Constitutional Law – Intergovernmental Tax Immunities – Erosion of Distinction Between Taxation of Property and of Privilege

Plaintiff Murray Corporation, a manufacturer of airplane parts for the federal government, was assessed a tax by the city of Detroit under the General Property Tax Act of Michigan, based in part on the value of materials. which the corporation had in its possession. Legal title to these materials was in the federal government. The corporation paid the taxes under protest and sued for a refund, contending that the taxes infringed the federal government’s immunity from state taxation to the extent the taxes were based on the value of government property. The district court entered judgment for Murray and the Court of Appeals for the Sixth Circuit affirmed. On appeal to the United States Supreme Court, held, reversed, four justices dissenting. Although on its face a tax on property, in essence the tax is on possession of property which plaintiff used in profit-making activities. Since it thus has the same effect as a privilege tax which has uniformly been upheld, the tax is valid. Detroit v. Murray Corporation of America, 355 U.S. 489 (1958), reh. den., Justice Frankfurter dissenting, 26 U.S. LAW WEEK 3357 (1958).