Tax Law Commons^™

Taxation - Exemptions - Municipally-Owned Property

Michigan Law Review

In settlement for collateral notes given to secure its deposits in a bank which became insolvent, a municipality had conveyed to it an office building, located in a county other than the one in which said municipality was situated. The city thereafter rented the offices to tenants operating private businesses. The county in which the building was located subjected it to an ad valorem tax. Contesting the right to its collection, the city failed to pay the assessed taxes, for a period of four years. Held, the property, although municipally-owned, not being held or used for any governmental or …

Taxation - Constitutionality Of Statute Permitting Rebate On Payment Of Delinquent Taxes

Michigan Law Review

Defendant county demurred to plaintiff's claim for taxes paid under protest, arguing that ,the statute upon which plaintiff relied, one giving taxpayers the right to pay off delinquent taxes without interest and with a five per cent reduction in principal, was unconstitutional. The demurrer was overruled and defendant appealed. Held, that while the court feels that the law is entirely valid, the county is not entitled to raise an objection to it. Vance Lumber Co. v. King County, 184 Wash. 402, 51 P. (2d) 623 (1935).

Revenue Financing Of Public Enterprises, E. H. Foley Jr.

Michigan Law Review

Courts have been slow to take judicial notice of the growing needs of local communities. Legislatures have restrained municipal corporations from engaging in business enterprises upon the assumption that the object was mere hope of gain, that the investment of municipal funds in such enterprises was simply a speculation, or that the effect was to divert municipal corporations from their legitimate ends and to poach upon the preserves of private enterprise. Novel municipal undertakings have been feared as an entering wedge of state socialism or governmental paternalism. Even when the instrumentality of private adventure was disposed to leave a need …

Taxation Of Undistributed Corporate Profits, John B. Martin Jr.

Michigan Law Review

The legislation proposed by President Roosevelt in his message of March 3, 1936, to prevent automatic avoidance of taxation by non-distribution of corporate profits, does not represent a new and previously unheard of system of taxation. It embraces, on the contrary, the gist of proposals made by various individuals and organizations extending back as far as the year 1864 when Congress passed, a Revenue Act providing that "gains and profits of all companies, whether incorporated or partnership . . . shall be included in estimating the annual gains, profits, or income of any person entitled to the same, whether divided …

Municipal Corporations - Effect Upon Collection Of Tort Judgments Of Constitutional And Statutory Limitations On Indebtedness And Taxing Powers, Michigan Law Review

Michigan Law Review

In an effort to protect the taxpayer from the extravagance of municipal officials, two types of restrictions, in the main, have been imposed: those limiting the power to contract debts, and those restricting the power to levy taxes. Frequently in an effort to recover and collect a judgment against the city, one or the other of these restrictions is met. Courts seem to hold unanimously that debt limitations apply to the city's obligations in contract and not in tort, but they are divided as to the effect of tax limitations upon collection of a tort judgment. As an example of …

Taxation - Exemption Of Federal Instrumentality From State Gasoline Tax

Michigan Law Review

An Alabama statute provided that "Every distributor, refiner, retail dealer or storer of gasoline . . . shall pay an excise tax . . . upon the selling, distributing, storing or withdrawing from storage in this State for any use, gasoline . . . ." The plaintiff, a private corporation, sold gasoline to the United States for use in performing governmental functions without reporting it for taxation. When the state demanded payment, the plaintiff brought this suit to restrain collection. Held (Justices Cardozo and Brandeis dissenting), the operation of the statute violates the constitutional principle safeguarding the federal government against …

Constitutional Law-Police Power -Validity Of Compulsory Unemployment Insurance Act

Michigan Law Review

Complainants asked for a declaratory judgment that the New York Unemployment Insurance Act is unconstitutional. They contended that the law, providing for the payment of limited unemployment benefits out of a fund raised by a uniform payroll tax imposed on all employers, takes property without due process of law. Held, that the law is valid, violating neither the state nor the Federal Constitution. W. H. H. Chamberlain, Inc. v. Andrews, 271 N. Y. 1, 2 N. E. (2d) 22 (1936).

