United States v. County of Fresno, 429 U.S. 452 (1977)

APPEAL FROM THE COURT OF APPEAL OF CALIFORNIA,

FIFTH APPELLATE DISTRICT

Syllabus

Pursuant to California statutes authorizing counties to impose an annual use or property tax on possessory interests in improvements on tax-exempt land, appellee counties imposed a tax on the possessory interests of appellant United States Forest Service employees in housing located in national forests within the counties and owned and supplied to appellants by the Forest Service as part of their compensation.

Held: The tax is not barred by the Supremacy Clause as a state tax on the Federal Government or federal property. Pp. 457-468.

(a) A State may, in effect, raise revenues on the basis of property owned by the United States as long as that property is being used by a private citizen and as long as it is the possession or use by the private citizen that is being taxed. City of Detroit v. Murray Corp., 355 U.S. 489; United States v. City of Detroit, 355 U.S. 466; United States v. Township of Muskegon, 355 U.S. 484. P. 462.

(b) The economic burden on a federal function of a state tax imposed on those who deal with the Federal Government does not render the tax unconstitutional as long as the tax is imposed equally on the other similarly situated constituents of the State. Pp. 462-464.

(c) The "legal incidence" of the tax in question falls neither on the Federal Government nor on federal property, but is imposed solely on private citizens who work for the Federal Government and threatens to interfere with federal laws relating to the Forest Service’s functions only insofar as it may impose an economic burden on the Forest Service to reimburse its employees for the taxes owed or, failing reimbursement, to remove an advantage otherwise enjoyed by the Government in the employment market. P. 464.

(d) The tax does not discriminate against Forest Service or other federal employees, and the fact that it is imposed on real property renters only if the owner is exempt from taxation does not make it discriminatory, United States v. City of Detroit, supra. Since the state property tax imposed on owners of nonexempt property is passed on to their lessees, appellants are no worse off than those who work for private employers and rent houses in the private sector. Pp. 464-465.

(e) It cannot be properly contended that appellants are required to occupy their houses for the Forest Service’s sole benefit, and not for their own personal benefit, since the occupancy of the houses constitutes part of appellants’ "compensation" for services performed, and thus concededly is of personal benefit to the employee, and since, moreover, the Forest Service itself purports to measure the personal benefit of the occupancy to the employee, and collects rent in such an amount through deductions from the employee’s paycheck. Pp. 465-467.

50 Cal.App.3d 633, 123 Cal.Rptr. 548 (County of Fresno judgment) and County of Tuolumne judgment affirmed.

WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, STEWART, MARSHALL, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. STEVENS, J., filed a dissenting opinion, post, p. 468.