43 N.Y.2d 425 (1977)
A state’s amendment of its tax laws, even if not explicitly referring to national banks, constitutes “affirmative action” allowing the state to tax national banks under federal law; commercial rent tax is considered a tax on tangible personal property, permitting taxation of national banks without further legislative action.
Summary
Citibank and Chase Manhattan Bank challenged the City of New York’s commercial rent tax for the period of 1970-1972, arguing that as national banks, they were immune under federal law (Public Law 91-156). This law allowed states to tax national banks equally with state banks but included a “saving provision” requiring “affirmative action” by the state legislature to impose such taxes. The banks argued that the 1970 amendment to the city’s rent tax, which increased rates but did not expressly mention national banks, did not constitute affirmative action. The court held that the amendment was affirmative action and that the commercial rent tax was a tax on tangible personal property, thus not requiring affirmative action under the federal statute.
Facts
Citibank and Chase Manhattan Bank, national banking associations with principal places of business in New York City, were assessed commercial rent tax by the city for the period of June 1, 1970, through May 31, 1972. The banks challenged the tax, asserting immunity under federal law, specifically Public Law No. 91-156, which governed state taxation of national banks. The city’s commercial rent tax had been in effect since 1963. In 1970, the New York State Legislature amended the law to increase the rates of the tax. The banks argued this amendment did not constitute the “affirmative action” required by the federal law to subject them to the tax.
Procedural History
The banks initiated separate CPLR article 78 proceedings challenging the Finance Administration’s determination. The Appellate Division confirmed the Finance Administration’s determinations and dismissed the banks’ petitions. The banks appealed to the Court of Appeals of the State of New York.
Issue(s)
1. Whether the New York State Legislature’s amendment to the city’s commercial rent tax, which increased rates but did not explicitly mention national banks, constituted “affirmative action” as required by Public Law No. 91-156, thus allowing the city to tax national banks.
2. Whether the New York City commercial rent tax is a tax on tangible personal property, which under federal law does not require “affirmative action” by the state legislature to be imposed on national banks.
Holding
1. Yes, because the amendment, even without explicitly mentioning national banks, constituted “affirmative action” since it was a conscious decision to increase tax rates, and amendments are considered re-enactments of the amended statute.
2. Yes, because the New York City commercial rent tax has been consistently regarded as a tax on tangible personal property, and such taxes are expressly excepted from the “affirmative action” requirement under federal law.
Court’s Reasoning
The court reasoned that the 1970 amendment to the commercial rent tax law constituted “affirmative action” because it involved a conscious legislative decision to increase tax rates. The court noted that amendments are considered re-enactments of the statutes they amend. The court stated, “From the point of view of Congress, it was the possibility that inequitable or double taxation might be imposed immediately on national banks that was the crux of its concern.”
Furthermore, the court held that the commercial rent tax was a tax on tangible personal property, specifically a leasehold interest. Quoting Ampco Printing-Advertisers’ Offset Corp. v City of New York, the court emphasized that a leasehold is deemed personalty and tangible. Because Public Law No. 91-156 explicitly exempts taxes on tangible personal property from the “affirmative action” requirement, the city was permitted to levy the tax on national banks without further legislative input. The court noted, “* * * [P]rior to January 1, [1973], no tax may be imposed on any class of banks by or under authority of any State legislation in effect prior to the enactment of this Act unless (1) the tax was imposed on that class of banks prior to the enactment of this Act, or (2) the imposition of the tax is authorized by affirmative action of the State legislature after the enactment of this Act.”
The dissenting judge argued that the 1970 amendment was merely an increase in rates and did not demonstrate a conscious decision to subject national banks to the tax. The dissent also contested the majority’s characterization of the commercial rent tax as a tax on tangible personal property in the context of federal law.