Section 2 Historical Perspective?Taxation of National Banks

LibraryTax Law 2009

The Missouri Bank Tax, insofar as it applies to national banks, depends on the federal statutes authorizing states to assess taxes against national banks. Chapter 148, RSMo, therefore, must be
read and interpreted in conjunction with the federal statutes and authorities. Thus, this chapter provides a review of the history of taxation of national banks under state and federal law. Since the Supreme Court decision in McCulloch v. State of Maryland, 17 U.S.
(4 Wheat.) 316 (1819), national banks have been recognized as immune from state taxation under the federal constitution. But because of the expanding, nongovernmental activities of national banks, state legislation and courts attempted to circumvent this immunity. See, e.g., Liberty Nat’l Bank & Trust Co. v. Buscaglia,
235 N.E.2d 101 (N.Y. 1967); First Agric. Nat’l Bank of Berkshire County v. State Tax Comm’n, 229 N.E.2d 245 (Mass. 1967). But on appeal of the latter case, the United States Supreme Court upheld the national bank immunity from state taxation. First Agric. Nat’l Bank of Berkshire County v. State Tax Comm’n, 392 U.S. 339 (1968).

The state tax immunity of national banks generally does not apply to bank holding companies or subsidiaries of national banks. See, e.g., Oliver Continuous Filter Co. v. McColgan, 120 P.2d 682 (Cal. App. 1942) (franchise tax on bank holding companies was allowed); Ariz. State Tax Comm’n v. First Bank Bldg. Corp., 429 P.2d 481 (Ariz. App. 1967) (transaction privilege tax assessed against national bank subsidiary was allowed). But at least one court has held that state banks that are members of...

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