Me. Justice Stone
delivered the opinion of the Court.
This is an appeal under § 238 of the Judicial Code from. a decree of a District Court of three judges for Southern New York, 41 F. (2d) 395, which dismissed, on the merits, the bill of complaint by which appellant, a New York corporation, sought to restrain appellees, the New York State Tax Commission, from the collection of a tax, on [385]*385the ground that the taxing statute, as applied, infringes the federal Constitution.
Section 2091 of Article 9-A of the New York Tax Law lays an annual tax on every domestic, corporation of certain classes “ for the privilege of exercising its franchise in this state in a corporate or organized capacity.” The tax is payable in advance for each year beginning November 1st, and is at the rate of P/2% of so much of the corporation's entire net income for its preceding fiscal year as is, under other sections, allocated to the business carried [386]*386on within the state. By § 209 the net income embraces “ income from any source,” and “ is presumably the same as' the entire net income ” reported for income taxation to the United States, “ plus . . . dividends on stocks or any interest received on bonds of any character.” Subdivision 3 of § 208 provides: “The term ‘entire net income’ means the total net income, including all dividends received on stocks and all interest received from federal, state, municipal or other bonds . . .” Appellant’s bill of complaint sets up that during its fiscal year ending June 30, 1929, it was the owner of copyrights granted by the United States upon motion picture films, and'had received royalties from the licensing of them. It challenges the tax assessed against it under the statute, for the year beginning November 1,1929, so far as it is measured by the amount of the royalties.
Appellant’s contention is based on two propositions, both essential to its conclusion that the tax is invalid. They are, first, that the copyrights and all income derived from them are immune from state taxation since they, like patents, are instrumentalities of the federal government, taxation of which the Constitution impliedly forbids, see Long v. Rockwood, 277 U. S. 142; and, second, that the present tax, measured by net income, is void, so far as the measure includes income from the copyrights, because a tax on federal instrumentalities.2
For present purposes it is enough if we direct our attention to the second proposition. At the outset appellant contends that the tax, although stated in the taxing act [387]*387to be on corporate franchises, is in reality a tax on income, and as such falls within the class of taxes which concededly may not be directly imposed on federal instrumentalities. In support of the contention, it points to the language of the statute, (§§ 214 (a) and 214 (8), dealing, with the computation of the tax), and to an opinion of the New York Court of Appeals, (Alpha Portland Cement Co. v. Knapp, 230 N. Y. 48, 57), which refer to the tax as one “ upon income.”
So far as these considerations are of weight, they are counterbalanced by the later pronouncement of the same court in People ex rel. Bass, Ratcliff & Gretton v. Tax Commission, 232 N. Y. 42, 46: . . although we have said in another connection (People ex rel. Alpha P. C. Co. v. Knapp, supra, p. 57) that ‘ the tax imposed upon this franchise must be held in practical operation to be a tax upon the income . . . This tax is equivalent to a tax upon relator’s income/ it is primarily a tax levied for, the privilege of doing business in the state.”
But the nature of a tax must be determined by its operation rather than by particular descriptive language which may have been applied to it. As was said in Macallen Co. v. Massachusetts, 279 U. S. 620, 625, 626, . . neither state courts nor legislatures, by giving the tax á particular name, or by using some form of words, can take away our duty to consider its nature and effect. ... this Court must determine for itself by independent inquiry whether the tax here is what, in form and by the decision of the state court, it is declared to be ... ” On [388]*388appeal from the state court in People ex rel. Bass, Ratcliff & Gretton v. Tax Commission, supra, this Court upheld the tax and defined its nature, saying, 266 U. S. 271, 280: It. is not a direct tax upon the allocated' income of the corporation in a given year,, but a tax for the privilege of doing business, in one year measured by the, allocated income accruing from the business in the preceding year. See New York v. Jersawit, 263 U. S. 493, 496.” See also Home Insurance Co. v. New York, 134 U. S. 594; People ex rel. United States Aluminum Printing Plate Co. v. Knight, 174 N. Y. 475; Anderson v. Forty-two Broadway Co., 239 U. S. 69.
