Argument for Petitioner. 308 U.S. with whom Mr. William L. Henderson, Deputy Attorney General, was on the brief, for petitioner. The tax is uniform and does not discriminate against the Corporation or the United States. The tax is not a burden on the Corporation since it could be, and customarily is, paid by the mortgagor. sense. If the tax is paid by the mortgagor, the effect on the Corporation of collecting the tax from the mortgagor, and the slight increase in the cost of its operations which this might entail, are so speculative, remote and uncertain as to constitute no burden at all in the constitutional McCulloch v. Maryland, 4 Wheat. 316, 436; Union Pacific Railroad v. Peniston, 18 Wall. 5, 30; Metcalf & Eddy v. Mitchell, 269 U. S. 514, 523-524; Willcuts v. Bunn, 282 U. S. 216, 225; Educational Films Corp. v. Ward, 282 U. S. 379, 391-392; Fox Film Corp. v. Doyal, 286 U. S. 123, 128; Indian Territory Illuminating Oil Co. v. Board of Equalization, 288 U. S. 325, 327–328; Schuylkill Trust Co. v. Pennsylvania, 296 U. S. 113, 127; United States v. California, 297 U. S. 175. In all of these cases the Court has avoided an extension of immunity from tax for fear of crippling the taxing power of either the States or the Federal Government. The immunity exists only to the extent necessary to prevent undue interference with the operations of the Federal Government. The tax must have a direct and immediate effect upon the operations of the governmental instrumentality; it must restrict, retard, impede or obstruct its activities. We rely upon James v. Dravo Contracting Co., 302 U. S. 134; Silas Mason Co. v. State Tax Commission, 302 U. S. 186; Atkinson v. State Tax Commission, 303 U. S. 20; Helvering v. Mountain Producers Corp., 303 U. S. 376; Helvering v. Gerhardt, 304 U. S. 405; Allen v. Regents of University System of Georgia, 304 U. S. 439; and Graves v. New York ex rel. O'Keefe, 306 U. S. 466. 21 Argument for Petitioner. From a reading of these cases it is clear that the present tendency is to scrutinize any claim to immunity and allow it only when it is abundantly clear that, otherwise, an unreasonable burden would be imposed on a governmental agency. This is particularly true where immunity would result in a benefit to a private person, but where the burden, if any, on the governmental agency is remote and speculative. The activities of this Corporation are such that this non-discriminatory tax, laid upon it as well as upon private agencies operating in the money lending field, would not retard, impede or obstruct the operations of the Corporation. South Carolina v. United States, 199 U. S. 437; Allen v. Regents of University System of Georgia, 304 U. S. 439. The distinction drawn, in the case of state agencies, between those exercising proprietary functions and those exercising governmental functions seems to come to no more than this: In the one case it is not necessary to inquire whether a particular federal tax is or is not a burden, for there is no implied constitutional immunity. On the other hand, if a state agency is exercising a governmental function, there is immunity from a tax which is found upon inquiry to impose a direct and palpable burden. The only difference to be noted in dealing with federal agencies is that the Court does not consider that any of them may not be governmental and hence it is necessary in each case to inquire whether or not the state tax in fact does impose a direct and palpable burden upon the federal agency. Even though the Home Owners' Loan Corporation is a governmental agency, it is still necessary to determine whether or not the challenged tax imposes a direct and palpable burden upon the federal agency, so as to retard, obstruct or impede it in the performance of the functions delegated to it by Congress. The nature of those func Argument for Petitioner. 308 U.S. tions must be examined, and the benefit to be derived from immunity weighed against the detriment to the State, which is coöperating with the Federal Government in the attainment of common governmental ends. We can not close our eyes to the fact that the Federal Government is daily broadening the sphere of its activities. It is constantly setting up agencies which compete with private agencies engaging in similar activities. Carried far enough, an immunity from tax would deprive the States of their sources of revenues. This is not necessary for the protection of the Federal Government in the performance of the functions delegated to it by the Constitution. The Home Owners' Loan Act of 1933 does not purport to confer upon the Corporation an immunity from the Maryland tax. If construed to confer that immunity it is, to that