State Taxation of the Federal Government

As you're preparing for the exam you're certain to come across some questions in Constitutional Law testing the concept of state taxation of the federal government. The general rule to note is that a state may not tax federal instrumentalities without the consent of Congress. The key point here is that a state cannot tax the federal government or its agents in a manner that is going to prevent the federal government from performing its federal functions. But then there are those nondiscriminatory taxes (a very common issue that shows up is when the state requires federal employees to pay state income taxes) that are perfectly valid provided that they do not unreasonably burden the federal government.

But the reason for this post is that a less common rationale for providing the federal government with a basis for avoiding state taxation comes up in the questions and it should be considered as a correct answer choice.

The Necessary and Proper Clause in the Constitution gives Congress the power to make all laws necessary and proper for executing any power granted to the federal government. Though it seems like a bit of a stretch, the right to make all laws necessary and proper for executing any power granted to the federal government has been held to include the power of the federal government to grant itself immunity from state taxation.