delivered the opinion of the Court.
In this case, among other issues which we need not reach, we are asked to decide whether a Texas tax statute, Article 5248 of the Revised Civil Statutes of Texas, as amended in 1950, 1 discriminates unconstitutionally against the United States and those with whom it deals. We hold that it does.
Appellant, Phillips Chemical Company, engages in the commercial manufacture of ammonia on valuable industrial property leased from the Federal Government in Moore County, Texas. The lease, executed in 1948 pursuant to the Military Leasing Act of 1947, 61 Stat. 774, is for a primary term of 15 years and calls for an annual rental of over $1,000,000. However, it reserves to the Government the right to terminate upon 30 days’ notice in the event of a national emergency аnd upon 90 days’ notice in the event of a sale of the property.
When the District assessed the tаx, Phillips commenced the present action in the state courts to enjoin its collection. Phillips contested both the District’s right to levy the tax and the valuation figure upon which the amount of the tax was calculated. The latter issue was severed by the trial court for later decision and is not involved in this appeal. The lower state courts denied relief for the years subsequent to the effective date of the 1950 amendment to Article 5248, and on writ of error the Supreme Court of Texas, by a divided court, affirmed. 159 Tex. -,
The District’s power to levy the tax was found to lie in amended Article 5248. Before 1950, Article 5248 provided a general tax exemption for lаnd and improvements “held, owned, used and occupied by the United States” for public purposes. In 1950, the Texas Legislature added two provisions to Article 5248, one providing for taxation of privately owned-personal property located on federal lands, and the other reading as follows:
“[Pjrovided, further, that any portion of said lands and improvements which is usеd and occupied by any person, firm, association of persons or corporation in its private capacity, or which is being used or occupied in the conduct of any private business or enterprise, shall be subject to taxation by this State and its political subdivisions.”
As construed by a majority of the Texas court, this provision is an affirmative grant of authority tо the State and its political subdivisions to tax private users of gov
However, three members of the Texas court, joined by a fourth on petition for rehearing, were of the opinion that under the majority’s construction the statute discriminates unconstitutionally against the United States and its lessees. Their conclusion rested on the fact that Article 7173 of the Revised Civil Statutes of Texas 3 imposes a distinctly lesser burden on similarly situated lessees of exempt property owned by the State and its political subdivisions. We agree with the dissenters’ conclusion.
Article 7173 is the only Texas statute other than Article 5248 which authorizes a tax on lessees. It provides in-part that:
“Property held under a lease for a term of three years or more, or held under a contract for the purchase thereof, belonging to this State, or that is exempt by law from taxation in the hands of- the owner thereof, shall be considered for all the purposes of taxation, as the property of the person so holding the same, except as otherwise specially provided by law.”
As construed by the Texas courts, Article 7173 is less burdensome than Article 5248 in three respects. First, the measure of a tax under Article 7173 is not the full value of leased tax-exempt premises, as it apparently is under Article 5248, but only the price the taxable lease-, hold would bring at a fair voluntary sale for cash — the value of the leasehold itself.
4
Second, by its very terms, Article 7173 imposes no tax on a lessee whose lease is for a term of less than three years. Finally, and crucial here, a lease for three years or longer but subject — like-Phillips^ — to. termination at the lessor’s option in the event of a sale is not “a lease for a term of three years or moré” for purposes of Article 7173.
Trammell
v.
Faught,
Although Article 7173 is, in terms, applicable to all lessees who hold tax-exempt property under a lease for a term of three years or more, it appears that only lessees of
public
property fall within this class in Texas. Tax exemptions for real proрerty owned by private organizations — charities, churches, and similar entities — do not survive a lease to a business lessee.
5
The full value of
However, all lessees of exempt public lands would appear to belong to the class defined by Article 7173.
6
In view of the fact that lessees in this class are taxed because they use exempt property for a nonexempt purpose, they аppear to be similarly situated and presumably should be taxed alike. Yet by the amendment of Article 5248, the
Phillips argues that because Article 5248 applies only to private users оf federal property, it is invalid for that reason, without more. For this argument, it relies on
Miller
v.
Milwaukee,
A determination that Article 5248 is invalid, under this test, cannot rest merely on an examination of that article. It does not operate in a vacuum. First, it is necessary to determine how other taxpayers similarly situated are treated. Such a determination requires “an examination of the whole tax structure of the state.” Cf.
Tradesmens National Bank
v.
Oklahoma Tax Comm’n, 309
U. S. 560, 568. Although
Macollen
may have departed somewhat from this rule, nothing in
Miller,
at least as it has been interpreted in later cases,' should be read as indicating that less is required. Cf.
Educational Films Corp.
v.
Ward,
Therefore, we must focus on the nature of the classification erected by Articles 5248 and 7173. The imposition of a heavier tax burden on lessees of federal property than is imposed on lessees of other exempt public property must be justified by significant differences between the two сlasses: The School District addresses.this problem, essentially, as-one of equal protection, and argues that we must uphold the classification, though apparently discriminatory, “if any state of facts reasonably can be conceived that would sustain it.”
