OAKLAND COUNTY, ET AL., Plaintiffs,

vs

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, Defendants. ________________________________/

ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Excerpts 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 Court agrees. 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. ... IV. CONCLUSION 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 Taxes. Plaintiffs’ and State Plaintiff’s motion for summary judgment is GRANTED. Defendants’ motion is DENIED. The issue of damages remains. IT IS ORDERED. Full order below...

OAKLAND COUNTY, ET AL., vs FEDERAL HOUSING FINANCE AGENCY