued November 14, 1957

Decided March 3, 1958

355 U.S. 466

Syllabus

Under Michigan Public Act 189 of 1953, the City of Detroit assessed against a private corporation engaged in business for profit taxes based upon the value of real property owned by the United States and leased to the corporation under a lease permitting the corporation to deduct from the agreed rental any such taxes paid by it but reserving to the Government the right to contest the validity of such taxes. In effect, the Act provides that, when tax exempt real property is used by a private party in a business conducted for profit, such private party is subject to taxation in the same amount and to the same extent as though he owned the property; that such taxes shall be assessed and collected in the same manner as taxes assessed to the owners of real property, except that they shall not become a lien against the property, but shall be a debt due from the user and collectible by direct action; and that the Act shall not apply to federal property for which payments are made in lieu of taxes in amounts equivalent to taxes which otherwise might lawfully be assessed.

Held: the Act, on its face and as here applied, does not invade the constitutional immunity of federal property from taxation by the States or discriminate against the Government or those with whom it deals. Pp. 355 U. S. 467-475.

(a) The Government's constitutional immunity does not shield private parties from state taxes imposed on them merely because part or all of the financial burden of the taxes eventually falls on the Government. Pp. 355 U. S. 469, 355 U. S. 472-473.

(b) The tax here involved is not levied on the Government or its property, but on the private lessee who uses the property in a business conducted for profit. P. 355 U. S. 469.

(c) The fact that the tax is measured by the value of the property used does not justify treating it as a mere contrivance to tax the property itself. Pp. 355 U. S. 470-471.

(d) United States v. Allegheny County,322 U. S. 174, distinguished. Pp. 355 U. S. 471-472.

(e) Neither on its face nor as here applied does this tax operate so as to discriminate against the Federal Government or those with whom it deals. Pp. 355 U. S. 473-474.

Page 355 U. S. 467

(f) A different result is not required by the fact that the Act creates an exception to the tax on users where payments in lieu of taxes are made by the United States "in amounts equivalent to taxes which might otherwise be lawfully assessed" P. 474, n 6.

(g) To hold that the tax imposed here on private business violates the Government's constitutional tax immunity would improperly impair the taxing power of the State. P. 355 U. S. 475.

345 Mich. 601, 77 N.W.2d 79, affirmed.

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