Jefferson County v. Acker

United States Court of Appeals,

Eleventh Circuit.

No. 94-6400.

JEFFERSON COUNTY, a political subdivision of the State of
Alabama, Plaintiff-Appellant,

v.

William M. ACKER, Jr., Defendant-Appellee.

JEFFERSON COUNTY, a political subdivision of the State of
Alabama, Plaintiff-Appellant,

v.

U.W. CLEMON, Defendant-Appellee.

Aug. 30, 1996.

Appeals from the United States District Court for the Northern
District of Alabama. (Nos. CV93-M-69-S and CV93-M-196-S) Charles A.
Moye, Jr., Judge.

Before TJOFLAT, Chief Judge, KRAVITCH, HATCHETT, ANDERSON,
EDMONDSON, COX, BIRCH, DUBINA, BLACK, CARNES and BARKETT, Circuit
Judges, and HENDERSON*, Senior Circuit Judge.

COX, Circuit Judge:

We decide in this case whether Jefferson County, Alabama, may

impose on federal judges holding office under Article III of the

Constitution1 a tax for the privilege of engaging in their

occupation within the county. We hold that such a tax violates the

*
Senior U.S. Circuit Judge Henderson elected to participate
in this decision pursuant to 28 U.S.C. § 46(c).
1
Article III of the Constitution vests the judicial power of
the United States in the Supreme Court "and in such inferior
Courts as the Congress may from time to time ordain and
establish." U.S. Const. art. III, § 1. Article III judges
include federal district court judges, judges for the circuit
courts of appeals, and justices of the Supreme Court.
Supremacy Clause of the Constitution.2

I. FACTS AND PROCEDURAL HISTORY

Jefferson County, Alabama, sued William M. Acker, Jr., and

U.W. Clemon, United States District Judges for the Northern

District of Alabama, to recover delinquent county taxes due under

Jefferson County Ordinance No. 1120. Ordinance No. 1120 imposes a

license or privilege tax (the "privilege tax") on persons not

otherwise required to pay any license or privilege tax to the State

of Alabama or Jefferson County. The ordinance provides:

It shall be unlawful for any person to engage in or follow any
vocation, occupation, calling or profession ... within the
County on or after the 1st day of January, 1988, without
paying license fees to the County for the privilege of
engaging in or following such vocation, occupation, calling or
profession, which license fees shall be measured by one-half
percent (1/2%) of the gross receipts of each such person.

Jefferson County, Ala., Ordinance No. 1120, § 2 (Sept. 29, 1987).

The ordinance defines "vocation, occupation, calling and

profession" to include the holding of any kind of office, by

election or appointment, by any federal, state, county, or city

officer or employee where the officer's or employee's services are

rendered within Jefferson County. Id. § 1(C).3 It is undisputed

2
Given the nature of the question presented in this case, we
considered the issue of recusal at the outset. Our discussion of
the recusal issue is included as an appendix.
3
The ordinance also includes the following definition of
"vocation, occupation, calling and profession":

The words "vocation, occupation, calling and
profession" shall mean and include the doing of any
kind of work, the rendering of any kind of personal
services, or the holding of any kind of position or job
within Jefferson County, Alabama, by any clerk,
laborer, tradesman, manager, official or other
employee, including any non-resident of Jefferson
County who is employed by any employer as defined in
that the ordinance facially applies to federal judges.

Non-residents of Jefferson County performing work in Jefferson

County must pay the privilege tax. See id. § 1(B). The ordinance

defines "gross receipts," by which it measures the privilege tax,

as the total gross amount of all salaries, wages, or other monetary

payments of any kind which a person receives or is entitled to

receive for work or services. Id. § 1(F).4 If compensation is

earned from work both inside and outside Jefferson County, the

privilege tax is based on the proportion of work performed within

Jefferson County. Id. § 3. The computation of the percentage of

work done within Jefferson County must be supported by oath. Id.

this section, where the relationship between the
individual performing the services and the person for
whom such services are rendered is, as to those
services, the legal relationship of employer and
employee, including also a partner of a firm or an
officer of a firm or corporation, if such partner or
officer receives a salary for his personal services
rendered in the business of such firm or corporation,
but they shall not mean or include domestic servants
employed in private homes and shall not include
businesses, professions or occupations for which
license fees are required to be paid under any General
License Code of the County or to the State of Alabama
or the County by any of the following [listing sections
of the Code of Alabama].

Ordinance No. 1120, § 1(B).
4
Ordinance No. 1120, § 1(F) provides:

The words "gross receipts" and "compensation" shall
have the same meaning, and both words shall mean and
include the total gross amount of all salaries, wages,
commissions, bonuses or other money payment of any
kind, or any other considerations having monetary
value, which a person receives from or is entitled to
receive from or be given credit for by his employer for
any work done or personal services rendered in any
vocation, occupation, calling or profession, including
any kind of deductions before "take home" pay is
received ...
 The ordinance requires employers to withhold privilege taxes,

to file returns with the Director of Revenue, and to keep and

maintain certain records for five years. Id. § 4. The

Administrative Office of the United States Courts has never

withheld Jefferson County privilege taxes from the salary of any

federal judge or court employee. Under the ordinance, an

employer's failure to withhold the privilege tax does not relieve

employees from the obligation to pay. Id. An employee whose

employer has failed to comply with the ordinance must file a return

and pay the privilege tax. Id. § 5.

The ordinance grants certain investigative powers to the

Jefferson County Director of Revenue. These include the power to

examine the books, records, and papers of any employer or licensee

to determine the accuracy of any return or to determine the amount

of privilege taxes due if no return was filed, as well as the power

to examine any person under oath concerning any gross receipts

which were or should have been shown in a return. Id. § 7. The

Director of Revenue also may promulgate regulations for the

administration and enforcement of the ordinance. Id. § 8.

The ordinance imposes interest and penalties for the failure

to pay privilege taxes and the failure to withhold privilege taxes.

Id. § 10(A). In addition, the ordinance alludes to other

punishment for failing to comply with its requirements:

Any person or employee who shall fail, neglect or refuse to
pay a license fee ... or any employer who shall fail to
withhold said license fees, or to pay over to County such
license fees ..., or any person required to file a return ...
who shall fail, neglect or refuse to file such return, or any
person or employer who shall refuse to permit the Director of
Revenue or any agent or employee designated by him ... to
examine his books, records and papers for any purpose
 authorized by this Ordinance ... shall upon conviction be
subject to punishment within the limits of and as provided by
law for each offense. Such punishment shall be in addition to
the penalties imposed under subsection (A) of this section.

Id. § 10(B). Alabama law provides that each violation 5 of a city

or town ordinance requiring the payment of privilege taxes is

punishable by a fine, as prescribed by the ordinance, of up to

$500, by up to six months imprisonment, or by both. Alabama Code

§ 11-51-93 (1989). Alabama law does not appear to provide criminal

sanctions for violating county ordinances requiring the payment of

privilege taxes.

At least three other local governments in Alabama have

ordinances requiring the payment of license or privilege taxes.

The Cities of Gadsden and Birmingham, in the Northern District of

Alabama,6 and Auburn, in the Middle District of Alabama, have

ordinances almost identical to Jefferson County's, though their

ordinances tax gross receipts at a higher rate and, because they

are city ordinances, are backed by criminal penalties under Alabama

law. See id. Counsel for Jefferson County told us at oral

argument that Jefferson County simply copied Birmingham's ordinance

when enacting Ordinance No. 1120.

Judge Acker and Judge Clemon maintain their principal offices

in the Hugo Black Federal Courthouse in Birmingham, Alabama, which

lies within Jefferson County. They routinely perform some but not

all of their duties outside of Jefferson County. Judges Acker and

5
Each day one works without a license constitutes a separate
offense. Alabama Code § 11-51-93 (1989).
6
The Northern District of Alabama holds court in both
Birmingham and Gadsden. 28 U.S.C. § 81 (a)(3) and (6).
Clemon have refused to pay the privilege tax imposed by the

ordinance. Before the district court's opinion in this case, all

other active judges of the Northern District of Alabama paid the

privilege tax on differing percentages of their judicial salaries

without supporting those percentages by an oath or any formal

accounting procedure. In addition, all state judges with offices

in Jefferson County have paid the privilege tax based on portions

of their salaries.

Jefferson County sued Judge Acker and Judge Clemon in state

court to recover delinquent privilege taxes due under the

ordinance. Each judge removed his case to federal court, where the

cases were consolidated. The parties stipulated to the facts and

submitted cross-motions for summary judgment.

The district court7 held that, under the intergovernmental tax

immunity doctrine, the ordinance is unconstitutional as applied to

Judge Acker and Judge Clemon. The court concluded that the legal

incidence of the privilege tax falls on the federal judicial

function. Jefferson County v. Acker, 850 F.Supp. 1536, 1543

(N.D.Ala.1994). According to the court, the privilege tax, "by

express intention and in real effect, is a franchise tax imposed

upon the federal judicial operations and is unconstitutional as a

direct tax upon an officer and instrumentality of the United

States, that is, upon the sovereign itself." Id. at 1545-46.

The district court also held that applying the ordinance to

Judges Acker and Clemon violates the Compensation Clause of Article

7
The Honorable Charles A. Moye, Jr., U.S. District Judge for
the Northern District of Georgia, sitting by designation.
III.8 Id. at 1547. The privilege tax diminishes a judge's

compensation, rather than taxing his salary, the court held,

because its incidence "is upon the performance of judicial

functions by a judicial officer, antecedent to the point that the

salary therefor having been paid by the government becomes the

property of the individual citizen of Alabama." Id. at 1547-48.

Jefferson County appealed.9

A panel of this court reversed, holding that the ordinance may

be applied to Article III judges without violating the

intergovernmental tax immunity doctrine or the Compensation Clause.

