First Fed. Sav. & Loan Ass'n v. Tax Comm'n,
437 U.S. 255 (1978)

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U.S. Supreme Court

First Fed. Sav. & Loan Ass'n v. Tax Comm'n, 437 U.S. 255 (1978)

First Federal Savings & Loan Association of Boston v.

Tax Commission of Massachusetts

No. 77-334

Argued March 21, 1978

Decided June 15, 1978

437 U.S. 255


Appellants brought suit in a Massachusetts court challenging the State's power to impose an excise tax on federal savings and loan associations as measured by their net operating income, claiming that the tax violates § 5(h) of the Home Owners' Loan Act of 1933, which provides that no tax on a federal savings and loan association shall be "greater than that imposed" by the State on similar local thrift and home financing institutions. Appellants claimed that the state tax on their net operating income exceeds that imposed on similar local institutions because the deduction available under the state tax statute for "minimum additions to its guaranty fund or surplus required by law or the appropriate federal and state supervisory authorities" is generally lower for federal savings and loan associations than for similar state savings institutions. Appellants also contended that, because the Massachusetts tax does not apply to credit unions, which, appellants maintained, are "similar" to federal savings and loan associations, the associations are entitled to the credit unions' exemptions. The Supreme Judicial Court of Massachusetts upheld the statute.


1. The Massachusetts tax is not discriminatory on its face. The amount of the deduction depends on varying regulatory practices as to the reserves that must be maintained, but a tax is not invalid because it recognizes that state and federal regulations may differ. Nor does the record show any discrimination in fact, or in statutory purpose (federal reserve requirements were as high as the State's when the tax was enacted). Pp. 437 U. S. 257-260.

2. Credit unions are not "similar" to federal savings and loan associations within the meaning of § 5(h), as is clear not only from distinctions between the two under both federal and state law but also from the fact that Massachusetts savings banks and cooperative banks are more competitive with federal associations than credit unions are. Congress recognized that States might classify their own institutions in various ways, as Massachusetts has done in excluding credit unions from a large

Page 437 U. S. 256

classification that includes state institutions more closely resembling the federal associations. Pp. 437 U. S. 260-262.

372 Mass. 478, 363 N.E.2d 474, affirmed.

STEVENS, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, STEWART, WHITE, MARSHALL, POWELL, and REHNQUIST, JJ., joined. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, post, p. 437 U. S. 263.

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