Allied Stores
v.
Bowers,
None of these considerations provides solid support for the classification. It is- undoubtedly true, as a general proposition, that the State is free to adopt measures reasonably designed to facilitate the leasing of its own land. But if the incentive which it provides is in the form of a reduction in tax which discriminates against the Gov- ' ernment’s lessees, the question remains, is it permissible?
Likewise, it is not enough to say that the State can make up in' rent what it loses in taxes from its lessees. What the State’s political subdivisions lose in taxes from the State’s lessees cannot be made up in this fashion. Other local taxpayers — including the Government’s lessees — must make up the difference.
Nor is the classification here supported by the allegedly serious impact of federal leasing, as contrasted with state leasing, on the operations of local government. .It is claimed, in this respect, that neither the State nor its subdivisions lease property еxactly comparable — in size, value, or number
of
employees involved — to the ordnance works leased by Phillips from the Government. However, the classification erected by Article 5248 is not based on such factors. Article 5248 imposes its burdens on
atl
lessees of federal property. It is conceded that the State and its subdivisions lease valuable property tо commercial and business enterprises, as does the Federal Govern
It is true that perfection is by no means required under the equal protection test of permissible classification.. But we have made it clear, in the equal protection cases, that our decisions in that field are not necessarily controlling where problems of intergovernmental tax immunity are involved. In
Allied Stores
v.
Bowers, supra,
for example, we noted that the State was “dealing with [its] proper domestic concerns, and not trenching upon the prerogatives of the National Government.”
Nevertheless, it is claimed that the classification here is supported by our decision in
United States
v.
City of Detroit, supra,
because of the assertedly similar nature of the clаssification created by the statute involved in that case.
9
The Michigan statute, although applicable
This argument misconceives the scope of the Michigan decisions. In those cases we did not decide — in fact, we were not asked to decide — whether the exemption of school-owned property rendered the statute discriminatory. Neither the Government nor its lessees, to whom the statute was applicable, claimed discrimination of this character. 11 Since the issue was not ráised, the basis for the separate classification of property owned by schools was not examined. Therefore, the Michigan cases shed no light on the classification problem here. 12
Reversed.
Notes
Vernon’s Tex. Rev. Civ. Stat., 1948 (Supp. 1950), Art. 5248. The amendatory Act is Tex. Laws, 1st C. S. 1950, c. 37.
The Court of Civil Appeals thought that the tax should be limited to the value of Phillips’ leasehold,
Vernon’s Tex. Rev. Civ. Stat., ,1948, Art. 7173.
Vernon’s Tex. Rev. Civ. Stat., 1948, Art. 7174;
State
v.
Taylor & Kelley,
Tex. Const., Art. VIII, § 2;
Morris
v.
Masons,
Although public lands in general are exempt from state and local taxation in Texas, Tex. Const., Art. XI, § 9; Vernon’s Tex. Rev. Civ. Stat., 1948, Art. 7150 (4), there are certain conditions and exceptions to the exemption. The exemption dоes not survive a lease if the “public purpose” of the property is abandoned.
Abilene
v.
State,
During the years in question, the leasehold was taxable under § 6 of the Military Leasing Act of 1947, 61 Stat. 774, the predecessor • of the provision now codified as 10 U. S. C. § 2667 (e). Section 6 provided in part that “[tjhe lessee’s interest, made or created pursuant to the provisions of this Act, shall be made subject to State or local taxation.”
See, e. g., Op. Tex. Atty. Gen., No. WW-531, Dec. 9, 1958.
Mich. Acts 1953, No. 189, now compiled in 6 Mich. Stat. Ann., 1950 (1957 Cum. Supp.), §§ 7.7 (5) and 7.7 (6). See United States v. City of Detroit, supra, at 467, n. 1.
“Under Michigan law this means persons who use property-owned by the Federal Government, the State, its political subdivisions, churches, charitable organizations and a great host of other entities.” United States v. City of Detroit, supra, at 473.
In its brief, the Government stated that the exception was not pertinent to its argument. Its- discrimination argument rested on the propositiоn that the Michigan, statute was, in reality, “special legislation” directed at government property. The Government argued that this purpose was manifested by the fact that the statute contained an exception for cases in which payments had been, made by the United States “in lieu of taxes in amounts equivalent to taxes which might otherwise be lawfully assessed.” It was argued that the purpose thus manifested was improper under Macallen Co. v. Massachusetts, supra. We pointed out, in rejecting the argument, that the exception to the tax relied on by the Government in this connection served to protect it against thé possibility of a double contribution to the revenues of the State, and that the precedential value of Macollen had been substantially impaired by later decisions. See United States v. City of Detroit, supra, at 472, n. 2, 474, n. 6.
Only issues raised by the jurisdictional statement or petition for certiorari,, as the case may be, are considered by the Court. Supreme Court Rules, 15, par. 1 (c)(1), 23, par. 1 (c).