Jefferson County v. Acker, 61 F.3d 848 (11th Cir.1995). Chief

Judge Tjoflat dissented. The panel majority disagreed with the

district court's conclusion that the ordinance taxes the federal

judicial function. The panel majority determined that "the

practical effect of [the ordinance] is to tax the income that

federal judges derive from the performance of their judicial

functions," not "to impose a license tax as a precondition to the

performance of those functions." Id. at 855. And the panel

majority determined that federal judges are federal officers rather

than arms of the federal government. Id. at 853. Therefore, the

panel held, the ordinance does not directly tax the operations of

8
The Compensation Clause provides that Article III judges
"shall, at stated Times, receive for their Services, a
Compensation, which shall not be diminished during their
Continuance in Office." U.S. Const. art. III, § 1.
9
The district court also held that the ordinance does not
discriminate against Judges Acker and Clemon by reason of the
federal source of their compensation in violation of the Public
Salary Act, 4 U.S.C. § 111. On this appeal, there is no
contention that this holding was erroneous and, in light of our
disposition of the case, we do not address it.
the federal government in violation of the intergovernmental tax

immunity doctrine. Id. at 856.

Also based on its determination that the practical effect of

the privilege tax is that of an income tax, the panel majority held

that the Compensation Clause does not bar applying the ordinance to

federal judges. Id. According to the panel majority, "[i]t is

well established that the Compensation Clause does not forbid ...

levying an income tax on federal judges." Id. (citing O'Malley v.

Woodrough, 307 U.S. 277, 282, 59 S.Ct. 838, 840, 83 L.Ed. 1289

(1939)).

Judges Acker and Clemon filed a suggestion for rehearing en

banc. Recognizing this case to involve legal questions and

principles of exceptional importance, we granted rehearing en banc

to determine whether the ordinance constitutionally may be applied

to Article III judges.

II. ISSUES ON APPEAL

Two issues have been raised on appeal: (1) whether the tax

imposed by Ordinance No. 1120 constitutes an unconstitutional

diminution in the compensation of Article III judges; and (2)

whether the tax imposed by Ordinance No. 1120 violates the

Supremacy Clause as an intergovernmental tax. Because we hold that

the Supremacy Clause bars the application of the ordinance to

federal judges, we do not address whether the ordinance

unconstitutionally diminishes federal judges' compensation.

III. CONTENTIONS OF THE PARTIES

Jefferson County contends that the district court erred in

holding that the intergovernmental tax immunity doctrine prohibits
imposing the privilege tax on federal judges. Jefferson County

argues that the Public Salary Act and the Buck Act waived the tax

immunity of federal officers, including federal judges, with

respect to all taxes except discriminatory taxes. Because the

privilege tax is not discriminatory, the County argues, it

constitutionally may be applied to federal judges.

The County further contends that, even if Congress's waiver of

federal tax immunity does not apply to the privilege tax, the

intergovernmental tax immunity doctrine bars only those state taxes

levied directly on the federal government itself.10 The privilege

tax, the County argues, is not levied directly on the federal

government. Rather, it is imposed on individuals, who are

employees of the federal government as opposed to its agencies or

instrumentalities. The County argues that Judges Acker and Clemon

have conceded their tax immunity argument by admitting that they

are subject to the Alabama state income tax: if they were

instrumentalities of the federal government, tax immunity would

shield them not only from the privilege tax but also from state

income taxes.

Judges Acker and Clemon contend that Congress has not waived

their federal tax immunity from the privilege tax. They argue that

the privilege tax violates the intergovernmental tax immunity

doctrine because the legal incidence of the privilege tax is not on

10
The County recognizes that the intergovernmental tax
immunity doctrine also bars taxes that discriminate against the
federal government. But the dispute on this appeal does not
center on whether the privilege tax is discriminatory and, in
light of our disposition of the case, we do not address whether
the privilege tax is discriminatory.
the individual judge but on the performance of the federal judicial

function. The judges contend that a federal judge is the federal

court when performing judicial duties. The judges contend that

state law is determinative of the legal incidence of the privilege

tax. When state law demonstrates that a tax is levied on a federal

function, they argue, the practical effect of the tax need not be

considered. Judges Acker and Clemon also argue that the

ordinance's onerous time-keeping and return requirements burden the

federal judicial function.

IV. DISCUSSION

We are presented with an issue of first impression. The

parties have not cited, and we have not found, any federal case

addressing whether the intergovernmental tax immunity doctrine

prohibits a state or local government from imposing a privilege tax

on Article III judges.

We begin our analysis with an examination of the contours of

the intergovernmental tax immunity doctrine, mindful that the

nature of the tax and the identity of the taxpayer here differ

significantly from the taxes and taxpayers at issue in previous

intergovernmental tax immunity cases. Then we apply the doctrine

to the judges' challenge to the Jefferson County privilege tax.

Finally, we determine whether the Public Salary Act and the Buck

Act have altered the intergovernmental tax immunity doctrine's

limits on state and local taxation so as to permit the imposition

of the privilege tax on federal judges.

A. The Intergovernmental Tax Immunity Doctrine

The purpose of the intergovernmental tax immunity doctrine is
to forestall "clashing sovereignty." United States v. New Mexico,

455 U.S. 720, 735, 102 S.Ct. 1373, 1383, 71 L.Ed.2d 580 (1982)

(quoting McCulloch v. Maryland, 4 Wheat 316, 430, 4 L.Ed. 579

(1819)). Born of Chief Justice Marshall's opinion in McCulloch v.

Maryland, and aphoristically expressed in Marshall's famous dictum

"the power to tax involves the power to destroy," the

intergovernmental tax immunity doctrine seeks to reconcile states'

sovereign taxing authority with the Supremacy Clause's protection

of federal operations from state interference. See generally New

Mexico, 455 U.S. at 730-36, 102 S.Ct. at 1380-1383; Paul J.

Hartman, Federal Limitations on State and Local Taxation §§ 6:1-

6:15 (1981). The Supreme Court's attempt to fashion a doctrine

accommodating these competing constitutional imperatives "has been

marked from the beginning by inconsistent decisions and

increasingly delicate distinctions." New Mexico, 455 U.S. at 730,

102 S.Ct. at 1380-81.

For over a century, the Supreme Court treated Marshall's

famous dictum as a constitutional mandate, Graves v. New York ex

rel. O'Keefe, 306 U.S. 466, 489, 59 S.Ct. 595, 602, 83 L.Ed. 927

(1939) (Frankfurter, J., concurring), finding in case after case

that nondiscriminatory state taxes potentially affecting the

federal government—even taxes imposed on private parties dealing

with the government—threatened to disrupt federal operations. The

Court thus struck down, for example, state income taxes on federal

employees, Dobbins v. Commissioners of Erie County, 41 U.S. (16

Pet.) 435, 10 L.Ed. 1022 (1842), and state sales taxes on private

companies' sales to the federal government, Panhandle Oil Co. v.
Mississippi ex rel. Knox, 277 U.S. 218, 48 S.Ct. 451, 72 L.Ed. 857

(1928). The theory was that such taxes might increase the cost to

the federal government of performing its functions. United States

v. County of Fresno, 429 U.S. 452, 460, 97 S.Ct. 699, 703, 50

L.Ed.2d 683 (1977).

The theory that a nondiscriminatory tax unconstitutionally

interferes with federal functions simply because it imposes an

economic burden on the federal government was abandoned in James v.

Dravo Contracting, 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155 (1937).

There, the Court assumed that a state gross receipts tax levied on

a federal contractor increased the cost to the government of the

contractor's services, but held that the tax nevertheless did not

interfere in any substantial way with the performance of federal

functions. Id. at 160, 58 S.Ct. at 221. Dravo signalled the

beginning of the end of constitutional tax immunity for private

parties dealing with the federal government. Thus, two years later

the Court overruled Dobbins, which had immunized federal employees

from state income taxes, declaring that any economic burden on the

government from an income tax on a government employee is "but the

normal incident of the organization within the same territory of

two governments, each possessing the taxing power," and a burden

"which the Constitution presupposes." Graves v. New York ex rel.

O'Keefe, 306 U.S. 466, 487, 59 S.Ct. 595, 601, 83 L.Ed. 927 (1939)

("O'Keefe ").

The O'Keefe Court focused its analysis on whether an income

tax on a federal employee obstructs or interferes with the

performance of federal functions. Id. at 477, 481, 484, 59 S.Ct.
at 597, 599, 600. Earlier cases granting immunity from income

taxes, the Court said, failed to consider whether such taxes

interfered with government functions; they just assumed that the

immunity of the government and its instrumentalities extended to

employees of those entities. Id. at 481, 59 S.Ct. at 599. But

"[t]he theory ... that a tax on income is legally or economically

a tax on its source [was] no longer tenable" after Dravo. Id. at

480, 59 S.Ct. at 598. Thus not willing to assume any burden on

government functions, id. at 486, 59 S.Ct. at 601, the court

examined whether an income tax indeed interfered with government

functions. The Court found no burden on federal functions other

than the economic burden that may be passed on to the government in

the form of higher labor costs. Id. at 481, 59 S.Ct. at 598.

Concluding that such a burden does not amount to an interference

with the performance of federal functions, the Court upheld the

imposition of state income taxes on federal employees. Id. at 487,

59 S.Ct. at 601.

Later cases similarly recognized that the economic burden on

the federal government of nondiscriminatory state taxes imposed on

those dealing with the federal government generally does not

threaten to impede the performance of federal functions. E.g.,

South Carolina v. Baker, 485 U.S. 505, 521, 108 S.Ct. 1355, 1366,

99 L.Ed.2d 592 (1988) (noting that tax's entire financial burden

may fall on government without rendering tax unconstitutional);

New Mexico, 455 U.S. at 734, 102 S.Ct. at 1382 (noting that no

immunity arises from federal government shouldering tax's entire

economic burden); County of Fresno, 429 U.S. at 462, 97 S.Ct. at
704-705 (noting that economic burden on federal function does not

render tax unconstitutional). With this recognition, the

intergovernmental tax immunity doctrine has become somewhat more

attuned to the practical realities of our federal system. But the

test for determining whether a nondiscriminatory tax interferes

with the federal government's functions remains highly formalistic.

