SAM D. JOHNSON, Justice.
General Dynamics Corporation brought this action to recover in excess of $2 million in franchise taxes paid pursuant to Article 12.01, et seq., Texas Taxation-General Annotated, to the State of Texas under protest for the years 1968 through 1971. General Dynamics maintained that this tax was not included within the Buck Act, United States Code Annotated, Title 4, Sections 105 — 110, and therefore could not be collected with respect to activities occurring within a federal enclave. The trial court, sitting without a jury, held that General Dynamics was entitled to recover these taxes. The court of civil appeals reversed and rendered. 533 S.W.2d 118. We affirm.
General Dynamics is a private corporation primarily engaged in the manufacture and sale of defense equipment and supplies. The Corporation conducts business at several locations in Texas, though the majority of its operations occurred on a federal enclave in Tarrant County which consists of about 428 acres of land known as Air Force Plant No. 4 Site. The land was leased to the Corporation by the federal government.
The dispute arose over the classification by the State of the gross receipts from General Dynamics’ operations within the federal enclave in Tarrant County as gross receipts arising in Texas. The Buck Act1 permits a state to collect an “income tax”2 on business activities, such as those of General Dynamics, within a federal enclave. The State contended that the Texas franchise tax3 is an “income tax” within the [257]*257meaning of the Buck Act and, therefore, the taxes were due.
The single question to be resolved is whether the Texas franchise tax paid by General Dynamics is an “income tax” under the Buck Act and may be levied for business conducted on a federal enclave.
The court of civil appeals held that this court’s decision in Humble Oil & Refining Company v. Calvert, 478 S.W.2d 926, cert. denied, 409 U.S. 967, 93 S.Ct. 293, 34 L.Ed.2d 234 (1972), controlled the decision, that the tax levied in the instant case was an “income tax” as that term is used in the Buck Act, and that the State could therefore classify the gross receipts derived from the federal enclave as part of the gross receipts resulting from business activities in Texas.
Federal law governs the question of whether a tax is an “income tax” within the meaning of the Buck Act. Howard v. Commissioners of Louisville, 344 U.S. 624, 73 S.Ct. 465, 97 L.Ed. 617 (1953). When previously interpreting the Buck Act, this court has noted:
“The Congressional intent is strongly stated in the bill’s Senate Report where it is stated that ‘[t]his definition [of income tax] . . . must of necessity cover a broad field because of the great variations to be found between the different State laws. The intent of your committee in laying down such a broad definition was to include therein any State tax (whether known as a corporate-franchise tax, or business-privilege tax, or any other name) if it is levied on, with respect to, or measured by net income, gross income, or gross receipts’ ” Humble Oil & Refining Company v. Calvert, supra, at 929. [Emphasis added.]
Thus, this court must not only apply federal law but also interpret the Buck Act in light of the recognized congressional intent.
With respect to the Texas franchise tax, the courts of this state have held that it “is not a tax upon the property of the corporation nor one upon its income, though both are to be regarded in measuring such tax, but a charge made by the state against the corporation for the privilege granted it to do business in the state. . . . [I]t was the purpose of the Legislature to levy against the corporation a tax commensurate with the value of the privilege granted ..” United North & South Development Co. v. Heath, 78 S.W.2d 650, 652 (Tex.Civ.App.—Austin 1934, writ ref’d). Accord, Riveroaks Development Corp. v. Shepperd, 246 S.W.2d 236, 240 (Tex.Civ.App.—Austin 1952, writ ref’d); Sterling Oil & Refining Corporation v. Isbell, 202 S.W.2d 300, 302 (Tex.Civ.App.-Austin 1947, no writ); Houston Oil Co. of Texas v. Lawson, 175 S.W.2d 716, 723 (Tex.Civ.App.—Galveston 1943, writ ref’d).
The United States Supreme Court, citing the Texas decision in United North & South Development Co. v. Heath, supra, has held that the Texas franchise tax “is obviously payment for the privilege of carrying on business in Texas.” Ford Motor Co. v. Beauchamp, 308 U.S. 331, 334, 60 S.Ct. 273, 274, 84 L.Ed. 304 (1939).
The United States Supreme Court cases, Commissioner of Internal Revenue v. Glenshaw Glass Co., 348 U.S. 426, 431, 75 S.Ct. 473, 99 L.Ed. 483 (1955), and Old Colony Trust Co. v. Commissioner of Int. Rev., 279 U.S. 716, 49 S.Ct. 499, 73 L.Ed. 918 (1929), cited in the case of Humble Oil & Refining Company v. Calvert, supra, indicates that the federal courts would agree with the analysis of this court in that case as to what “income tax” means under the Buck Act. This court wrote:
“If the tax in question is based upon income and is measured by that income in money or money’s worth, as a net income tax, gross income tax, or gross receipts [258]*258tax, it is an ‘income tax.’ ” 478 S.W.2d 926 at 930.
