INTERGOVERNMENTAL IMMUNITIES AND INTERSTATE RELATIONS
This Chapter, like the ones before it, examines several aspects of federal-state relationships and interstate relationships. As before, the emphasis is on federalism, and the limits it places both on state and federal power. The most important concepts in this Chapter are:
- Several types of immunities: There are several types of immunities produced by our federalist system. The most important are:
- Federal immunity from state taxation: The federal government is immune from being taxed by the states.
- State immunity from federal tax: The states have partial immunity from federal taxes.
- Federal immunity from state regulation: The federal government is essentially free from state regulatory interference.
- State immunity from federal regulation: The states generally are not immune from federal regulation. However, if a federal regulatory scheme had the effect of preventing the states from exercising their core functions, this might be found to be a violation of the Tenth Amendment.
- Interstate privileges and immunities: The “Privileges and Immunities” Clause of Article IV says that “the Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.” This clause means that a state may not discriminate against non-residents.
- Rights fundamental to national unity: But this clause only operates with respect to rights that are fundamental to national unity. Thus only rights related to commerce are covered: the right to be employed, the right to practice one’s profession, and the right to engage in business are the prime examples.
I. TAX IMMUNITIES
A. Federal and state immunity: It has long been established that the federal government is immune from taxation by any state, unless Congress has consented to such taxation. Likewise, it has always been accepted that a state, at least in the performance of its essential government functions, is immune from federal taxation. However, the scope of this state immunity has been significantly narrowed in recent years. Although the rules in the federal immunity and state immunity situations are similar, there are enough differences to warrant separate treatment of the two.