Current intergovernmental tax immunity doctrine asks whether

the "legal incidence," as opposed to the economic burden, of the

tax falls directly on the federal government or its

instrumentality. See New Mexico, 455 U.S. at 735, 102 S.Ct. at

1383; County of Fresno, 429 U.S. at 464, 97 S.Ct. at 705. A

nondiscriminatory state or local tax is unconstitutional only "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." New Mexico, 455

U.S. at 735, 102 S.Ct. at 1383. To be an instrumentality of the

government, a taxed entity must be "so intimately connected with

the exercise of a power or the performance of a duty by the

Government that taxation of it would be a direct interference with

the functions of government itself." Id. (citations and internal

quotation marks omitted).

The "legal incidence" test has significantly constricted

federal intergovernmental tax immunity. Indeed, the Supreme Court

has characterized the current doctrine's prohibition against taxes

legally incident on the federal government or its instrumentalities

as of "essentially symbolic importance, as the visible "consequence
of that [federal] supremacy which the constitution has declared.'

" New Mexico, 455 U.S. at 735, 102 S.Ct. at 1383 (quoting

McCullough v. Maryland, 4 Wheat at 436). Relegation of the

doctrine to largely symbolic importance is not surprising in light

of the recognition that the economic burden of nondiscriminatory

state taxes does not threaten the government's operations. After

all, by its very essence, a tax imposes an economic burden. If the

Constitution presupposes such an economic burden, then few taxes

will violate the intergovernmental tax immunity doctrine.

We do not mean to gainsay the intergovernmental tax immunity

doctrine's importance in our federal system. Though it has been

narrowed and beset by formalism, the doctrine has continuing

vitality. Our point is that the reason for the doctrine's

contraction must be appreciated to understand the scope of the

doctrine's continuing vitality. The doctrine's contraction stemmed

not from a weakening of the principle that, under the Supremacy

Clause, states may not burden or interfere with federal operations,

but from the recognition that nondiscriminatory taxes levied on

private parties generally do not impede federal operations. The

intergovernmental tax immunity doctrine still prohibits any state

or local tax that burdens or interferes with federal operations.

Mindful of the underlying purpose of intergovernmental tax

immunity, the doctrine's history, and the "actual workings of our

federalism," O'Keefe, 306 U.S. at 490, 59 S.Ct. at 603

(Frankfurter, J., concurring), we turn to whether the Jefferson

County privilege tax constitutionally may be levied on Judges Acker

and Clemon.
B. The Federal Judges' Challenge to the Privilege Tax

Judge Acker and Judge Clemon's challenge to the privilege tax

differs substantially from most intergovernmental tax immunity

challenges. As far as we can tell, Judges Acker and Clemon are the

first federal judges to challenge a state or local tax on

intergovernmental tax immunity grounds. Moreover, because the

privilege tax differs from most taxes, their objection to the

privilege tax is novel. They do not allege that the privilege tax

interferes with federal functions by imposing an economic burden on

the federal government. The district court found that the

privilege tax imposes no economic burden on the federal government

itself; it is paid by individual federal judges out of their own

pockets. Judges Acker and Clemon do not question this conclusion

and, thus, do not make the economic-burden argument that now has

been thoroughly repudiated by the intergovernmental tax immunity

doctrine.11

The burden of which Judges Acker and Clemon complain is the

ordinance's requirement that they remit privilege taxes for the

privilege of lawfully performing federal judicial duties in

Jefferson County. Though they object to paying a tax, they do so

not for the economic reasons generally associated with objections

to taxes but because the tax purports to be a precondition to the

lawful performance of their federal judicial duties.

Jefferson County contends that the privilege tax does not

11
Purporting to eschew the economic-burden theory, some
litigants have couched their arguments simply in terms of
interfering with federal functions, but these challenges
invariably have amounted to challenges to the tax's economic
burden.
regulate, control, or license a federal judge's performance of his

duties any more than a state income tax. If Jefferson County is

correct that, despite being labelled a "license fee," the privilege

tax amounts to an income tax, then it constitutionally may be

applied to Judges Acker and Clemon under O'Keefe. Thus, before

attempting to ascertain the "legal incidence" of the privilege tax

under the intergovernmental tax immunity doctrine, we examine the

substantive nature of the privilege tax to determine whether it

merely taxes the receipt of income.

1. Whether the Privilege Tax Is In Substance An Income Tax

To determine the nature and effect of the privilege tax, "we

must look through form and behind labels to substance." City of

Detroit v. Murray Corp. of America, 355 U.S. 489, 492, 78 S.Ct.

458, 460, 2 L.Ed.2d 441 (1958). We are the ultimate arbiters of

the substance of the privilege tax. But state law defines the

attributes comprising the substance of the privilege tax.

The Alabama Supreme Court has described the operational

effect of a City of Auburn ordinance identical to the Jefferson

County ordinance in all relevant respects. McPheeter v. City of

Auburn, 288 Ala. 286, 259 So.2d 833 (1972). Rejecting the argument

that the Auburn ordinance imposed an income tax not authorized by

the state constitution, Alabama's highest court explained that

[t]he tax is occasioned when the taxpayer performs services
within the Auburn city limits, and not when the taxpayer
receives income. Therefore, the ordinance taxes the privilege
of working and the engagement of rendering services within the
City of Auburn, and it only measures the tax due by the amount
of the taxpayers' gross receipts which result from such
privilege.... It is evident that the tax is not even measured
by a person's income, but only by his salary or wages earned.
So in no sense can the Auburn tax be considered an income tax.
Id. at 837.

Concerned with substance, not labels, we pay no heed to the

state court's conclusion that the privilege tax is not an "income

tax" under state law. In analyzing the privilege tax's natural

effect, however, we accord great weight to the state court's

determination of how the tax operates; if the state court's

determination is a reasonable interpretation of the ordinance, we

deem it conclusive. See Gurley v. Rhoden, 421 U.S. 200, 208, 95

S.Ct. 1605, 1610, 44 L.Ed.2d 110 (1975) (deferring to state court's

reasonable determination of operating incidence of excise tax).

The Alabama Supreme Court's determination of the operation of

the Auburn ordinance is a reasonable interpretation of how the

identical Jefferson County ordinance operates. Our examination of

the Jefferson County ordinance, within the context of Alabama law,

reveals that the privilege tax is a tax on the performance of work

in Jefferson County. In substance, the privilege tax does not tax

the receipt of income.

The privilege tax differs fundamentally from an income tax.

The ordinance purports to make it unlawful to engage in one's

occupation in Jefferson County without paying the privilege tax.

Ordinance No. 1120, § 2. This provision indicates that, instead of

taxing the receipt of income, the privilege tax attaches to the

performance of work in Jefferson County.

Other provisions of the ordinance further demonstrate that the

privilege tax does not merely tax the receipt of income. The

privilege tax is levied not only on income received but also on

income that one is entitled to receive, id. § 1(F), indicating
that the ordinance is concerned with ensuring that work is taxed

regardless of whether income from the work actually is received.

Moreover, persons engaged in occupations or businesses for which

they are required to pay state or other Jefferson County license

fees are exempted from paying the privilege tax under Ordinance No.

1120. Id. § 1(B). We do not understand why, if the ordinance is

an income tax, it exempts from its requirements persons paying

license fees to Jefferson County or to the State of Alabama,

license fees that are totally unrelated to income.12 This exemption

makes sense only if the ordinance aims to ensure that a license fee

is paid to some unit of government for all work performed in

Jefferson County.

We hold that the Jefferson County privilege tax is not, in

substance, a tax on income. Though the privilege tax is measured

by income, at least roughly, its other attributes remove it from

any reasonable conception of an income tax. Therefore, this case

is not controlled by O'Keefe 's holding that income taxes do not

interfere with federal functions in violation of the

intergovernmental tax immunity doctrine.

2. The Legal Incidence of the Privilege Tax

Our determination that the privilege tax does not tax the

receipt of income is only the beginning of our inquiry. Regardless

of what "type" of tax the privilege tax is, the intergovernmental

tax immunity doctrine bars its imposition on Judges Acker and

Clemon only if its legal incidence falls directly on the federal

12
Attorneys, for example, must pay a flat annual license fee
of $250 to the state, regardless of their income. Ala.Code § 40-
12-49.
government or its instrumentality. New Mexico, 455 U.S. at 735,

102 S.Ct. at 1383. Judges Acker and Clemon urge that the privilege

tax falls on the federal judicial function, as the district court

held. Jefferson County contends that the privilege tax is imposed

on individuals, not on the federal government or the federal

judicial function.

Identifying the legal incidence of the privilege tax is a

question of federal law. Kern-Limerick, Inc. v. Scurlock, 347 U.S.

110, 121, 74 S.Ct. 403, 410, 98 L.Ed. 546 (1954). However, as with

our determination of the nature of the privilege tax, determining

the privilege tax's legal incidence requires us to identify the

substantive characteristics of the privilege tax under state law.

City of Detroit, 355 U.S. at 493, 78 S.Ct. at 460-61. Then, we

must evaluate the substance of the privilege tax under the federal

standards for identifying a tax's legal incidence. Kern-Limerick,

347 U.S. at 121, 74 S.Ct. at 410.

We hold that the legal incidence of the tax falls on the

federal judge. As the Supreme Court seems to apply the legal

incidence test, the legal incidence of a tax falls on the entity

that the taxing statute identifies as the taxpayer and contemplates

paying the tax. See United States v. State Tax Commission of

Mississippi, 421 U.S. 599, 607-610, 95 S.Ct. 1872, 1877-79, 44

L.Ed.2d 404 (1975); Gurley, 421 U.S. at 203-212, 95 S.Ct. at 1608-

12; Kern-Limerick, 347 U.S. at 113-123, 74 S.Ct. at 406-411. The

ordinance identifies the person engaging in work in Jefferson

County as the taxpayer and contemplates that he or she will pay the
tax.13 Ordinance No. 1120, §§ 2, 4, 5. Thus, the legal incidence

of the privilege tax falls on Judge Acker and Judge Clemon.

