CONSTITUTIONAL LAW - TAXATION - CURTAILMENT OF INTERGOVERNMENTAL TAX IMMUNITIES

In the recent well-publicized decision of Graves v. O'Keefe, the United States Supreme Court, following a path adequately cleared by Helvering v. Gerhardt, again enlarged the scope of the governmental powers to impose non-discriminatory taxes. In so doing, the Court clarified the fundamental principles underlying intergovernmental tax immunities by eliminating inconsistencies and resolving confusion persisting in this field of law. The Gerhardt case had sustained the imposition of a federal income tax on the salaries of employees of the Port of New York Authority, a state instrumentality created by New York and New Jersey. But it had not been clear whether the Gerhardt decision was based upon the fact that the New York Port Authority was not an essential governmental function, or whether assuming it to be an essential governmental function, the tax on the employees was such an indirect and incidental burden that it could not be included within the implied immunity of the state.

For this reason it cannot be said that this decision swept away the doctrine of tax immunity of state employees. The implication was there, however, and this implication is now fully substantiated in the O'Keefe decision.