Why is federal property exempt from taxation?

Federal property is exempt from taxation primarily because taxing it would violate the principle of intergovernmental immunity, which maintains that the federal government should not be subjected to state taxation. This principle is rooted in the Constitution and aims to prevent one level of government from taxing another, which could undermine the federal government's ability to function and execute its duties effectively.

The efficiency principle relates to how taxation can create distortions or inefficiencies in the operation of government functions. Taxing federal properties could lead to complications in federal operations and could divert resources away from their primary functions. By keeping federal property exempt from state taxes, it ensures a smoother operation and avoids potential conflicts between governmental levels, thus preserving the integrity of federal authority and operations.

In this context, the other options do not appropriately capture the rationale behind the tax exemption, focusing instead on aspects related to state revenue or administrative needs, rather than the underlying constitutional principles guiding this exemption.