Cite as: 526 U. S. 32 (1999)
Opinion of the Court
nies doing business in the State.1 See Ariz. Rev. Stat. Ann. §§ 42-1306, 42-1310.16 (1991). Blaze protested the assessment and prevailed at the end of administrative proceedings, but, on review, the Arizona Tax Court granted summary judgment in the Department's favor. The Arizona Court of Appeals reversed. 190 Ariz. 262, 947 P. 2d 836 (1997). It rejected the Department's argument that our decision in New Mexico, supra, controlled the case and held that federal law pre-empted the application of Arizona's transaction privilege tax to Blaze. The Arizona Supreme Court denied the Department's petition for review, with one justice voting to grant the petition. We granted certiorari, 523 U. S. 1117 (1998), and now reverse.
II
In New Mexico, we considered whether a State could impose gross receipts and use taxes on the property, income, and purchases of private federal contractors. To remedy "the confusing nature of our precedents" in this area, 455 U. S., at 733, we announced a clear rule:
"[T]ax immunity is appropriate in only one circumstance: when the levy falls on the United States itself, or on an agency or instrumentality so closely connected to the Government that the two cannot realistically be viewed as separate entities, at least insofar as the activity being taxed is concerned." Id., at 735.
We reasoned that this "narrow approach" to the scope of governmental tax immunity "accord[ed] with competing constitutional imperatives, by giving full range to each sovereign's taxing authority." Id., at 735-736 (citing Graves v. New York ex rel. O'Keefe, 306 U. S. 466, 483 (1939)). For that immunity to be expanded beyond these "narrow constitu-1 The Department initially also sought to tax Blaze's proceeds from contracts with tribal housing authorities but eventually dropped its claim. We therefore have no occasion to consider Blaze's tax liability with respect to those contracts.
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