In the 1945 case of Reconstruction Finance Corporation v. Beaver County, the U.S. Supreme Court ruled that property owned by a federal agency was not exempt from state and local taxation if Congress had not explicitly provided such an exemption in its legislation creating or empowering the agency. The case involved a dispute over whether properties owned by the Reconstruction Finance Corporation (RFC), a government entity established to provide financial support to businesses during economic downturns, were subject to taxes imposed by Beaver County in Pennsylvania. The RFC argued that as a federal instrumentality it was immune from state and local taxation under constitutional principles of intergovernmental tax immunity. However, the court rejected this argument stating that while constitutionally based tax immunity does protect some governmental functions from impairment through taxation by another government, it doesn't automatically apply to all activities performed by governmental entities unless expressly stated so.

In the dissenting opinion for Reconstruction Finance Corporation v. Beaver County, Justice Robert H. Jackson argued that the majority's decision to exempt federal instrumentalities from local taxation could lead to an imbalance of power between state and federal governments. He contended that this ruling would allow Congress to create corporations immune from state taxes, which could potentially undermine states' financial stability and sovereignty. Furthermore, he expressed concern about the potential for abuse if Congress were allowed unchecked authority in creating tax-exempt entities. According to him, it was not clear whether such a broad interpretation of constitutional immunity was intended by the framers or beneficial for maintaining a balanced federation.