124
Syllabus
ties if the value exceeds 102%; and (4) the Seller-Borrower may, during the term of the repo, substitute federal securities of equal market value for the securities initially involved in the transaction. The fact that the Trusts take "delivery" of the federal securities at the repo's commencement also is consistent with understanding the repos as loans, since "delivery" perfects the Trusts' security interests in their collateral. Pp. 128-133. (b) Respondent's two objections to this interpretation of § 3124(a) are unpersuasive. It does not matter that the Trusts and Seller-Borrower characterize the repos as sales and repurchases, since the substance and economic realities of the transactions show that the Trusts receive interest on cash they have lent to the Seller-Borrower. Cf. Frank Lyon Co. v. United States, 435 U. S. 561, 582. And, contrary to respondent's argument, this case does not involve the construction or validity of the Nebraska income tax statute's add-back rule. Pp. 133-135. 2. Nebraska's taxation of income from repos involving federal securities does not violate the Supremacy Clause. Respondent has pointed to no statute, revenue ruling, or other manifestation of Nebraska policy that treats "state" repos differently from "federal" repos for tax purposes. Nor does the taxation at issue make it more difficult and expensive for the Federal Government to finance the national debt. Expert testimony referred to by respondent has no relevance to this case, and respondent has shown no "obvious and appreciable" injury to the Government's borrowing power as a result of Nebraska's taxation of the Trusts' repo income, see Rockford Life Ins. Co. v. Illinois Dept. of Revenue, 482 U. S. 182, 190, n. 10. Pp. 135-137. 244 Neb. 82, 504 N. W. 2d 800, reversed and remanded.
Thomas, J., delivered the opinion for a unanimous Court.
L. Jay Bartel, Assistant Attorney General of Nebraska, argued the cause for petitioner. With him on the briefs was Don Stenberg, Attorney General.
Terry R. Wittler argued the cause for respondent. With him on the brief was Larry A. Holle.*
*Briefs of amici curiae urging reversal were filed for the State of California et al. by Daniel E. Lungren, Attorney General of California, Timothy G. Laddish, Assistant Attorney General, Joyce E. Hee, Deputy Attorney General, and Patrick J. Kusiak, and by the Attorneys General for their respective jurisdictions as follows: James H. Evans of Alabama, Grant Woods of Arizona, Charles M. Oberly III of Delaware, Roland W. Burris
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