3. Whether Federal Judges Are Federal Instrumentalities

We must determine, then, whether Judges Acker and Clemon may

be considered the federal government or its instrumentalities. The

district court concluded that federal judges are federal

instrumentalities. Judges Acker and Clemon argue that a federal

judge is the federal court when performing judicial duties.

Jefferson County argues that Judges Acker and Clemon are

individuals and employees of the federal government, not its

instrumentalities. According to the County, Judges Acker and

Clemon cannot be instrumentalities of the government because, if

they were, then they would be immune from state income taxes as

well.

Judges Acker and Clemon may be instrumentalities of the

federal government with respect to the taxation of one activity but

not another. See New Mexico, 455 U.S. at 740-743, 102 S.Ct. at

1386-87 (suggesting that an entity may be a federal instrumentality

when one activity is taxed even if it is not an instrumentality

when another activity is taxed). The Supreme Court's description

of what constitutes a federal instrumentality suggests that the

activity being taxed may determine whether the taxpayer is a

federal instrumentality. To be an instrumentality, an entity must

be "so closely connected to the Government that the two cannot

realistically be viewed as separate entities, at least insofar as

13
The ordinance imposes withholding requirements on
employers, but contemplates that the license fee will be paid by
the person engaging in the work.
the activity being taxed is concerned," or "so intimately connected

with the exercise of a power or the performance of a duty by the

Government that taxation of it would be a direct interference with

the functions of government itself." Id. at 735, 102 S.Ct. at 1383

(citations and internal quotation marks omitted) (emphasis added).

We accept that a federal judge is not an instrumentality of

the federal government when the activity being taxed is the judge's

receipt of income. A judge may be no more intimately connected

with the federal government when receiving income than the federal

employee in O'Keefe. The taxation of a federal judge's income may

interfere with the functions of government no more than the

taxation of any other federal employee's income. But taxing a

federal judge in the performance of his or her judicial duties is

fundamentally different from taxing his or her income.

When performing federal judicial duties, a federal judge

performs "the functions of government itself," New Mexico, 455 U.S.

at 735, 102 S.Ct. at 1383, and cannot realistically be viewed as a

separate entity from the federal court. The judge is "so

intimately connected with the exercise of [federal judicial] power

or the performance of a [federal judicial] duty ... that taxation

of [him] would be a direct interference with the functions of

government itself." Id. Thus, we hold that a federal judge is a

federal instrumentality when the taxed activity is the judge's

performance of judicial duties.

We conclude, then, that the intergovernmental tax immunity

doctrine bars the imposition of the Jefferson County privilege tax

on Judges Acker and Clemon. The privilege tax taxes the activity
of working in Jefferson County. As applied to Judges Acker and

Clemon, the privilege tax taxes the performance of federal judicial

duties in Jefferson County. When performing their judicial duties,

Judges Acker and Clemon must be considered instrumentalities of the

federal government. The imposition of the privilege tax on Judges

Acker and Clemon, therefore, amounts to a direct tax on federal

instrumentalities in violation of the intergovernmental tax

immunity doctrine.

Our conclusion that the Constitution bars levying the

privilege tax on Judges Acker and Clemon follows not only from a

formal application of the intergovernmental tax immunity doctrine

but also from adherence to the doctrine's overarching purpose. The

imposition of the privilege tax on federal judges is apt to lead to

the clashing sovereignty that the Supremacy Clause seeks to avoid.

By its very terms and in practical effect, Ordinance No. 1120 may

be applied to federal judges only at the risk of interfering with

the operation of the federal judiciary.

According to its plain language, the ordinance makes it

unlawful for a federal judge to perform his or her duties in

Jefferson County without paying the privilege tax. The County

argues that Alabama counties have no power to prosecute anyone

criminally for failure to pay the privilege tax. 14 While Alabama

counties currently lack the power to impose criminal sanctions for

failure to pay the privilege tax, the comfort that this omission

14
The ordinance is not backed by criminal penalties, the
County argues, so it is "unlawful" to work without paying the
privilege tax only in the sense that it is "unlawful" to refuse
to pay any civil debt.
provides may be short-lived; the Alabama legislature could of

course provide a criminal penalty provision applicable to counties

like the provision applicable to cities and towns.15

Regardless of whether a county possesses the power under

Alabama law to make unlicensed work a crime, a federal judge in

Jefferson County who for some reason fails to pay the privilege tax

is deemed by Jefferson County to act unlawfully when he performs

his judicial duties. We have no doubt that, under the Supremacy

Clause, Jefferson County could not enjoin or otherwise prevent a

federal judge from performing federal duties. But we believe that

the Supremacy Clause protects the federal judiciary not only from

outright obstruction but also from a requirement that a federal

judge pay a fee to lawfully perform his or her duties. See Mayo v.

United States, 319 U.S. 441, 447, 63 S.Ct. 1137, 1140, 87 L.Ed.

1504 (1943) (holding that Supremacy Clause prohibits state from

requiring United States to pay privilege tax before executing a

function of government); Johnson v. Maryland, 254 U.S. 51, 57, 41

S.Ct. 16, 16-17, 65 L.Ed. 126 (1920) (holding that state may not

require federal postal employee to obtain state driver's license

before performing official duties). Any attempt by a state or

local government to tell a federal judge what he or she must do to

lawfully perform federal duties offends elemental notions of

15
At oral argument, counsel for Jefferson County stated that
the County appears to have copied Birmingham's privilege tax
ordinance verbatim. Under Alabama law, a city, unlike a county,
does have the power to criminally prosecute and punish violators
of a license tax ordinance. Ala.Code § 11-51-93.
federal supremacy.16

In practice, any attempt to apply Ordinance No. 1120 to

federal judges threatens to lead to clashing sovereignty.

Enforcement of the privilege tax requirement against federal judges

risks intrusion into a federal judge's judicial affairs. To

determine the amount of a federal judge's privilege tax, Jefferson

County must determine what percentage of the judge's duties were

performed in Jefferson County. We question whether a state or

local government may inquire into precisely how and where a federal

judge spends time on judicial duties; even if permissible, such an

inquiry is apt to engender intergovernmental conflict. A further
17
source of conflict is the practical effect of the privilege tax

on federal judges' willingness to sit or otherwise perform duties

in Jefferson County.

16
The Supreme Court has described the freedom of the federal
courts from state interference, albeit in a different context, in
this way:

It may not be doubted that the judicial power of the
United States as created by the Constitution ... is a
power wholly independent of state action, and which
therefore the several states may not by any exertion of
authority in any form, directly or indirectly, destroy,
abridge, limit, or render inefficacious. The doctrine
is so elementary as to require no citation of authority
to sustain it. Indeed, it stands out so plainly as one
of the essential and fundamental conceptions upon which
our constitutional system rests, and the lines which
define it are so broad and so obvious, that ... the
attempts to transgress or forget them have been so
infrequent as to call for few occasions for their
statement and application.

Harrison v. St. Louis & San Francisco R.R. Co., 232 U.S.
318, 328, 34 S.Ct. 333, 335, 58 L.Ed. 621 (1914).
17
The effect includes the burden of recordkeeping and
disclosure requirements.
 We note that, in the performance of federal judicial duties,

non-resident federal judges often are called upon to sit in

Jefferson County. United States v. Tokars, 839 F.Supp. 1578

(N.D.Ga.1993), is just one example. Tokars was a federal criminal

racketeering prosecution involving allegations that the murder of

a young woman in front of her two children was committed by two

hitmen hired by her husband, an Atlanta attorney. Atlanta, the

case's original venue, was saturated with publicity about the case.

To safeguard the defendant's constitutional right to a fair trial,

a district judge for the Northern District of Georgia granted the

defendant a change of venue and spent five weeks in Birmingham

trying the case. Under Ordinance No. 1120, the Atlanta-based

federal judge would owe Jefferson County a percentage of her salary

because she chose Birmingham as the most appropriate venue where

the accused could get a fair trial.18

C. Congressional Consent to State Taxation

Congress generally has the power to consent to state taxation

of federal employees, operations, and instrumentalities. Mayo, 319

U.S. at 446, 63 S.Ct. at 1140. Jefferson County argues that

Congress, in the Public Salary Act and the Buck Act, consented to

all forms of state and local taxation of federal employees,

including federal judges. Therefore, we examine whether the Public

Salary Act and the Buck Act constitute consent to the imposition of

the privilege tax on federal judges. The district court held that,

18
When questioned at oral argument about whether the Tokars
judge owes the privilege tax for trying the case in Birmingham,
counsel for Jefferson County replied: "Under ordinance yes, I
believe she does, I believe she does."
under Article III, Congress may not consent to the imposition of

the privilege tax on federal judges. Because we find that Congress

did not consent to the imposition of the privilege tax on federal

judges, we need not address Congress's power to do so.

1. Public Salary Act

The Public Salary Act provides in relevant part:

The United States consents to the taxation of pay or
compensation for personal service as an officer or employee of
the United States, a territory or possession or political
subdivision thereof, the government of the District of
Columbia, or an agency or instrumentality of one or more of
the foregoing, by a duly constituted taxing authority having
jurisdiction, if the taxation does not discriminate against
the officer or employee because of the source of the pay or
compensation.

4 U.S.C. § 111. The Public Salary Act does not define the

"taxation of pay or compensation for personal service" to which the

United States consents. The County contends that Congress

consented to the imposition on federal employees of all

nondiscriminatory state and local taxes, including

nondiscriminatory privilege taxes.