If we look to the operation of the present statute, it is plain that it can have no application independent of the corporation’s enjoyment of the privilege of exercising its franchise. If appellant had ceased to do business before November 1,1929, it would not have been subject to any tax under this statute, although it had received, during its preceding fiscal year, income which the statute makes the measure of the tax. Since it can be levied only when the corporation both. seeks, or exercises the privilege of doing business in one year and has been in receipt of net income during its preceding fiscal year, the tax, whatever descriptive terms are properly applicable to it, obviously is not exclusively on income apart from the franchise. Hence we pass to the chief objection urged against it, that such a tax, however described, and even though deemed to be a t^x on franchises, is invalid so far as it is measured by income derived from'a federal instrumentality.
Under the Constitution the privilege of exercising the corporate franchise is the legitimate object, and the immunity of federal instrumentalities from taxation, a legitimate restriction, of the state power to tax. To give both •to the power and to the immunity such a practical construction as will not unduly restrict the power of the government imposing the tax, or the exercise of the func[389]*389tions of the government which may be affected by it, is the problem necessarily involved in determining the extent of. the immunity. See Metcalf & Eddy v. Mitchell, 269 U. S. 514, 523, 524. So far as it concerns the power of a state to impose a tax on corporate franchises, the problem has long since ceased to be novel. While this Court, since McCulloch v. Maryland, 4 Wheat. 316, has consistently held that the instrumentalities of either government, or the income derived from them, may not be made the direct object of taxation by the other, Weston v. City Council of Charleston, 2 Pet. 449; Dobbins v. Commissioners of Erie County, 16 Pet. 435; Home Savings Bank v. Des Moines, 205 U. S. 503; Indian Oil Co. v. Oklahoma, 240 U. S. 522; Federal Land Bank v. Crosland, 261 U. S.
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Me. Justice Stone
delivered the opinion of the Court.
This is an appeal under § 238 of the Judicial Code from. a decree of a District Court of three judges for Southern New York, 41 F. (2d) 395, which dismissed, on the merits, the bill of complaint by which appellant, a New York corporation, sought to restrain appellees, the New York State Tax Commission, from the collection of a tax, on [385]*385the ground that the taxing statute, as applied, infringes the federal Constitution.
Section 2091 of Article 9-A of the New York Tax Law lays an annual tax on every domestic, corporation of certain classes “ for the privilege of exercising its franchise in this state in a corporate or organized capacity.” The tax is payable in advance for each year beginning November 1st, and is at the rate of P/2% of so much of the corporation's entire net income for its preceding fiscal year as is, under other sections, allocated to the business carried [386]*386on within the state. By § 209 the net income embraces “ income from any source,” and “ is presumably the same as' the entire net income ” reported for income taxation to the United States, “ plus . . . dividends on stocks or any interest received on bonds of any character.” Subdivision 3 of § 208 provides: “The term ‘entire net income’ means the total net income, including all dividends received on stocks and all interest received from federal, state, municipal or other bonds . . .” Appellant’s bill of complaint sets up that during its fiscal year ending June 30, 1929, it was the owner of copyrights granted by the United States upon motion picture films, and'had received royalties from the licensing of them. It challenges the tax assessed against it under the statute, for the year beginning November 1,1929, so far as it is measured by the amount of the royalties.
Appellant’s contention is based on two propositions, both essential to its conclusion that the tax is invalid. They are, first, that the copyrights and all income derived from them are immune from state taxation since they, like patents, are instrumentalities of the federal government, taxation of which the Constitution impliedly forbids, see Long v. Rockwood, 277 U. S. 142; and, second, that the present tax, measured by net income, is void, so far as the measure includes income from the copyrights, because a tax on federal instrumentalities.2
For present purposes it is enough if we direct our attention to the second proposition. At the outset appellant contends that the tax, although stated in the taxing act [387]*387to be on corporate franchises, is in reality a tax on income, and as such falls within the class of taxes which concededly may not be directly imposed on federal instrumentalities. In support of the contention, it points to the language of the statute, (§§ 214 (a) and 214 (8), dealing, with the computation of the tax), and to an opinion of the New York Court of Appeals, (Alpha Portland Cement Co. v. Knapp, 230 N. Y. 48, 57), which refer to the tax as one “ upon income.”
