Cite as: 520 U. S. 564 (1997)
Opinion of the Court
of only those charities that choose to focus their activities on local concerns, or alternatively a governmental "purchase" of charitable services falling within the narrow exception to the dormant Commerce Clause for States in their role as "market participants," see, e. g., Hughes v. Alexandria Scrap Corp., 426 U. S. 794 (1976); Reeves, Inc. v. Stake, 447 U. S. 429 (1980). We find these arguments unpersuasive. Although tax exemptions and subsidies serve similar ends, they differ in important and relevant respects, and our cases have recognized these distinctions. As for the "market participant" argument, we have already rejected the Town's position in a prior case, and in any event respondents' open-ended exemption for charitable and benevolent institutions is not analogous to the industry-specific state actions that we reviewed in Alexandria Scrap and Reeves.
The Town argues that its discriminatory tax exemption is, in economic reality, no different from a discriminatory subsidy of those charities that cater principally to local needs. Noting our statement in West Lynn Creamery that "[a] pure subsidy funded out of general revenue ordinarily imposes no burden on interstate commerce, but merely assists local business," 512 U. S., at 199, the Town submits that since a discriminatory subsidy may be permissible, a discriminatory exemption must be, too. We have "never squarely confronted the constitutionality of subsidies," id., at 199, n. 15, and we need not address these questions today. Assuming, arguendo, that the Town is correct that a direct subsidy benefiting only those nonprofits serving principally Maine residents would be permissible, our cases do not sanction a tax exemption serving similar ends.22
22 As the Supreme Judicial Court made clear, 655 A. 2d, at 878, under Maine law an exemption is categorized as a "tax expenditure." Me. Rev. Stat. Ann., Tit. 36, § 196 (1990). The Town's effort to argue that this state statutory categorization allows it to elide the federal constitutional distinction between tax exemptions and subsidies is unavailing. We recognized long ago that a tax exemption can be viewed as a form of government
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