OAKLAND COUNTY, ET AL.,
FEDERAL HOUSING FINANCE AGENCY
AS CONSERVATOR FOR FEDERAL
NATIONAL MORTGAGE ASSOCIATION AND
FEDERAL HOME LOAN MORTGAGE COMPANY;
FEDERAL NATIONAL MORTGAGE ASSOCIATION;
AND FEDERAL HOME LOAN MORTGAGE COMPANY,
ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND
DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
D. An Exemption from All Taxation Covers Only Direct Taxes, Not Excise Taxes
Plaintiffs rely upon the Supreme Court’s decision in Wells Fargo for the
proposition that an exemption from ” all taxation” does not cover excise taxes such as
the Michigan Transfer Taxes. 485 U.S. 351. Plaintiffs say that Wells Fargo made clear
that an exemption from all taxation covers only direct taxes, not excise taxes. The
In Wells Fargo, the Supreme Court considered whether certain items of personal
property”“” Project Notes””“were exempt from the federal estate tax. In the late 1930s,
Congress passed the Housing Act, 50 Stat. 888 et seq., which empowered state and
local governments to issue tax-free obligations called Project Notes to finance housing
projects. 485 U.S. at 353. Congress provided that ” [Project Notes], including interest
thereon, . . . shall be exempt from all taxation now or hereafter imposed by the United
States.” Id. at 355. Discussing the exemption, the Supreme Court stated:
Well before the Housing Act was passed, an exemption of property from all
taxation had an understood meaning: the property was exempt from direct
taxation, but certain privileges of ownership, such as the right to transfer the
property, could be taxed. Underlying this doctrine is the distinction between an
excise tax, which is levied upon the use or transfer of property . . . and a tax
levied upon the property itself. The former has historically been permitted even
where the latter has been constitutionally or statutorily forbidden. Id.
After reviewing the case law, the Supreme Court held that the exemption from all
taxation did not exempt the Project Notes from excise taxes such as the estate tax. The
Court noted that where Congress had, on other occasions, exempted property from
estate taxation, it generally referred specifically to the estate tax rather than to ” all
taxation.” Id. at 356.
In reaching its conclusion, the Court reviewed over eighty years of Supreme
Court case law holding that excise taxes have historically been permitted, even when
tax on the property has been forbidden.
In the end, this case turns on a single question: whether a statutory exemption
from ” all taxation” includes excise taxes such as the Michigan Transfer Taxes. Wells
Fargo dictates that it does not. Accordingly, the Enterprises are liable for the Transfer
Plaintiffs’ and State Plaintiff’s motion for summary judgment is GRANTED.
Defendants’ motion is DENIED. The issue of damages remains.
IT IS ORDERED.