So far as these considerations are of weight, they are counterbalanced by the later pronouncement of the same court in People ex rel. Bass, Ratcliff & Gretton v. Tax Commission, 232 N. Y. 42, 46: . . although we have said in another connection (People ex rel. Alpha P. C. Co. v. Knapp, supra, p. 57) that ‘ the tax imposed upon this franchise must be held in practical operation to be a tax upon the income . . . This tax is equivalent to a tax upon relator’s income/ it is primarily a tax levied for, the privilege of doing business in the state.”
But the nature of a tax must be determined by its operation rather than by particular descriptive language which may have been applied to it. As was said in Macallen Co. v. Massachusetts, 279 U. S. 620, 625, 626, . . neither state courts nor legislatures, by giving the tax á particular name, or by using some form of words, can take away our duty to consider its nature and effect. ... this Court must determine for itself by independent inquiry whether the tax here is what, in form and by the decision of the state court, it is declared to be ... ” On [388]*388appeal from the state court in People ex rel. Bass, Ratcliff & Gretton v. Tax Commission, supra, this Court upheld the tax and defined its nature, saying, 266 U. S. 271, 280: It. is not a direct tax upon the allocated' income of the corporation in a given year,, but a tax for the privilege of doing business, in one year measured by the, allocated income accruing from the business in the preceding year. See New York v. Jersawit, 263 U. S. 493, 496.” See also Home Insurance Co. v. New York, 134 U. S. 594; People ex rel. United States Aluminum Printing Plate Co. v. Knight, 174 N. Y. 475; Anderson v. Forty-two Broadway Co., 239 U. S. 69.
If we look to the operation of the present statute, it is plain that it can have no application independent of the corporation’s enjoyment of the privilege of exercising its franchise. If appellant had ceased to do business before November 1,1929, it would not have been subject to any tax under this statute, although it had received, during its preceding fiscal year, income which the statute makes the measure of the tax. Since it can be levied only when the corporation both. seeks, or exercises the privilege of doing business in one year and has been in receipt of net income during its preceding fiscal year, the tax, whatever descriptive terms are properly applicable to it, obviously is not exclusively on income apart from the franchise. Hence we pass to the chief objection urged against it, that such a tax, however described, and even though deemed to be a t^x on franchises, is invalid so far as it is measured by income derived from'a federal instrumentality.
Under the Constitution the privilege of exercising the corporate franchise is the legitimate object, and the immunity of federal instrumentalities from taxation, a legitimate restriction, of the state power to tax. To give both •to the power and to the immunity such a practical construction as will not unduly restrict the power of the government imposing the tax, or the exercise of the func[389]*389tions of the government which may be affected by it, is the problem necessarily involved in determining the extent of. the immunity. See Metcalf & Eddy v. Mitchell, 269 U. S. 514, 523, 524. So far as it concerns the power of a state to impose a tax on corporate franchises, the problem has long since ceased to be novel. While this Court, since McCulloch v. Maryland, 4 Wheat. 316, has consistently held that the instrumentalities of either government, or the income derived from them, may not be made the direct object of taxation by the other, Weston v. City Council of Charleston, 2 Pet. 449; Dobbins v. Commissioners of Erie County, 16 Pet. 435; Home Savings Bank v. Des Moines, 205 U. S. 503; Indian Oil Co. v. Oklahoma, 240 U. S. 522; Federal Land Bank v. Crosland, 261 U. S. 374, it has held with like consistency that the privilége of exercising the corporate franchise is no less an appropriate object of taxation by one government merely because the corporate property or' net income, which is made the measure of the tax, may chance to in- > elude the obligations of the other, or the income derived from them-. The constitutional power of one government to reach this permissible object of taxation may not be curtailed because of the indirect effect which' the tax may have upon the other.