We do not interpret the Public Salary Act's consent to state

taxation of federal employees' compensation as encompassing the

imposition of privilege taxes such as Jefferson County's. The

Public Salary Act must be read in light of the uncertain state of

the intergovernmental tax immunity doctrine at the time of the

Act's enactment. Before the Act was proposed, the Supreme Court

held that the federal government could levy nondiscriminatory taxes

on the incomes of state employees. Davis v. Michigan Dept. of

Treasury, 489 U.S. 803, 811-814, 109 S.Ct. 1500, 1505-06, 103

L.Ed.2d 891 (1989) (describing context of Act's enactment). The
primary purpose of the Act was to amend the federal tax code to

clarify that the federal income tax applied to the income of all

state and local government employees. Id. at 811, 109 S.Ct. at

1505. See also H.R.Rep. No. 26, 76th Cong., 1st Sess., 3-4 (1939);

S.Rep. No. 112, 76th Cong., 1st Sess. 11 (1939).

Congress was concerned, however, that considerations of

fairness dictated equal tax treatment of federal and state

employees. Davis, 489 U.S. at 812, 109 S.Ct. at 1506. The Supreme

Court had decided Dravo but had not yet held in O'Keefe that the

intergovernmental tax immunity doctrine does not bar states from

taxing the income of federal employees. Thus, Congress entertained

doubts about whether states could tax federal employees' income

without Congress's consent. Id. at 811-812, 109 S.Ct. at 1506. To

ensure equal tax treatment of all government employees, therefore,

Congress decided to consent to state and local taxation of federal

employees' income. Id. at 812, 109 S.Ct. at 1506. Congress's

consent turned out to be unnecessary; O'Keefe was decided before

the Act was enacted. Id. Congress nevertheless enacted the

provision consenting to state and local taxation of federal

employees' compensation, effectively codifying the result in

O'Keefe. Id.

The context of the Act's enactment thus reveals that Congress

intended to consent to state taxation of federal employees' income

to reciprocate for the imposition of the federal income tax on

state employees. The Act does not consent to all state taxes on

federal employees. We discern no congressional intent to consent

to state taxes that in substance are not taxes on income. Thus, we
interpret "taxation of pay or compensation for personal service,"

4 U.S.C. § 111, to refer to state taxes on income. The Public

Salary Act does not alter the intergovernmental tax immunity

doctrine; in effect, it just codifies the result in O'Keefe.

Davis, 489 U.S. at 813, 109 S.Ct. at 1506.19
2. The Buck Act

The County also contends that Congress consented to taxes

such as the Jefferson County privilege tax in the Buck Act, 4

U.S.C. §§ 106-110. The Buck Act provides in relevant part:

No person shall be relieved from liability for any income tax
levied by any State, or by any duly constituted taxing
authority therein, having jurisdiction to levy such a tax, by
reason of his residing within a Federal area or receiving
income from transactions occurring or services performed in
such area; and such State or taxing authority shall have full
jurisdiction and power to levy and collect such tax in any
Federal area within such State to the same extent and with the
same effect as though such area was not a Federal area.

4 U.S.C. § 106(a). Unlike the Public Salary Act, the Buck Act

defines the state taxation to which the United States consents.

The Buck Act defines "income tax" as "any tax levied on, with

respect to, or measured by, net income, gross income, or gross

19
Our interpretation of the Public Salary Act as consenting
only to taxes that in substance tax income is not inconsistent
with the Third Circuit's decision in United States v. City of
Pittsburgh, 757 F.2d 43 (3rd Cir.1985). Adopting a broad reading
of "taxation of pay or compensation," the Third Circuit held that
the Public Salary Act consented to Pittsburgh's levy of a
privilege tax on a court reporter's transcript fee income. Id.
at 47. Unlike the Jefferson County privilege tax, the Pittsburgh
privilege tax was in substance a tax on income. The Third
Circuit found that, despite its "privilege tax" label, the
Pittsburgh tax was "clearly a tax on gross receipts or gross
income from the fees." Id. Though the Third Circuit did not
discuss how it arrived at that conclusion, our examination of the
Pittsburgh ordinance reveals that the ordinance did not include
the factors that distinguish the Jefferson County ordinance from
an income tax. See Pittsburgh, Pa., Ordinance No. 675 (Dec. 27,
1968).
receipts." Id. § 110(c).

The district court found that the privilege tax falls within

the Buck Act's definition of an "income tax" because the privilege

tax is measured by gross receipts. We agree that the Buck Act's

definition of "income tax" encompasses the privilege tax. But

another provision of the Buck Act removes the privilege tax from

the Buck Act's consent to state taxes. Echoing the

intergovernmental tax immunity doctrine's prohibition against state

taxes levied directly on the federal government, the Buck Act

provides that its provisions "shall not be deemed to authorize the

levy or collection of any tax on or from the United States or any

instrumentality thereof." Id. § 107(a). According to the Supreme

Court, "[t]his section can only be read as an explicit

congressional preservation of federal immunity from state ... taxes

unconstitutional under the immunity doctrine announced by Mr. Chief

Justice Marshall in McCullough v. Maryland." State Tax Commission

of Mississippi, 421 U.S. at 612, 95 S.Ct. at 1880. Therefore, the

Buck Act does not alter the intergovernmental tax immunity doctrine

or constitute consent to the privilege tax.

Indeed, the Buck Act's effect on the ability of states to tax

federal employees is much more modest than Jefferson County

suggests. According to its plain language, the Buck Act merely

precludes a taxpayer from arguing that a state or locality lacks

jurisdiction to tax her because she resides in a federal area or

receives income from transactions or services in a federal area.

4 U.S.C. § 106(a). The Buck Act equalizes taxing power within and

without federal areas, allowing states and localities to levy taxes
within federal areas "to the same extent and with the same effect"

as without federal areas. Id. The Buck Act does not, however,

affect the limits on state and local taxing power in any other

way.20
The Supreme Court addressed the effect of the Buck Act on

state and local taxation within federal areas in Howard v.

Commissioners of Sinking Fund of City of Louisville, 344 U.S. 624,

73 S.Ct. 465, 97 L.Ed. 617 (1953). In Howard, employees of a naval

ordnance plant located on federal land in Louisville, Kentucky,

challenged the City of Louisville's attempt to collect from them a

license fee for the privilege of working in Louisville. Id. at

625, 73 S.Ct. at 466. The Supreme Court noted that the United

States had exclusive jurisdiction over the federal area, except as

modified by statute. Id. at 627, 73 S.Ct. at 467. The Court held

that the license fee was an "income tax" under the Buck Act, id. at

629, 73 S.Ct. at 468, and that the Buck Act therefore granted

Louisville the right to impose the license fee on the federal

20
The Buck Act was enacted in 1940 against the background of
the just-enacted Public Salary Act. The Public Salary Act's
consent to state income taxes failed to reach federal employees
residing and working in federal areas because, without
congressional consent, the states lacked jurisdiction to tax
transactions occurring in federal areas. United States v.
Lewisburg Area Sch. Dist., 539 F.2d 301, 309 (3rd Cir.1976);
United States v. City and County of Denver, 573 F.Supp. 686, 691
(D.Colo.1983) (citing S.Rep. No. 1625, 76th Cong., 3d Sess. 3
(1940)). The Buck Act therefore was enacted to eliminate the
disparity between the income tax liability of federal employees
within federal areas and those outside federal areas. Lewisburg
Area Sch. Dist., 539 F.2d at 309; City and County of Denver, 573
F.Supp. at 691. It does so by eliminating immunity based solely
on the ground that the taxpayer resides in a federal area or
receives income from transactions or services in a federal area.
The Act does not affect claims of tax immunity based on other
grounds. See S.Rep. No. 1625, 76th Cong., 3d Sess. 2-3 (1940).
employees working at the ordnance plant. Id. at 628, 73 S.Ct. at

467. The Court explained, "By virtue of the Buck Act, the tax can

be levied and collected within the federal area, just as if it were

not a federal area." Id. at 629, 73 S.Ct. at 468.

The County suggests that the Buck Act authorizes Jefferson

County to levy its license fee on federal judges just as the Buck

Act was held in Howard to authorize Louisville to levy its license

fee on federal employees of the ordnance plant. The challenge to

the Jefferson County privilege tax, however, differs significantly

from the challenge in Howard. Judges Acker and Clemon do not

contend that Jefferson County may not tax them because they work

within a federal area. Rather, they argue that, regardless of

where in Jefferson County they perform their duties, Jefferson

County may not levy the privilege tax on them because to do so

would amount to a direct tax on instrumentalities of the federal

government in violation of the intergovernmental tax immunity

doctrine. The federal employees in Howard, in contrast, did not

contend that the license fee directly taxed the federal government.

They challenged the license fee solely on the one ground barred by

the Buck Act—that Louisville lacked jurisdiction to tax in a

federal area—and the Supreme Court addressed only that ground.

Thus, Howard does not address the issue presented here.

Nothing in Howard undermines our conclusion that the Buck Act

does not alter the intergovernmental tax immunity doctrine's limits

on state and local taxation. Howard cannot be read, for example,

as an implicit rejection of intergovernmental tax immunity from

privilege taxes falling within the Buck Act's definition of "income
tax." An intergovernmental tax immunity challenge, if raised by

the Howard employees, would have failed not because the Buck Act

precluded such a challenge but because the Louisville license fee

did not amount to a direct tax on the federal government or its

instrumentalities. Assuming that the taxed activity was working in

Louisville, the Howard employees could not be considered the

federal government or its instrumentalities when performing their

duties. Unlike federal judges, employees of a naval ordnance plant

realistically can be viewed as separate entities from the federal

government when performing their duties; they are not "intimately

connected with the exercise of a power or the performance of a duty

by the Government." New Mexico, 455 U.S. at 736, 102 S.Ct. at

1383. Thus, that Howard upheld the application of the Louisville

license fee to federal employees does not imply that the Buck Act

precludes an intergovernmental tax immunity challenge to the

application of Ordinance No. 1120 to federal judges.

V. CONCLUSION

As applied to federal judges, the privilege tax violates the

intergovernmental tax immunity doctrine as a direct tax on the

federal government or its instrumentalities. We hold, therefore,

that the Supremacy Clause prohibits Jefferson County from applying

Ordinance No. 1120 to Judges Acker and Clemon.