This court further described “income” as “an accession to wealth in the form of economic benefit, value in money or money’s worth.” 478 S.W.2d 926 at 930. Under the analysis in Humble Oil & Refining Company v. Calvert, supra, the granting of the privilege to transact business in the State of Texas represents the realization of gross income to the General Dynamics Corporation because an economic benefit flows to the Corporation.
These economic benefits which flow from the granting of the privilege include the opportunity to transact intrastate business and the right to invoke the protection of the local government. Ford Motor Co. v. Beauchamp, supra, 308 U.S. at 334-35, 60 S.Ct. 273. The formula used in the franchise tax is the valuation of the privilege granted by the Legislature. United North & South Development Co. v. Heath, supra; Riveroaks Development Corp. v. Shepperd, supra.
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SAM D. JOHNSON, Justice.
General Dynamics Corporation brought this action to recover in excess of $2 million in franchise taxes paid pursuant to Article 12.01, et seq., Texas Taxation-General Annotated, to the State of Texas under protest for the years 1968 through 1971. General Dynamics maintained that this tax was not included within the Buck Act, United States Code Annotated, Title 4, Sections 105 — 110, and therefore could not be collected with respect to activities occurring within a federal enclave. The trial court, sitting without a jury, held that General Dynamics was entitled to recover these taxes. The court of civil appeals reversed and rendered. 533 S.W.2d 118. We affirm.
General Dynamics is a private corporation primarily engaged in the manufacture and sale of defense equipment and supplies. The Corporation conducts business at several locations in Texas, though the majority of its operations occurred on a federal enclave in Tarrant County which consists of about 428 acres of land known as Air Force Plant No. 4 Site. The land was leased to the Corporation by the federal government.
The dispute arose over the classification by the State of the gross receipts from General Dynamics’ operations within the federal enclave in Tarrant County as gross receipts arising in Texas. The Buck Act1 permits a state to collect an “income tax”2 on business activities, such as those of General Dynamics, within a federal enclave. The State contended that the Texas franchise tax3 is an “income tax” within the [257]*257meaning of the Buck Act and, therefore, the taxes were due.
The single question to be resolved is whether the Texas franchise tax paid by General Dynamics is an “income tax” under the Buck Act and may be levied for business conducted on a federal enclave.
The court of civil appeals held that this court’s decision in Humble Oil & Refining Company v. Calvert, 478 S.W.2d 926, cert. denied, 409 U.S. 967, 93 S.Ct. 293, 34 L.Ed.2d 234 (1972), controlled the decision, that the tax levied in the instant case was an “income tax” as that term is used in the Buck Act, and that the State could therefore classify the gross receipts derived from the federal enclave as part of the gross receipts resulting from business activities in Texas.
Federal law governs the question of whether a tax is an “income tax” within the meaning of the Buck Act. Howard v. Commissioners of Louisville, 344 U.S. 624, 73 S.Ct. 465, 97 L.Ed. 617 (1953). When previously interpreting the Buck Act, this court has noted:
“The Congressional intent is strongly stated in the bill’s Senate Report where it is stated that ‘[t]his definition [of income tax] . . . must of necessity cover a broad field because of the great variations to be found between the different State laws. The intent of your committee in laying down such a broad definition was to include therein any State tax (whether known as a corporate-franchise tax, or business-privilege tax, or any other name) if it is levied on, with respect to, or measured by net income, gross income, or gross receipts’ ” Humble Oil & Refining Company v. Calvert, supra, at 929. [Emphasis added.]
Thus, this court must not only apply federal law but also interpret the Buck Act in light of the recognized congressional intent.
With respect to the Texas franchise tax, the courts of this state have held that it “is not a tax upon the property of the corporation nor one upon its income, though both are to be regarded in measuring such tax, but a charge made by the state against the corporation for the privilege granted it to do business in the state. . . . [I]t was the purpose of the Legislature to levy against the corporation a tax commensurate with the value of the privilege granted ..” United North & South Development Co. v. Heath, 78 S.W.2d 650, 652 (Tex.Civ.App.—Austin 1934, writ ref’d). Accord, Riveroaks Development Corp. v. Shepperd, 246 S.W.2d 236, 240 (Tex.Civ.App.—Austin 1952, writ ref’d); Sterling Oil & Refining Corporation v. Isbell, 202 S.W.2d 300, 302 (Tex.Civ.App.-Austin 1947, no writ); Houston Oil Co. of Texas v. Lawson, 175 S.W.2d 716, 723 (Tex.Civ.App.—Galveston 1943, writ ref’d).
The United States Supreme Court, citing the Texas decision in United North & South Development Co. v. Heath, supra, has held that the Texas franchise tax “is obviously payment for the privilege of carrying on business in Texas.” Ford Motor Co. v. Beauchamp, 308 U.S. 331, 334, 60 S.Ct. 273, 274, 84 L.Ed. 304 (1939).
