New York v. United States

326 U.S. 572, 66 S. Ct. 310 (1946)

 

RULE:

To say that the States cannot be taxed for enterprises generally pursued, like the sale of mineral water, because it is somewhat connected with a State's conservation policy, is to invoke an irrelevance to the federal taxing power.

FACTS:

The United States brought suit pursuant to § 615(a)(5) of the 1932 Revenue Act to recover taxes assessed against the State for the sale of mineral waters. The State claimed immunity, arguing that it was engaging in a traditional and essential governmental function. The circuit court entered judgment for the United States, and the court of appeals affirmed. The case was elevated on certiorari to the Supreme Court of the United States.

ISSUE:

Is the government immune from paying taxes for the sale of mineral water?

ANSWER:

Yes.

CONCLUSION:

The Court found that the State was engaged in an enterprise in which the State sold mineral waters in competition with private waters, the sale of which Congress had found necessary to tap as a source of revenue for carrying on the national government. To say that the States could not be taxed for enterprises generally pursued, like the sale of mineral water, because it is somewhat connected with a State's conservation policy, was to invoke an irrelevance to the federal taxing power.

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