AFFIRMED.

ANDERSON, Circuit Judge, dissenting, in which HENDERSON,
Senior Circuit Judge, joins:

I also dissent for the several reasons set forth by Judge

Birch. I can discern no principled way to avoid the conclusion

that the instant county ordinance is in substance an income tax for
purposes of federal law. I respectfully submit that the majority's

attempt to distinguish Howard v. Commissioners of Sinking Fund, 344

U.S. 624, 73 S.Ct. 465, 97 L.Ed. 617 (1953), is flawed. In Howard,

the Supreme Court interpreted the Buck Act's provision that no

person shall be relieved from liability for state or local income

tax by reason of residing on federal property or working on federal

property. 4 U.S.C.A. § 106(a). The Supreme Court held that an

almost identically worded ordinance was in substance an income tax.

The majority attempts to distinguish Howard by pointing to the

exclusion provision in the Buck Act—i.e. that the Buck Act shall

not be deemed to authorize taxation of the "United States itself or

any instrumentality thereof." 4 U.S.C.A. § 107(a). Although the

majority correctly points out that this provision confirms the

continued applicability of the intergovernmental tax immunity

doctrine, the majority's attempted distinction fails to recognize

that an income tax is clearly not barred by the tax immunity

doctrine and that the Buck Act and Howard indicate that the instant

ordinance is in substance an income tax.

Having concluded that the instant tax is as a practical matter

an income tax, it follows that it is not barred by the

intergovernmental tax immunity doctrine because tax upon the income
1
of a federal employee, however important the position, is not a

1
Because the instant tax is an income tax, and because a
state or local tax upon a federal judge's income is not barred by
the intergovernmental tax immunity doctrine, I need not address
the majority's assertion that the acts of federal judges (in
performing their official duties) are acts of the United States
or an instrumentality thereof.
tax upon the United States or an instrumentality thereof. 2 The

test is whether the tax obstructs or interferes with the

performance of the federal function. Graves v. New York ex rel.

O'Keefe, 306 U.S. 466, 477, 481, 484, 59 S.Ct. 595, 597, 598-99,

600, 83 L.Ed. 927 (1939). As Judge Birch persuasively points out,

the instant tax neither obstructs nor interferes with the

performance of the judge's functions. Indeed, the district court

so found.

I respectfully dissent.

BIRCH, Circuit Judge, dissenting, in which HENDERSON, Senior
Circuit Judge, joins:

I respectfully dissent. The linchpin of the majority opinion

is that the tax at issue in this case is something other than an

income tax.1 If the tax at issue is a tax on income, as defined by

2
As Judge Birch points out so forcefully, the majority
acknowledges this.
1
Throughout the majority opinion, Judge Cox is steadfast and
candid in acknowledging that should this tax be a tax on income,
it would not run afoul of the Supremacy Clause and the
intergovernmental tax immunity doctrine predicated thereon, to
wit:

But "[t]he theory ... that a tax on income is legally
or economically a tax on its source [was] no longer
tenable" after [James v.] Dravo [Contracting, 302 U.S.
134, 58 S.Ct. 208, 82 L.Ed. 155 (1937) ]. [Graves v.
New York ex rel. O'Keefe, 306 U.S. 466] at 480, 59
S.Ct. [595] at 598, 83 L.Ed. 927 [ (1939) ].

Maj.Op. at ----.

If Jefferson County is correct that, despite being
labeled a "license fee," the privilege tax amounts to
an income tax, then it constitutionally may be applied
to Judges Acker and Clemon under O'Keefe.

Maj.Op. at ----.

We have no doubt that a federal judge is not an
federal law,2 the judges must pay the $668.00 per year that the

instrumentality of the federal government when the
activity being taxed is the judge's receipt of income.
A judge is no more intimately connected with the
federal government when receiving income than the
federal employee in O'Keefe. The taxation of a federal
judge's income interferes with the functions of
government no more than the taxation of any other
federal employee's income.

Maj.Op. at ----.

Congress ... enacted the provision [4 U.S.C. § 111, The
Public Salary Act] consenting to state and local
taxation of federal employees' compensation,
effectively codifying the result in O'Keefe. [Davis v.
Michigan Dept. of Treasury, 489 U.S. 803 at 812, 109
S.Ct. 1500 at 1506, 103 L.Ed.2d 891 (1989) ].

Maj.Op. at ----.

We discern no congressional intent to consent to state
taxes that in substance are not taxes on income. Thus,
we interpret "taxation of pay or compensation for
personal service," 4 U.S.C. § 111, to refer to state
taxes on income.

Id.

We agree that the Buck Act's [4 U.S.C. §§ 106-110]
definition of "income tax" encompasses the privilege
tax.

Maj.Op. at ----.
2
In United States v. City of Pittsburgh, 757 F.2d 43, 47 (3d
Cir.1985) the Third Circuit, in adjudicating a challenge by the
United States to the taxation of an official court reporter
working in the federal district court (who the panel found to be
an officer of the court), observed:

The United States contends, however, that section
111 does not apply because the City's tax is not a tax
on compensation. It argues that the section applies
only to income taxes, and that because the business
privilege tax is not a net income tax, it is not tax on
compensation within the meaning of section 111. For
support, it cites F.J. Busse Co. v. City of Pittsburgh,
443 Pa. 349, 353, 279 A.2d 14, 16 n. 1 (1971), which
held that the City's business privilege tax is not an
earned income tax under Pennsylvania law. However, the
question of whether Congress consented to the
county has levied. 3 Despite the conclusion of the majority that

imposition of the business privilege tax is a question
of Congressional intent, and therefore determined with
reference to federal law. See Howard v. Comm'rs of the
Sinking Fund, 344 U.S. 624, 628-29, 73 S.Ct. 465, 467-
68, 97 L.Ed. 617 (1953) (determination of what is an
income tax under the Buck Act is a question of federal
law).

Congress, in enacting section 111, intended that
"[federal employees] should contribute to the support
of their State and local governments, which confer upon
them the same privileges and benefits which are
accorded to persons engaged in private occupations."
S.Rep.No. 112, 76th Cong. 1st Sess. 4 (1939). A broad
reading of the meaning of "taxation on ...
compensation" would comport with that intent. Further,
in enacting the Public Salary Tax Act of 1939, Congress
was aware that the states used a variety of forms of
income taxes, including gross income taxes and
occupational taxes. S.Rep. No. 112, 76th Cong. 1st
Sess. 6-10 (1939). In this case, the City's tax is
clearly a tax on gross receipts or gross income from
the fees. We believe that the City's business
privilege tax in this case is within the language and
intent of section 111.

We therefore hold that if there were any federal
constitutional immunity from the imposition of the
City's business privilege tax on a federal court
reporter's transcript fee income, that immunity was
waived by Congress.

(emphasis added). The majority opinion attempts to
distinguish this case from the instant case in footnote 17
on page ---- of its opinion.

The majority professes not to be bound by the Alabama
Supreme Court's McPheeter v. City of Auburn, 288 Ala. 286,
259 So.2d 833 (1972) conclusion that the privilege tax is
not an "income tax," Maj.Op. at ----, yet, in the next
sentence the majority asserts "... if the state court's
determination is a reasonable interpretation of the
ordinance, we deem it conclusive. See Gurley v. Rhoden, 421
U.S. 200, 208, 95 S.Ct. 1605, 1610 [, 44 L.Ed.2d 110]
(1975)." However, Gurley had nothing to do with the
determination of whether a state tax was an income tax for
the purpose of federal law. Moreover, the Supreme Court
expressly accorded great weight to the state court's
findings regarding the legal incidence of a state tax
strictly within the context of state law. Gurley, 421 U.S.
at 208, 95 S.Ct. at 1610.
this tax "may be applied to federal judges only at the risk of

interfering with the operation of the federal judiciary," Maj.Op.

at ----, the independence of the federal judiciary surely will

survive such a tax; as Justice Oliver Wendell Holmes (joined by

Justice Louis O. Brandeis) observed:

To require a man to pay the taxes that all other men have to
pay cannot possibly be made an instrument to attack his
independence as a judge. I see nothing in the purpose of
[Article III, § 1] of the Constitution to indicate that the
judges were to be a privileged class, free from bearing their
share of the cost of the institutions upon which their
well-being if not their life depends.
Evans v. Gore, 253 U.S. 245, 265, 40 S.Ct. 550, 557, 64 L.Ed. 887

(1920) (Holmes J., dissenting). I continue to maintain that the

Jefferson County tax is not a direct tax on the federal judiciary,

but is an individualized tax on the earnings of judges and all

others subject to the ordinance. Although Article III judges

together compose the federal judiciary, they are also citizens of

the country, state and localities where they reside. As emphasized

by the Supreme Court in O'Malley v. Woodrough, 307 U.S. 277, 59

3
The annual salary of a federal district judge is
established by law and is currently $133,600. See 28 U.S.C. §§
135, 461 (1993). Applying the one-half percent (.005%) privilege
tax, an annual tax of $668.00 would result. It is indeed
sobering to reflect upon the expenditure of taxpayers' dollars
involved in the resolution of the issue before this court. The
legal fees and time expended by Jefferson County in order to
recover these relatively paltry amounts should be distressing
enough to that county's citizens. However, considering the
expenditure of federal judicial resources (a district judge's
initial consideration, a three-judge panel of this court, and now
an en banc consideration by twelve judges of our court) one can
only wonder if the principle at issue here is really all that
significant. Common sense whispers to me that this is the
classic tempest in a teapot involving more the clash of powerful
egos rather than powerful principles. The outcome of this issue
may dent the coffers of Jefferson County or a few federal judges,
but will speak little to the separation-of-powers principle used
to justify this considerable expenditure of public resources.
S.Ct. 838, 83 L.Ed. 1289 (1939):

To suggest that [the income tax] makes inroads upon the
independence of judges who took office after Congress had thus
charged them with the common duties of citizenship, by making
them bear their aliquot share of the cost of maintaining the
Government, is to trivialize the great historic experience on
which the framers based the safeguards of Article III, § 1.
To subject them to a general tax is merely to recognize that
judges are also citizens, and that their particular function
in government does not generate an immunity from sharing with
their fellow citizens the material burden of the government
whose Constitution and laws they are charged with
administering.

