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O'Connor, J., dissenting
those who do business with it. The income tax at issue in Davis, however, did not appear discriminatory on its face. Like the Virginia income tax at issue here, it did not single out federal employees or retirees for disfavored treatment. Instead, federal retirees were treated identically to all other retirees, with a single and numerically insignificant exception—retirees whose retirement benefits were paid by the State. Whether such an exception rendered the tax "discriminatory" within the meaning of the intergovernmental immunity doctrine, it seems to me, was an open question. On the one hand, the tax scheme did distinguish between federal retirees and state retirees: The former were required to pay state taxes on their retirement income, while the latter were not. But it was far from clear that such was the proper comparison. In fact, there were strong arguments that it was not.
As Justice Stevens explained more thoroughly in his Davis dissent, 489 U. S., at 819—and as we have recognized since McCulloch v. Maryland, 4 Wheat. 316 (1819)—inter-governmental immunity is necessary to prevent the States from interfering with federal interests through taxation. Because the National Government has no recourse to the state ballot box, it has only a limited ability to protect itself against excessive state taxes. But the risk of excessive taxation of federal interests is eliminated, and "[a] 'political check' is provided, when a state tax falls" not only on the Federal Government, but also "on a significant group of state citizens who can be counted upon to use their votes to keep the State from raising the tax excessively, and thus placing an unfair burden on the Federal Government." Washington v. United States, 460 U. S. 536, 545 (1983) (emphasis added). Accord, United States v. County of Fresno, 429 U. S. 452, 462-464 (1977); South Carolina v. Baker, 485 U. S. 505, 526, n. 15 (1988).
There can be no doubt that the taxation scheme at issue
in Davis and the one employed by the Commonwealth of
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