where the
Government purchased movable machinery and leased it to a private
contractor, the lessee could not be taxed on the full value of the
equipment.[79] In the pioneer case of Van Brocklin _v._ Tennessee,[80]
the State was denied the right to sell for taxes lands which the United
States owned at the time the taxes were levied, but in which it had
ceased to have any interest at the time of sale. Nor can a State assess
land in the hands of private owners for benefits from a road improvement
completed while it was owned by the United States.[81]

PUBLIC PROPERTY AND FUNCTIONS

Property owned by the United States is, of course, wholly immune to
State taxation.[82] No State can regulate, by the imposition of an
inspection fee, any activity carried on by the United States directly
through its own agents and employees.[83] An early case whose authority
is now uncertain held invalid a flat rate tax on telegraphic messages,
as applied to messages sent by public officers on official
business.[84]

FISCAL INSTITUTIONS; LEGISLATIVE EXEMPTIONS

Fiscal institutions chartered by Congress, their shares and their
property, are taxable only with the consent of Congress and only in
conformity with the restrictions it has attached to its consent.[85]
Immediately after the Supreme Court construed the statute authorizing
the States to tax national bank shares as allowing a tax on the
preferred shares of such a bank held by the Reconstruction Finance
Corporation,[86] Congress passed a law exempting such shares from
taxation. The Court upheld this measure saying, "when Congress
authorized the States to impose such taxation, it did no more than
gratuitously grant them political power which they theretofore lacked.
Its sovereign power to revoke the grant remained unimpaired, the grant
of the privilege being only a declaration of legislative policy
changeable at will."[87] In Pittman _v._ Home Owners' Loan
Corporation[88] the Court sustained the power of Congress under the
necessary and proper clause to immunize the activities of the
Corporation from state taxation; and in Federal Land Bank _v._ Bismarck
Lumber Co.,[89] the like result was reached with respect to an attempt
by the State to impose a retail sales tax on a sale of lumber and other
building materials to the bank for use in repairing and improving
property that had been acquired by foreclosure of mortgages. The State's
principal argument proceeded thus: "Congress has aut