Id. at 282, 59 S.Ct. at 840 (footnote omitted).

There is currently no issue before this court that suggests

that the privilege tax in this case discriminates against federal

employees. The original panel opinion addressed that issue and

concluded that the occupational tax does not discriminate

unconstitutionally against federal employees. Jefferson County v.

Acker, 61 F.3d 848, 852-53 (11th Cir.1995), vacated and rehearing

en banc granted, 73 F.3d 1066 (11th Cir.1996). As noted above, the

dispositive issue is whether this tax is an income tax under

federal law. In a case addressing the issue of intergovernmental

tax immunity the Supreme Court admonished:

[I]n passing on the constitutionality of a state tax "we are
concerned only with its practical operation, not its
definition or the precise form of descriptive words which may
be applied to it." Lawrence v. State Tax Commission, 286 U.S.
276, 280, 52 S.Ct. 556, 557, 76 L.Ed. 1102. Consequently in
determining whether these taxes violate the Government's
constitutional immunity we must look through form and behind
labels to substance.

City of Detroit v. Murray Corp. of Amer., 355 U.S. 489, 492, 78

S.Ct. 458, 460, 2 L.Ed.2d 441 (1958). In this case, the majority

concedes that "[t]he district court found", and "Judges Acker and

Clemon do not question", "that the privilege tax imposes no
economic burden on the federal government itself; it is paid by

individual federal judges out of their own pockets." Maj.Op. at --

--; see also Jefferson County v. Acker, 850 F.Supp. 1536, 1544

(N.D.Ala.1994), rev'd 61 F.3d 848 (11th Cir.1995), vacated and

reh'g en banc granted, 73 F.3d 1066 (11th Cir.1996). Yet the

majority concludes that the tax at issue is not one on income.

The Supreme Court previously has upheld an analogous

ordinance, also denominated as a "license fee" by the state, as a

constitutionally sound income tax. Howard v. Commissioners of

Sinking Fund, 344 U.S. 624, 73 S.Ct. 465, 97 L.Ed. 617 (1953). In

Howard, the City of Louisville, Kentucky, enacted an ordinance

collecting a "license tax for the privilege of working in the city,

measured by one percent of all salaries, wages and commissions

earned in the city." Id. at 625, 73 S.Ct. at 466. Federal

employees working within the jurisdiction of the Navy Department

contended that the tax impermissibly functioned as a fee for doing

business with the United States. The Supreme Court, however, held

that the tax established by the ordinance was an income tax.

Quoting the Buck Act, 4 U.S.C. §§ 105-110, the Court stated that an

" "income tax' means any tax levied on, with respect to, or

measured by, net income, gross income, or gross receipts." Id. at

628, 73 S.Ct. at 467. Although the state court had held that the

tax was not an income tax, the Court declared:

[T]he right to tax earnings within the area was not given
Kentucky in accordance with the Kentucky law as to what is an
income tax. The grant was given within the definition of the
Buck Act, and this was for any tax measured by net income,
gross income, or gross receipts.... We hold that the tax
authorized by this ordinance was an income tax within the
meaning of the federal law.
Id. at 628-9, 73 S.Ct. at 468 (emphasis in original). It seems to

me that the Supreme Court's reasoning and disposition in Howard is

very instructive, if not binding, with respect to this case. The

majority attempts to minimize the precedential force of Howard by

distinguishing employees of a naval ordinance plant who "can be

viewed as separate entities from the federal government when

performing their duties" from federal judges because the latter are

" "intimately connected with the exercise of a power or the

performance of a duty by the Government.' " Maj.Op. at ----

(quoting United States v. New Mexico, 455 U.S. 720, 738, 102 S.Ct.

1373, 1383, 71 L.Ed.2d 580 (1982)). In Howard, however, the

Supreme Court explicitly concluded that the tax in question—which

was defined in terms identical to the tax at issue in this case—was

an income tax within the meaning of the Buck Act. 344 U.S. at 468,

73 S.Ct. at 468. The Court's finding that the tax was an income

tax under the Buck Act was inextricably linked to its conclusion

that individuals working in a federal area within Louisville were

subject to the tax. I believe that the Buck Act and the Supreme

Court's interpretation thereof compel the conclusion that the

Jefferson County tax, which is by its terms indistinguishable from

the tax described in Howard, is an income tax to which federal

judges in Jefferson County are subject.

The majority, relying principally on Alabama's

characterization of the tax and distinguishing Howard in a manner

that fails to explain the Supreme Court's equation of a license

occupation tax with an income tax, concludes "[i]n substance, the

privilege tax does not tax the receipt of income." Maj.Op. at ----
. Focusing on two provisions of the ordinance, the majority

concludes that the "tax does not merely tax the receipt of income."

Id. at ----. First, the majority notes that the tax is levied not

only on income received but also on income that one is entitled to

receive. This tax concept is certainly not novel in the realm of

income taxation, either state or federal. See In re Kochell, 804

F.2d 84, 85 (7th Cir.1986) (stating that "in tax law a payment

attributable to a person's earnings that bypasses him and goes to

his designees is taxed as a payment to him"); Bank of Coushatta v.

United States, 650 F.2d 75, 77 (5th Cir. Unit A 1981) (noting that

"[a] taxpayer is considered in constructive receipt of income if it

is available to him without any substantial limitation or

restriction as to the time or manner of payment or condition upon

which payment is made, and the Commissioner will assess taxes on

the basis of this income...."). The majority posits that this

provision demonstrates that "the ordinance is concerned with

ensuring that work is taxed regardless of whether income from the

work is actually received." Maj.Op. at ----. While such an

explanation is not incredible, it is more likely that the

traditional and typical rationale for the taxation of entitlement

to income noted above is more plausible.

The majority concludes that because the ordinance exempts

persons paying license fees to Jefferson County or to the State of

Alabama, it "makes sense only if the ordinance aims to ensure that

a license fee is paid to some unit of government for all work

performed in Jefferson County." Id. An equally plausible

explanation is that the exemption exists to prevent double taxation
of wage earners in that jurisdiction—particularly when the other

qualifying fees may also be computed on the receipt or entitlement

from wage or fee income. The deduction or exemption of state and

local taxes relative to each other or to federal taxable income is

a familiar tax mechanism. See 26 U.S.C. § 164(a)(1), (2) and (3)

(1988) and Ala.Code § 40-18-15 (1993).
4
If the burden or interference of the tax is not economic,

what is it? The majority informs us that the complaining judges

refuse to pay the tax "because the tax purports to be a

precondition to the lawful performance of their federal judicial

duties", Maj.Op. at ---- (emphasis added), and holds "that a

federal judge is a federal instrumentality when the taxed activity

is the judge's performance of judicial duties". Id. at ---- - ----

. Nowhere in the opinion do we find an explanation of just how

this declaration of lawful precondition "impedes" or "burdens" the

performance of any judicial duties. To paraphrase a popular

question posed during the 1980's in fast food advertising: "Where

is the "burden' "? Aside from offending the sensibilities of these

affected judges and arousing a sense of apprehension, the ordinance

is a paper tiger. As the majority concedes "Alabama law does not

4
See Computation of the tax set out in footnote 3 of this
dissent. Recall that the district court found as a matter of
fact that the privilege tax imposes no "monetary (economic)
burden on the Federal Government itself." Acker, 850 F.Supp. at
1544. Moreover, there has been no analysis of facts or finding
by the district court relative to the judges' contention that
"the ordinance's onerous time-keeping and return requirements
burden the federal judicial function." Maj.Op. at ----. Stated
differently, there is nothing in the record before us to
establish or substantiate any such conclusion. Moreover, this
ordinance's record keeping and return requirements appear to be
no more onerous than those commonly associated with paying one's
federal and state income taxes.
appear to provide criminal sanctions for violating county

ordinances requiring the payment of privilege taxes." Maj.Op. at

----. While one can appreciate that these judges, honorable men

and women sworn to uphold the law, may feel uncomfortable acting

"unlawfully" as the ordinance "purports" to characterize their work

in the absence of payment of the tax, is that the degree of

impediment or burden required to invoke application of the

intergovernmental tax immunity doctrine and the Supremacy Clause of

the United States Constitution? I doubt it. The burden or

impediment, to the extent that one exists in this case is, at best,

de minimis and ephemeral.

Appendix

BY THE COURT:

ON RECUSAL

We accepted the Appellee's suggestion for rehearing en banc of

this case to determine the validity, as applied to Article III

judges, of a Jefferson County tax imposed on persons working in the

County. Given the nature of the controversy, we, at the outset,

had to decide whether some or all judges of this Court are

disqualified from the case, where nine of the en banc panel's

twelve judges have sat in Jefferson County at least one day—and

some a few days more. We also faced the fact that, though this

court has no immediate sittings planned for Jefferson County, all

of its judges could be sent to do judicial work in Birmingham

(which is in Jefferson) in the future. Counsel for the County,

however, represented at oral argument that the county has "never"

attempted to collect the tax from a federal judge with no chambers
in Jefferson County. And, no judge of this Court now keeps

chambers in Jefferson County. Nor does this Court maintain a

courtroom for its use in Jefferson County.

Appellees included in their Certificate of Interested Persons

this phrase: "each Judge of the United States Circuit Court of

Appeals for the Eleventh Circuit who has within the last five years

performed or may perform any work or duties relating to the

judicial function at any office or other location within Jefferson

County, Alabama."1 No motions to recuse have been presented. This

listing might be construed as a suggestion of recusal; but in any

event, whether 28 U.S.C. § 455 requires recusal is an issue that

judges are required to resolve on their own motion. See Phillips

v. Joint Legislative Committee on Performance and Expenditure

Review of State of Mississippi, 637 F.2d 1014, 1020 n. 6 (5th Cir.