The precise question now presented was definitely answered in Flint v. Stone Tracy Co., 220 U. S. 107, 162, et seq., which upheld a federal tax, levied upon a corporate franchise granted by a state, but measured by the entire corporate income, including, in that case, income from tax exempt municipal bonds. In reaching this conclusion, the Court reaffirmed the distinction, repeatedly made in earlier decisions, between a tax, invalid because laid directly on governmental instrumentalities or income derived from them, and an excise which is valid because imposed on corporate franchises, even though the corporate property or income which is the measure of the [390]*390tax embraces tax exempt securities or their income. See Society for Savings v. Coite, 6 Wall. 594; Provident Institution v. Massachusetts, 6 Wall. 611; Hamilton Co. v. Massachusetts, 6 Wall 632; Home Insurance Co. v. New York, supra.
Upon a like principle other forms of excise tax have been upheld, although the statutory measure of the tax included securities constitutionally immune from any form of direct taxation. A state inheritance or legacy tax is valid, although measured by the value of United States bonds which are transmitted. Plummer v. Coler, 178. U. S. 115. See also Orr v. Gilman, 183 U. S. 278; Blodgett v. Silberman, 277 U. S. 1; cf. Greiner v. Lewellyn, 258 U. S. 384; Willcuts, Collector, v. Bunn, ante, p. 216. By parity of reasoning an inheritance tax may be levied by a state on a bequest to the United States, United States v. Perkins, 163 U. S. 625, and by the United States on a bequest to a municipality. Snyder v. Bettman, 190 U. St 249. Similarly, state laws, taxing to stockholders, at full valué, shares in national banks, are upheld, although the banks, own tax exempt United States bonds. Van Allen v. Assessors, 3 Wall. 573, 583; People v. Commissioners, 4 Wall. 244, 255; Peoples National Bank of Kingfisher v. Board of Equalization, 260 U. S. 702; Des Moines National Bank v. Fairweather, 263 U. S. 103, 112 et seq. A tax on net income is not a forbidden tax on exports because it includes receipts from exports in the computartion of the income, Peck & Co. v. Lowe, 247 U. S. 165; Barclay & Co. v. Edwards, 267 U. S. 442; nor is the inclusion in a state income tax of receipts from interstate commerce a prohibited burden on commerce; United States Glue Co. v. Oak Creek, 247 U. S. 321; Shaffer v. Carter, 252 U. S. 37, 57; cf. Interborough Rapid Transit Co. v. Sohmer, 237 U. S. 276, 283, 284. It has been held that a state tax upon the franchise of .a corporation, [391]*391measured by its receipts from transportation, properly apportioned to the business done within the state, is valid, although including receipts from interstate commerce. Maine v. Grand Trunk Ry. Co., 142 U. S. 217; cf. Galveston, Harrisburg & San Antonio Ry. Co. v. Texas, 210 U. S. 217. A state may not tax tangible property located beyond its boundaries, Union Transit Co. v. Kentucky, 199 U. S. 194; but it may measure a tax on franchises of domestic corporations by corporate property, even though without the state. Kansas City, F. S. & M. Ry. Co. v. Kansas, 240 U. S. 227; Cream of Wheat Co. v. Grand Forks, 253 U. S. 325. So well settled is this last mentioned application of the doctrine that an excise may be measured by tax-immune property, that an appeal in which such a tax was assailed on the very grounds urged here, was dismissed per curiam during the present term. Nebraska ex rel. Beatrice Creamery Co. v. Marsh, post, p. 799.
It is said that there is no logical distinction between a tax laid on a proper object of taxation, measured by a subject matter which is immune, and a tax of like amount imposed directly on the latter; but it may be said with greater force that there is a logical and practical distinction between a tax laid directly upon all of any class of government instrumentalities,, which the Constitution impliedly forbids, and a tax such as the present which can in no case have any incidence, unless the taxpayer enjoys a privilege which is a proper object of taxation, and which would not be open to question if its amount were arrived at by any other non-discriminatory method.