The United States Supreme Court cases, Commissioner of Internal Revenue v. Glenshaw Glass Co., 348 U.S. 426, 431, 75 S.Ct. 473, 99 L.Ed. 483 (1955), and Old Colony Trust Co. v. Commissioner of Int. Rev., 279 U.S. 716, 49 S.Ct. 499, 73 L.Ed. 918 (1929), cited in the case of Humble Oil & Refining Company v. Calvert, supra, indicates that the federal courts would agree with the analysis of this court in that case as to what “income tax” means under the Buck Act. This court wrote:
“If the tax in question is based upon income and is measured by that income in money or money’s worth, as a net income tax, gross income tax, or gross receipts [258]*258tax, it is an ‘income tax.’ ” 478 S.W.2d 926 at 930.
This court further described “income” as “an accession to wealth in the form of economic benefit, value in money or money’s worth.” 478 S.W.2d 926 at 930. Under the analysis in Humble Oil & Refining Company v. Calvert, supra, the granting of the privilege to transact business in the State of Texas represents the realization of gross income to the General Dynamics Corporation because an economic benefit flows to the Corporation.
These economic benefits which flow from the granting of the privilege include the opportunity to transact intrastate business and the right to invoke the protection of the local government. Ford Motor Co. v. Beauchamp, supra, 308 U.S. at 334-35, 60 S.Ct. 273. The formula used in the franchise tax is the valuation of the privilege granted by the Legislature. United North & South Development Co. v. Heath, supra; Riveroaks Development Corp. v. Shepperd, supra. Accordingly, the franchise tax can be viewed as a tax levied on the economic benefit which flows to General Dynamics Corporation as a result of the granting of the privilege to transact business in Texas.
The proposition that an economic benefit is received and that income is realized by the granting of a franchise is not a unique one. The federal courts have held that extension of a street railway franchise by a city in exchange for a bridge may result in the realization of a capital gain or loss, Philadelphia Park Amusement Co. v. United States, 126 F.Supp. 184, 130 Ct.Cl. 166 (1954), and that the sale of a franchise can generate capital gains, Baxter v. C.I.R., 433 F.2d 757 (9th Cir. 1970); Coca-Cola Bottling Co., 22 B.T.A. 686 (1931). Similarly, the federal courts have held that a loss may be realized when a franchise is terminated. The loss of an exclusive sales franchise, United States v. Hardy, 74 F.2d 841 (4th Cir. 1935), and the loss of the right to renew a liquor license due to Prohibition, Elston Co. v. United States, 21 F.Supp. 267, 86 Ct.Cl. 136 (1937), Best Brewery Co., 16 B.T.A. 1354 (1929), McAvoy Company, 10 B.T.A. 1017 (1928), William Zakon, 7 B.T.A. 687 (1927), have been allowed as deductions from gross income.
Furthermore, an analysis in terms of the formula employed by the State of Texas also leads to the conclusion that the franchise tax is an “income tax” within the meaning of the Buck Act.
The term “income tax” “means any tax levied on, with respect to, or measured by, net income, gross income, or gross receipts.” Section 110 of the Buck Act. [Emphasis added.]
Federal courts have described the Texas franchise tax in various terms. In Southern Realty Corporation v. McCallum, 5 Cir., 65 F.2d 934, 935-36, cert. denied, 290 U.S. 692, 54 S.Ct. 127, 78 L.Ed. 596 (1933), the court wrote:
“The [corporate franchise] tax is not laid on property or on income, though both are regarded in measuring it.” 4 [Emphasis added.]
The fifth circuit has also written that the Texas franchise tax is “graduated according to capital strength of the corporation, which [259]*259is its business potency.” Ford Motor Co. v. Clark, 100 F.2d 515, 517 (5 Cir. 1938), aff’d:, 308 U.S. 331, 60 S.Ct. 273, 84 L.Ed. 304 (1939). [Emphasis added.] Finally, in Ford Motor Co. v. Beauchamp, supra, 308 U.S. at 335, 60 S.Ct. at 275, the United States Supreme Court wrote that the franchise tax was “based upon the proportion of the capital employed in Texas, calculated by the percentage of sales which are within the state.” [Emphasis added.] On the basis of the language employed by the federal courts, it can be reasonably concluded that the Texas franchise tax is one “levied on” capital but “measured by . gross receipts.” Given the specific wording of the Buck Act, Section 110(c), and the congressional intent that the term “income tax” should include “any State tax measured by . . gross receipts,” it is reasonable to view the Texas franchise tax as an “income tax” within the meaning of the Buck Act. [Emphasis added.]
We hold that the Texas franchise tax is an “income tax” within the meaning of the Buck Act either because the privilege to transact business in Texas represents income or because the tax is “measured by gross receipts.”
The judgment of the court of civil appeals is affirmed.