Unit A 1981). Because the integrity of the judiciary is in issue,

moreover, the issue should be resolved "at the earliest possible

opportunity." Union Carbide Corp. v. U.S. Cutting Service, Inc.,

782 F.2d 710, 712 (7th Cir.1986).

Whether a judge is disqualified, that is, must not take part

in deciding a case, is a question of law. See McCuin v. Texas

Power & Light Co., 714 F.2d 1255, 1260 (5th Cir.1983). Title 28

U.S.C. § 455 requires recusal whenever a judge's impartiality

"might reasonably be questioned," id. § 455(a), or when he "has a

financial interest in the subject matter in controversy ... or any

1
The significance of the five-year figure is unclear. We
assume, for purposes of this opinion only, that no statute of
limitations has run that would prevent the collection of taxes
imposed based on the 9 October 1990 en banc sitting, in which
most of the present Court heard argument in Jefferson County.
other interest that could be substantially affected by the outcome

of the proceeding." Id. § 455(b)(4). The statute defines

"financial interest" to mean "ownership of a legal or equitable

interest, however small ... in the affairs of a party...." Id. §

455(d)(4).

The Ordinance may arguably authorize Jefferson County to

compel the payment of half of one percent of the income received

for those days worked in the County. So, for example, for those

judges who sat in Birmingham on 9 October 1990—the last day the

Court of Appeals has sat in Birmingham and the only day most of our

judges have sat in Jefferson County—the Ordinance might mean they

could be assessed for half of one percent of 1/365 of their salary

for 1990, which comes to roughly a dollar and a half. We doubt the

reasonable observer would think the integrity of federal judges

could be bought so cheaply.

We looked at the two potential "interests" of the court's

judges, in accordance with 28 U.S.C. § 455(b)(4)—financial

interests and "other" interests. Considering the statutory

definition of "financial interest," the term may be totally

inapplicable here; but we do not rely on a strict reading. In In

re New Mexico Natural Gas Antitrust Litigation, 620 F.2d 794, 796

(10th Cir.1980), the court wrote these words:

We agree with the Fourth Circuit's determination that a
remote, contingent benefit, such as a possible beneficial
effect on future utility bills, is not a "financial interest"
within the meaning of the statute. It is an "other interest,"
requiring disqualification under a "substantially affected"
test.

Id. (citing In re Virginia Elec. & Power Co., 539 F.2d 357 (4th

Cir.1976)). That case involved an antitrust claim alleging that
various oil companies were fixing the price of natural gas at the

well head. Relief was sought, among other things, on behalf of a

class of residential customers in New Mexico where all the federal

judges of the District of New Mexico resided. The Tenth Circuit

held that the possible beneficial effect on the future utility

bills of those judges was a remote and contingent benefit and,

thus, was no "financial interest." Rather, the interest was an

"other interest" which would require disqualification only if the

interest "could be substantially affected by the outcome of the

proceeding." The possible beneficial effect on future rates was

found to be remote and contingent, because, among other things, the

rate setting agency might not pass on the cost savings to

consumers. Accord In re Virginia Elec. & Power Co., 539 F.2d 357,

366-67 (4th Cir.1976).

We agree with the Tenth and Fourth Circuits that the term

"financial interest" is limited to direct interests and does not

include remote or contingent interests. We believe that the

judges' interest in this case is even more remote and contingent

than in the Tenth and Fourth Circuit cases. Jefferson County has

represented that its tax has never been assessed against a federal

judge without chambers in Jefferson County, and no judge of this

Court maintains chambers in Jefferson County. Some judge of this

Court might occasionally sit in Jefferson County as a member of a

three-judge district court; but these duties are not common.

Moreover, the possibility that a particular judge of this Court

will be specially assigned in the future to hear a case in

Jefferson County is wholly speculative. Considering the low
expectancy—regardless of how this case might be decided—that the

tax will be assessed against judges who have no chambers or

courtroom in Birmingham, we have concluded that the judges of this

Court have no "financial interest" in the subject matter in

controversy in this case.

Having determined that the judges' interest in this case is

not a "financial interest," but is an "other interest,"

disqualification is required only if the interest "could be

substantially affected by the outcome of the proceeding." We

readily conclude that this provision does not require recusal. It

is unlikely that the tax will ever be assessed against a judge of

this Court because none have chambers in Jefferson County. And

even if the tax were assessed against non-resident judges, we do

not believe the "substantially affected" standard would be

satisfied. Special assignments to sit in Birmingham are uncommon,

and any such assignment would probably be of short duration and

thus give rise to a de minimis tax.2

Our conclusion and reasoning is supported by opinions of the

Codes of Conduct Committee of the Judicial Conference of the United

States. The committee has interpreted language in the Code of

2
For the same reasons, we also conclude that no one could
reasonably question the impartiality of the judges of this Court.
We also have considered whether non-financial interests in the
case's outcome might require recusal of judges. We concluded
that the potential administrative burdens and intrusiveness of
the Ordinance (again viewed against the likelihood of no tax ever
being assessed against a judge now on this court) did not require
recusal. For cases finding no need to recuse for non-financial
interests tied to the Article III function, see In re Petition to
Inspect & Copy Grand Jury Materials, 735 F.2d 1261, 1266 (11th
Cir.1984); Duplantier v. United States, 606 F.2d 654, 662-63
(5th Cir.1979).
Conduct for United States Judges in a similar way (the Code's words

track closely the financial interest language of section 455). See

generally Union Carbide Corp. v. U.S. Cutting Service, Inc., 782

F.2d 710, 715 (7th Cir.1986) ("In matters of judicial ethics we are

bound to give some weight to the view of the committee of judges

that the Judicial Conference of the United States has established

to advise federal judges on ethical questions."). In its Advisory

Opinion No. 62, the committee advised that a judge should recuse

from a case involving a utility to which he was a ratepayer only if

he stood to receive savings that "might reasonably be considered

substantial." The committee has also advised, in the same context,

that a potential billing increase of "60 cents per month as of 1984

plus normal increases is not considered substantial." Guide to

Judiciary Policies and Procedures, Vol. II, Ch. V, Compendium §

3.1-7[1](c) (1995).

Our decision to go forward with deciding the case was

confirmed by the "rule of necessity," which rule "requires that

"where all are disqualified, none are disqualified.' " In re City

of Houston, 745 F.2d 925, 930 n. 9 (5th Cir.1984) (quoting Pilla v.

American Bar Ass'n, 542 F.2d 56, 59 (8th Cir.1976)). See generally

United States v. Will, 449 U.S. 200, 217-19, 101 S.Ct. 471, 482, 66

L.Ed.2d 392 (1980) (section 455 was not intended to abridge rule of

necessity). Applying the rule, this court has held that where a

case is framed as one that "involves important Article III

concerns" of interest to "all Article III judges, wherever

located," the rule of necessity instructs judges to refrain from

recusal. In re Petition to Inspect & Copy Grand Jury Materials,
735 F.2d 1261, 1266 (11th Cir.1984). Also, this court held in

Duplantier v. United States, 606 F.2d 654, 662-63 (5th Cir.1979)

(considering constitutionality of Ethics in Government Act

provisions requiring filing of personal financial reports by

judges), that where all members of the judiciary have some interest

in the outcome, none are disqualified, even if the levels of

interest of individual judges vary somewhat. See id. at 662

(noting specific characteristics of interest of judges who had

already filed reports). Every United States circuit judge in the

country is eligible to be sent to Jefferson County to do judicial

work. See 28 U.S.C. § 291 (assignment of circuit judges); see

also id. § 292 (assignment of district judges). So, this case is

one that involves concerns of some importance to Article III judges

everywhere.3 Thus, recusal by any one judge of this court would be

contrary to the rule of necessity.

Also relevant to the recusal decision and to the application

of the rule of necessity was the hardship to the participants and

hindrance to judicial economy that would have resulted from a

recusal en masse. In City of Houston, 745 F.2d at 931 n. 9, the

court noted that recusal was inappropriate when viewed in the light

of the "impracticality and unnecessary hardship that would result

from recusal where the grounds are tenuous at best...." Id.

(citations omitted); see also id. (noting relevance of "great

3
The principles involved in this case also might affect the
application of other taxes to which other federal judges in other
places are subject. See In re Pet. To Inspect & Copy Grand Jury
Materials, 735 F.2d 1261, 1266-67 (11th Cir.1984) (applying rule
of necessity where principles of law involved in case are of
substantial interest to all Article III judges).
inconvenience to the counsel, parties, or judge") (internal

quotation marks and citations omitted). Here, recusal would have

been especially impractical, because it would have entailed

empaneling an entire en banc court of judges sitting by

designation, an event for which we can find no clear precedent and

which raises some jurisprudential questions.4
Because we have no interest, financial or other, that requires

disqualification under the circumstances and because

disqualification under the circumstances would also be contrary to

the rule of necessity, we concluded that no member of this court

was required to recuse.

ALL THE JUDGES CONCUR IN THE OPINION ON RECUSAL.

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4
For background, see United States v. Nixon, 827 F.2d 1019,
1021 (5th Cir.1987); see also Matter of Skupniewitz, 73 F.3d
702, 705 (7th Cir.1996); Martinez v. Winner, 778 F.2d 553, 555
n. 1 (10th Cir.1985), vacated on other grounds, Tyus v. Martinez,
475 U.S. 1138, 106 S.Ct. 1787, 90 L.Ed.2d 333 (1986).

Our conclusion for this case would be the same even if
it were plainly lawful to empanel an en banc court for this
Circuit composed of non-disqualified judges drawn
exclusively from other circuits; the rule of necessity has
been applied, by one court at least, even where fewer than
all judges of a single district court would be disqualified.
See City of Houston, 745 F.2d at 931 n. 9 (applying the rule
of necessity where "no resident Houston district judge would
be qualified if [the pertinent district judge] were held to
be disqualified;" district included cities in which
district judges were resident other than Houston).
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