31 USC 3124
"(a) Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax"

Notice there is a period after the word "State" and before the word "The", therefore not a sentence continuation, it is a new sentence and a new though in parallel to.

28 USC 3002
(14) “State” means any of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Marianas, or any territory or possession of the United States.

Where is the Seat of the Federal Government, inside the 10 mile square of what?