This Court, in drawing the line which defines the. limits of the powers and immunities of state and national governments, is not intent upon a mechanical application of the rule that government instrumentalities are immune from taxation, ■ regardless of the consequences to the op[392]*392erations of government. The necessity for marking those boundaries grows out of our Constitutional system, under which both the federal and the state governments exercise their authority over one people within the territorial limits of the same state. The purpose is the preservation to each government, within its own sphere, of the freedom to carry on those affairs committed to it by the Constitution, without undue interference by the other. McCulloch v. Maryland, supra, p. 405; The Collector v. Cay, 11 Wall. 113, 125; Railroad Co. v. Peniston, 18 Wall. 5, 31; South Carolina v. United States, 199 U. S. 437, 461; Flint v. Stone Tracy Co., supra, pp. 154, 172; Metcalf & Eddy v. Mitchell, supra, pp. 523, 524.
Having in mind the end sought, we cannot say that the rule applied by this Court for some seventy years, that a non-discriminatory tax upon corporate franchises is valid,, notwithstanding the inclusion of tax exempt property or income ip. the measure of it, has failed of its purpose, or has worked so badly as to require a departure from it now; or that, the present tax, viewed in the light of actualities, iixlpóses any such real or direct burden on the federal government as to call for the application of a different rule.
The decision of this Court in Macallen Co. v. Massachusetts, supra, upon which appellant relies, was not such a departure. That case did not overrule Flint v. Stone Tracy Co., supra.. Instead, the opinion rested the decision on the distinguishing fact that the tax exempt securities were mcluded in the measure of the franchise tax by virtue of an amendment to the taxing statute which, it was held, was specifically intended to reach the income from tax exempt national and municipal bonds which had previously. not been included in the measure of the tax. Thcase was thus brought within the purview of Miller v. Milwaukee, 272 U. S. 713, in which this Court had stated, with respect to a state tax on income, no franchise or [393]*393privilege tax being involved [p. 715]: “ If the avowed purpose or self-evident operation of a statuté is to follow thé bonds of.the United States, and to make up for its inability to reach them directly by indirectly achieving the same result, the statute must fail even if but for its purpose or special operation it would be perfectly good.” But, as the Court in that case was careful to point out, in language later quoted with approval in Macallen Co. v. Massachusetts, p. 631, “A tax very well may be upheld as against any casual effect it may have upon the bonds of the United States when passed with a different intent and not aimed at them ...” '
It cannot be said that the present tax was aiméd at copyrights. Appel ant insists that it is, for the same rea- • son as the tax held invalid in Macallen Co. v. Massachusetts, supra, in that amendments of the taxing act, sufficiently broad to include income from tax. immune property in the measure of the tax, were specifically intended to accomplish that result. Reference is madé to the legislative history of the statute. In People ex rel. Standard Oil Company v. Law, 237 N. Y. 142, it was held 1 as a matter of statutory construction that the “ entire net income” specified by the act then in force Was gross income as defined by the applicable provisions of the federal income tax law, less specified deductions, and that consequently income from state and municipal bonds and some federal bonds was not included in the measure of the tax. After that decision subdivision 3 of § 208 was amended, Laws N. Y. 1924, .c. 329, to include in the defini-. tion of income “ all interest received from federal, state, municipal or other bonds ”; and § 209 was amended, Laws N. Y. 1927, c. 479, so as to include in the measure of the tax " income from any source.”
But the statute, before these amendments, was sufficiently broad to include income from copyrights within the measure of the tax; and neither before nor after the [394]*394amendments did it make any mention of copyrights or their income. There is nothing to suggest that the legislature could at any time have had in mind the addition of income from copyrights to the measure of the tax, or that the statute or the amendments were adopted' “for the very purpose of subjecting ” it “pro tanto to the burden of the tax,” which was declared to be the vice of the statute in Macallen Co. v. Massachusetts, supra, p. 631. That- the royalties play some part in the measure of the tax is the result of the application of the general language of.the statute to particular circumstances to which the statute makes no specific reference. In this respect, the present statute differs in no substantial way from that upheld in Flint v. Stone Tracy Co., supra.
Affirmed.