ax exempt bonds.[55] A State may
constitutionally levy an excise tax on corporations for the privilege of
doing business, and measure the tax by the property or net income of the
corporation, including tax exempt United States securities or the income
derived therefrom.[56] The designation of a tax is not controlling.[57]
Where a so-called "license tax" upon insurance companies, measured by
gross income, including interest on government bonds, was, in effect, a
commutation tax levied in lieu of other taxation upon the personal
property of the taxpayer, it was still held to amount to an
unconstitutional tax on the bonds themselves.[58]
TAXATION OF GOVERNMENT CONTRACTORS
In the course of his opinion in Osborn _v._ Bank of the United
States,[59] Chief Justice Marshall posed the question: "Can a contractor
for supplying a military post with provisions, be restrained from making
purchases within any state, or from transporting the provisions to the
place at which the troops were stationed? or could he be fined or taxed
for doing so? We have not yet heard these questions answered in the
affirmative."[60] One hundred and thirteen years later, the Court did
answer the last part of his inquiry in the affirmative. In James _v._
Dravo Contracting Company[61] it held that a State may impose an
occupation tax upon an independent contractor, measured by his gross
receipts under contracts with the United States. Previously it had
sustained a gross receipts tax levied in lieu of a property tax upon the
operator of an automobile stage line, who was engaged in carrying the
mails as an independent contractor,[62] and an excise tax on gasoline
sold to a contractor with the Federal Government and used to operate
machinery in the construction of levees in the Mississippi River.[63]
Subsequently it has approved State taxes on the net income of a
government contractor,[64] income[65] and social security[66] taxes on
the operators of bath houses maintained in a National Park under a lease
from the United States; sales and use taxes on sales of beverages by a
concessionaire in a National Park,[67] and on purchases of materials
used by a contractor in the performance of a cost-plus contract with the
United States,[68] and a severance tax imposed on a contractor who
severed and purchased timber from lands owned by the United States.[69]
STATUS OF DOCTRINE TODAY
Of a piece with James _v._ Dravo Contracting Co. was the decision in
Graves
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