An NPR member station
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Fannie Mae and Freddie Mac Beat Spokane Tax Rap

The City of Spokane has lost a costly tax battle with two federal home mortgage entities commonly known as Fannie Mae and Freddie Mac. The city - and many other municipalities across the country - have been trying for years to impose excise taxes on the transfer of real property held or controlled by the two federal agencies.

But in a suit heard first in a Spokane federal court, judges ruled that the city may not impose excise taxes on real property financed by either of the agencies set up by Congress to foster a market for home mortgages. The city had argued that it has the power to charge taxes on the transfer of property just as it does on the property itself.

But federal appeals court judges flatly rejected that argument, saying there's a clear difference between a tax levied on property itself, and a tax imposed on the use or transfer of the property. The judges cited similar cases in other jurisdictions, all agreeing that excise taxes are not property taxes.

The city also two other back-up arguments - one, that Congress exceeded its authority under the Commerce Clause of the Constitution, and two, that taxing exemptions violate the 10th Amendment of the Constitution. That provision gives states any power which is not delegated to the federal government.

Fannie Mae is the informal name for the Federal National Mortgage Association, and Freddie Mac is shorthand for the Federal Home Loan Mortgage Corporation.

Related Content