f a state for the same reason;[3] that a state cannot
tax the emoluments of an official of the United States[4] and
conversely, that the United States cannot tax the salary of a state
official;[5] that a state cannot impose a tax on the property or
revenues of the United States[6] and conversely, that Congress cannot
tax the property or revenues of a state or a municipality thereof.[7]

[Footnote 1: 4 Wheaton, 316.]

[Footnote 2: _Weston v. City of Charleston_, 2 Pet., 449.]

[Footnote 3: _Mercantile Bank v. New York_, 121 U.S., 138, 162.]

[Footnote 4: _Dobbins v. Commissioner of Erie County_, 16 Pet., 435.]

[Footnote 5: _Collector v. Day_, 11 Wall., 113.]

[Footnote 6: _Van Brocklin v. Tennessee_, 117 U.S., 151.]

[Footnote 7: _United States v. Railroad Co._, 17 Wall., 322.]

The Supreme Court has said (and many times reiterated in substance) that
the National Government "cannot exercise its power of taxation so as to
destroy the state governments, or embarrass their lawful action."[1] One
of the most distinguished writers on American Constitutional law
(Thomas M. Cooley, Chief Justice of the Supreme Court of Michigan and
afterward Chairman of the federal Interstate Commerce Commission) has
said:

There is nothing in the Constitution which can be made to
admit of any interference by Congress with the secure
existence of any state authority within its lawful bounds. And
any such interference by the indirect means of taxation is
quite as much beyond the power of the national legislature as
if the interference were direct and extreme.[2]

[Footnote 1: _Railroad Co. v. Peniston_, 18 Wall., 5, 30.]

[Footnote 2: _Cooley's Constitutional Limitations_, 7th Ed., 684.]

The question as to the right of Congress to levy an income tax on
municipal securities came up squarely in the famous Income Tax Cases[1]
involving the constitutionality of the Income Tax Law of 1804. While the
Supreme Court was sharply divided as to the constitutionality of other
features of the law, it was unanimous as to the lack of authority in the
United States to tax the interest on municipal bonds.

[Footnote 1: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429; same
case on rehearing, 158 U.S., 601.]

The decision in those cases is the law to-day (except in so far as it
has been changed by the recent Sixteenth Amendment) with one possible
limitation. It has been held that state agencies and instrumentalit