extent, unconstitutional and void. Congress has no power to confer upon agencies of the Federal Government an immunity from state taxation which is broader and more extensive than the implied constitutional immunity. Graves v. New York ex rel. O'Keefe, 306 U. S. 466. Assuming that Congress has the power to authorize the creation of the Home Owners' Loan Corporation to assist needy home owners by refinancing mortgages on their homes, it is, we submit, clear that an immunity from the Maryland recordation tax is not necessary or needful to protect the agency in the performance of that function. If an immunity from taxation is necessary to protect a federal agency in the performance of a governmental function devolved upon it by Act of Congress, then any tax which interferes with the performance of the function constitutes a burden upon the federal agency. If so, there is an implied constitutional immunity from the tax. On the other hand, if the tax does not so interfere, then 21 Argument for Petitioner. it constitutes no burden on the agency and there is no implied constitutional immunity from the tax. But in this event there would be no necessity for an immunity to protect the federal agency in the performance of its governmental functions, and it would therefore not be necessary for Congress to grant such an immunity in order to enable the federal agency to carry on its activities. If there is no such necessity, then clearly the power to grant immunity from tax could not be derived from the implied power of Congress "to do whatever is needful or appropriate to carry out the powers delegated to it by the Federal Constitution." The idea that the Congress has some power, the limits of which are not defined, to grant an immunity from a tax broader than the implied constitutional immunity, is without foundation. In other words, if we concede the power of Congress to grant to a governmental agency whatever tax immunity is necessary to protect and safeguard that agency in the performance of the governmental functions delegated to it by Congress, we merely concede the implied constitutional immunity from substantial interference. If we go beyond this, then we must say that the Congress has the power to grant not merely an immunity necessary to protect the agency in the performance of its governmental functions, but an unlimited immunity. Such a rule would have disastrous consequences. A statutory declaration of immunity may therefore be treated as an expression of congressional opinion as to the necessity for immunity, or as negativing any implication of a waiver of the immunity by Congress, or both. But beyond this point we submit that the question of whether immunity exists in any particular case depends upon whether it can be implied from the Constitution, and in every case this is a judicial and not a legislative question. Argument for Respondent. 308 U.S. Solicitor General Jackson, with whom Assistant Attorney General Clark and Messrs. Sewall Key, Warner W. Gardner, Berryman Green, and Harold Lee were on the brief, for respondent. Petitioner does not challenge the constitutionality of the Home Owners' Loan Act of 1933, as amended. It follows that the Corporation shares the full immunity from state taxation which attaches to the operations of the United States. Its functions are necessarily "governmental," since they are in exercise of the delegated powers of the Federal Government. Since it is wholly owned and controlled by the Government, its corporate organization does not affect the governmental nature of its activities. Graves v. New York ex rel. O'Keefe, 306 U. S, 466, 477. Congress has full power to determine whether the recordation of these mortgages should be exempt from or subject to state taxation; and the question of tax immunity or liability is simply one of Congressional intent. Helvering v. Gerhardt, 304 U. S. 405, 411-412. Such was the decision in Federal Land Bank v. Crosland, 261 U.S. 374. The laws of the United States are declared by the Constitution to be "the supreme law of the land." If Congress had expressly declared that the recordation of these mortgages should be exempt from state taxation the Maryland tax would fall, since the provision could not be declared to have no reasonable relationship to the ends promoted by the Corporation. The doctrine of immunity of federal instrumentalities from state taxation was developed simply as an attribute of the supremacy clause of the Constitution. McCulloch v. Maryland, 4 Wheat. 316, 426, 427, 433. Not until Collector v. Day, 11 Wall. 113, did the Court ascribe immunity to the more nebulous implications of a federated constitution. But even after that decision, and notably |