Open main menu

South Carolina v. Baker, 485 U.S. 505 (1988), was a United States Supreme Court case in which the Court ruled that section 310(b)(1) of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) does not violate the Tenth Amendment to the United States Constitution.

South Carolina v. Baker
Seal of the United States Supreme Court
Argued December 7, 1987
Decided April 20, 1988
Full case nameSouth Carolina v. Baker, Secretary of the Treasury on Exceptions to Report of Special Master
Citations485 U.S. 505 (more)
108 S. Ct. 1355; 99 L. Ed. 2d 592
Section 310(b)(1) of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) does not violate the Tenth Amendment to the United States Constitution, nor violates the doctrine of intergovernmental tax immunity by taxing the interest earned on unregistered state bonds.
Court membership
Chief Justice
William Rehnquist
Associate Justices
William J. Brennan Jr. · Byron White
Thurgood Marshall · Harry Blackmun
John P. Stevens · Sandra Day O'Connor
Antonin Scalia · Anthony Kennedy
Case opinions
MajorityBrennan, joined by White, Marshall, Blackmun, Stevens; Scalia (except part II)
ConcurrenceScalia (in part)
ConcurrenceRehnquist (in judgment)
Kennedy took no part in the consideration or decision of the case.
Laws applied
U.S. Const. amend X; Tax Equity and Fiscal Responsibility Act of 1982
This case overturned a previous ruling or rulings
Pollock v. Farmers' Loan & Trust Company, 157 U.S. 429 (1895) (in part)



TEFRA continued the federal tax exemption for state bond interest as long as the bond is registered, with each seller and buyer being recorded for audit purposes. Anonymous bearer bonds, which often were used in money laundering, were no longer exempt, however. South Carolina sued to have the federal tax advantage restored for all their bonds.


The Court also ruled that a nondiscriminatory federal tax on the interest earned on state bonds does not violate the intergovernmental tax immunity doctrine; this is the case which permitted the federal taxation of interest income on bonds issued by state governments in the United States. In this case, the Supreme Court stated that the contrary decision of the Court in the case of Pollock v. Farmers' Loan & Trust Co. (1895) had been "effectively overruled by subsequent case law."

Further readingEdit

  • Trujillo, P. A. (1988). "Municipal Bond Financing after South Carolina v. Baker and the Tax Reform Act of 1986: Can State Sovereignty Reemerge". Tax Lawyer. 42: 147. ISSN 0040-005X.
  • Wyatt, Terrence M.; Sparkman, William E. (1988). "The United States Congress Can Tax Interest on State Bonds: South Carolina v. Baker". West's Education Law Reporter. 48 (1): 1–6. ISSN 0744-8716.

External linksEdit