Constitutional Law - Franchise Tax - Burden Upon Interstate And Foreign Commerce - Due Process - Equal Protection Of The Laws

Michigan Law Review

The state of California adopted a franchise tax which was based upon the corporations' net income apportioned according to "that portion which is derived from business done within the State." When this was construed to include not merely the income from intrastate business alone, but rather the income from both this and from all interstate and foreign business attributable to California, its enforcement was resisted upon the grounds that (1) so construed it was repugnant to the commerce clause upon the theory that it burdened interstate and foreign commerce, (2) it violated the due process clause upon the theory that …

Constitutional Law - Interstate Commerce - State Occupation Tax On Operation Of Radio Broadcasting Station

Michigan Law Review

A domestic corporation, owning and operating two radio stations, both broadcasting well beyond the state's borders, sought to enjoin the enforcement of an annual occupation tax equal to one per cent of gross income from business within the state. It was admitted that while a state might impose a property tax on a business engaged only in interstate commerce or a tax solely to support regulation in the exercise of the state's police power, an unapportioned gross income tax on a business engaged in intrastate and interstate commerce would be an unconstitutional burden on interstate commerce, although a net income …

Municipal Corporations-Power Of Congress To Pass Act For Readjustment Of Municipal Debts

Michigan Law Review

In 1934, Congress amended the National Bankruptcy Act so as to authorize any municipality or other political subdivision of any state to effect a readjustment of its debts by proceedings in courts of bankruptcy. A water district in Texas petitioned the United States District Court asking for a readjustment of its obligations. After the dismissal of the proceedings in the District Court, but before the reversal of the decision by the Court of Appeals, the state legislature of Texas passed an act empowering municipalities and other political subdivisions to proceed under the federal statute. Held, that the municipal debt …

Federal Gross Estate Tax-Constitutionality-Revocable Transfers By Way Of Trust

Michigan Law Review

Five recent decisions of the United States Supreme Court, together with a decision of the United States Court of Appeals for the Third Circuit, have considerably changed some of the currently accepted theories regarding the taxability under the Federal Estate Tax of transfers reserving various degrees of control to donors, both with respect to what may be considered to be a sufficient reserved control and what the constitutional limits on the taxing power may be. Some perplexing questions have been settled by these decisions while others quite as vexing seem to have been raised and left for future determination.

The Reduction Of Income Taxes Through The Use Of Trusts, William C. Warren

Michigan Law Review

Obviously the draftsmen of the first Revenue Act under the Sixteenth Amendment could not foresee every possibility of tax avoidance and adequately prevent such avoidance by express statutory provisions. Since the enactment of the Revenue Act of 1913, Congress has made constant efforts in each succeeding Revenue Act to close the loopholes discovered by tax lawyers. The success of these efforts has been most remarkable, particularly in comparison with the similar efforts of England under her income tax laws. Indeed, it may fairly be said that the enactment. of the Gift Tax Act in 1932 wrote the final chapter of …

The Federal Spending Power And State Rights, John W. Holmes

Michigan Law Review

The cry for constitutional change, that dwindled to a small voice with the repeal of Prohibition, has risen to a new pitch following decapitation of the AAA by the United States Supreme Court in United States v. Butler. Burgeoning in Congress is a portentous, if unorganized, attack upon the Supreme Court's power of judicial review.

It seems timely, therefore, to inquire how far the current conception of the Supreme Court as an obstacle to the exercise of legislative power by the central government is justified, and to canvass the extent of the need, if any, for curtailment of the …

Taxation-Right Of Federal Taxpayer To Question Validity Of A Federal Tax-Effect Of Section 3224 Of The United States Revised Statutes

Michigan Law Review

Quite apart from the merits of the controversy, the recent decision of the Supreme Court in the Hoosac Mills case presented the interesting problem of the taxpayer's standing in court to question the validity of a federal tax. The problem is really twofold. First, may the taxpayer enjoin the collection of the tax? Second, assuming that he may not, what steps must he take before he can get a refund of the amount that he has paid?