dissenting.
I agree that New Jersey cannot tax United States bonds made tax-exempt by Congress. This Court has consistently held, however, that such bonds need not be excluded from computation of a justifiable state tax imposed on corporations created by or doing business within the state. A short time ago we said that “The power of a state to levy a tax on a legitimate subject, such as a franchise, measured by net assets or net income including tax-exempt federal instrumentalities or their income is likewise well settled.” Tradesmens Bank v. Tax Comm’n, 309 U. S. 560, 564; and see cases there cited. I do not see how the Court’s opinion here can possibly be reconciled with that principle, for it seems clear to me that this New Jersey tax as applied falls within such a classification.
The state law under which this tax was levied applies only to stock insurance companies organized under New Jersey laws. The first part provides for a tax on intangible property to be computed by a formula which expressly excludes tax-exempt bonds, as well as certain reserves, from the property subject to tax. To avoid the possibility that occasionally this formula might produce *677no tax at all, New Jersey added a proviso setting a minimum assessment of 15% of corporate net worth. The necessity of such a minimum is clear, for the statute also provides that “no franchise tax shall be imposed upon any insurance company included in this section.” This tax on an assessment measured by 15% of net worth is the only New Jersey tax to which appellant, a stock insurance company created by and doing business in New Jersey, was subjected for the year in question. Thus, by the terms of the statute and in actual practice, this tax at least replaced a franchise tax. Certainly it was levied “on a legitimate subject,” within the meaning of the Tradesmens Bank opinion. I can see no practical distinction between this New Jersey tax and a franchise tax, unless the Court is now departing from the sound principle of determining the constitutionality of a state tax “by its operation rather than by particular descriptive language which may have been applied to it.” Educational Films Corp. v. Ward, 282 U. S. 379, 387. Yet only by making such a distinction constitutionally determinative can the New Jersey tax be invalidated. See Tradesmens Bank v. Tax Comm’n, supra; Educational Films Corp. v. Ward, supra. If New Jersey had set a minimum tax in dollars which exceeded the tax on appellant here, we could not say that the tax was an unreasonable charge for the advantages accorded appellant by the state. That the minimum tax actually enacted varies fairly with net worth, and that appellant happens to own United States bonds, should not require us to strike down this tax as unconstitutional. And there was certainly no purpose to put a heavier tax burden on appellant merely because it owned tax-exempt bonds. Cf. Missouri Ins. Co. v. Gehner, 281 U. S. 313, 318.
But even under the Court’s contrary reasoning on that point, I think the tax should stand. It was levied on only $75,700 worth of appellant’s property. Appellant con*678ceded in its brief that its “net worth” exceeded the value of its tax-exempt federal securities by $94,936.87.1 Thus the tax imposed on appellant did not have to touch its tax-exempt bonds. The Court’s opinion acknowledges, as it must, that New Jersey “clearly . . . negatived any purpose” to include them in the tax assessment. A legislative purpose to exclude these bonds from assessment is express in the first part of the New Jersey statute. A contrary purpose in the proviso under which appellant is taxed should not be drawn by this Court when appellant’s tax-exempt bonds need not be touched by the tax. The assessment of 15% of net worth leaves untaxed 85% *679of the net worth, which more than covers the amount of the tax-exempt bonds. We cannot say that New Jersey did not intend to accomplish just this result by leaving 85% untaxed. Under these circumstances the decision in Missouri Ins. Co. v. Gehner, supra, on which the Court relies, does not bar upholding the New Jersey tax. The Gehner opinion recognized the power of the state to apply its tax rate to a company’s net worth in excess of tax-exempt bonds.
Moreover, the New Jersey law does not discriminate against insurance companies owning government bonds. The state statute held invalid in the Gehner case had granted tax exemptions for statutory reserves, etc., but had deprived insurance companies of these exemptions to the extent that the companies owned tax-exempt federal bonds. This Court held such “discrimination” unconstitutional. But that holding can have no applicability to the New Jersey statute, under which federal bonds in no way deprive their owners of any state exemption. As we have pointed out, the New Jersey tax law did not increase appellant’s burden merely because appellant owned tax-exempt bonds. Indeed, appellant’s tax is substantially lower than if the funds invested in these bonds had been invested in non-exempt property.
I think the decision of the New Jersey court should be affirmed.
The Court suggests that perhaps the statute should be construed as requiring liabilities other than reserves to be subtracted from net worth before the assessment is computed, in which case the excess over government bonds would be only $44,473.64. I had not understood the appellant to raise such a question in New Jersey or here, nor did I know that appellant challenged the tax as being on too low an assessment. Moreover, in discovering this supposed ambiguity in the statute the Court is supported only by the doubtful premise that the state court, in the absence of any allegation or proof that the tax levied was too small, would be required to recompute the tax itself and then either remand the case or construe the statute in such a way as to justify what may have been merely an arithmetical error. For an instance in which a state court has expressly refused to do either, see Missouri Ins. Co. v. Gehner, 281 U. S. 313, 319. Furthermore, such an interpretation would have absurd consequences. Under it, a company could avoid taxation completely by merely borrowing a few million dollars two days before the operative date of assessment and paying it back two days afterwards: the net worth of the company would not be altered by this transaction, but the liabilities would be increased (and the assessment accordingly reduced) by the amount of the loan obtained. As appellant concedes in its brief, subtracting liabilities from net worth (which is itself determined by subtracting liabilities from assets) would conflict with “administrative interpretation and practice.” It would also conflict with the state court’s statement that the tax is upon net worth. I cannot ascribe such a self-defeating interpretation to the highest court of New Jersey.