Cite as: 527 U. S. 423 (1999)
Syllabus
Governments from taxing the salaries of another sovereign's employees. See, e. g., Dobbins v. Commissioners of Erie Cty., 16 Pet. 435, 450. In Graves v. New York ex rel. O'Keefe, 306 U. S. 466, 486-487, the Court expressly overruled prior decisions and held that a State's taxation of federal employees' salaries lays no unconstitutional burden upon the Federal Government. Since Graves, the Court has reaffirmed a narrow approach to governmental tax immunity, United States v. New Mexico, 455 U. S. 720, 735, closely confining the doctrine to bar only those taxes that are imposed directly on one sovereign by the other or that discriminate against a sovereign or those with whom it deals, Davis v. Michigan Dept. of Treasury, 489 U. S. 803, 811. In contracting the doctrine, the Court has recognized that the area is one over which Congress is the principal superintendent. See New Mexico, 455 U. S., at 737-738. Indeed, congressional action coincided with the Graves turnaround: The Public Salary Tax Act was enacted shortly after release of the Court's decision in Graves. In Howard v. Commissioners of Sinking Fund of Louisville, 344 U. S. 624, 625, n. 2, 629, the Court concluded that a "license fee" similar in relevant respects to Jefferson County's was an "income tax" for purposes of a federal statute authorizing state taxation of federal employees' incomes, even though the fee was styled as a tax upon the privilege of working in a municipality, was not an "income tax" under state law, and deviated from textbook income tax characteristics. Id., at 628-629. As Howard indicates, whether Jefferson County's license tax fits within the Public Salary Tax Act's allowance of nondiscriminatory state taxation of federal employees' pay is a question of federal law. The practical impact, not the State's name tag, determines the answer to that question. Pp. 436-439.
(b) The Court rejects the judges' contention that two features of the Ordinance remove the tax from the Public Salary Tax Act shelter and render it an unconstitutional licensing scheme. The Court finds unpersuasive the judges' first argument that the Ordinance, by declaring it "unlawful . . . to engage in" a covered occupation, falls under Johnson v. Maryland, 254 U. S. 51, 57, which held that a State could not require a federal postal employee to obtain a state driver's license before performing his federal duties. The incautious "unlawful . . . to engage in" words likely were written with nonfederal employees, the vast majority of the occupational taxpayers, in front view. The Ordinance's actual operation is the decisive factor. See Detroit v. Murray Corp. of America, 355 U. S. 489, 492. In practice, the county's license tax serves a revenue-raising, not a regulatory, purpose. The county neither issues licenses to taxpayers, nor in any way regulates them in the performance of their duties based on their status as license taxpayers. Cf., e. g., Johnson, 254 U. S., at 57. In response to the judges'
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