Silas Mason Co. v. Tax Commission of Washington

Background

Contractors who built the Grand Coulee Dam under contracts with the United States challenged Washington’s Occupation Tax Act after the State sought to tax their gross receipts. The contractors argued the tax unconstitutionally burdened the Federal Government and that the United States had exclusive control over the project area, preventing state regulation and taxation.

Reasoning

The Court first relied on its prior ruling supporting a similar state tax on federal contractors and then addressed territorial control. The opinion explains that federal title to land alone does not automatically oust state authority. Exclusive federal lawmaking power requires a clear cession or acceptance of such jurisdiction. Washington’s statutes and the government’s own contracts showed that the United States did not assume exclusive legislative authority. The federal contracts required contractors to obey state licensing, safety, health, and workers’ compensation rules, and Congress later validated those contracts—indicating federal intent to preserve state cooperation and local administration.

Real world impact

The Court concluded the State could lawfully tax the contractors’ receipts and that Washington retained territorial authority to apply local laws in the project area so long as they do not interfere with federal functions. Practically, contractors on the Grand Coulee project remain subject to state taxes, building and health rules, and local services such as schools and policing.

Dissents or concurrances

Four Justices dissented, adopting the reasons stated in the dissent to the companion case James v. Dravo Contracting Co., as noted in the opinion.