Taxation-State and Local Commons^™

State Income Taxation Of Multijurisdictional Corporations: Reflections On Mobil, Exxon, And H.R. 5076, Walter Hellerstein

Michigan Law Review

The purpose of this Article is twofold: first, to analyze the Mobil and Exxon decisions; second, to consider the congressional reaction they may engender. Because the terrain that this Article covers may be unfamiliar to some readers, a few further words of introduction may be appropriate.

Taken together, the Mobil and Exxon decisions dealt with the three methods of dividing a multijurisdictional corporation's income among the states - specific allocation, separate accounting and apportionment by formula. Each method provides a different solution to the problem of determining the portion of the income of multistate businesses that should be taxable by …

Local Taxes, Federal Courts, And School Desegregation In The Proposition 13 Era, Michigan Law Review

Michigan Law Review

This Note examines a federal court's dilemma when the remedy of school desegregation collides with the trend of tax limitation - when a school desegregation order requires funds that the local school authorities do not have and cannot raise. Can the district court order a local tax levy to fund school desegregation when the school authorities have already reached their maximum taxing limit? Is there a better alternative remedy?

To tackle those questions, this Note first elucidates three equitable principles to guide courts in fashioning desegregation decrees. It then explores the history of judicial power to order state and local …

State Taxation And The Supreme Court: Toward A More Unified Approach To Constitutional Adjudication?, Walter Hellerstein

Michigan Law Review

The first section of this Article examines three recent cases, each addressed to a different constitutional limitation on the scope of state tax power, that may be read as signifying a new approach: Michelin Tire Corp. v. Wages, which concerned the import-export clause; United States v. County of Fresno, which concerned the supremacy clause; and Complete Auto Transit, Inc. v. Brady, which concerned the commerce clause. Section II considers the implications of these decisions and explores -the possibility that they share an underlying doctrinal unity.

Preferential Property Tax Treatment Of Farmland And Open Space Under Michigan Law, Ronald Henry

University of Michigan Journal of Law Reform

This note will attempt to explain the new Michigan statute and evaluate the effectiveness of this type of legislation as a means of preserving open space and farmland from conversion to more intensive use.

Some Reflections On The State Taxation Of A Nonresident's Personal Income, Walter Hellerstein

Michigan Law Review

My purpose here is fourfold: first, to inquire into the theoretical and constitutional underpinning of Vermont's taxing scheme against the background of the case that challenged the validity of the levy; second, to analyze the impact of related legislation on the principles upon which the basic Vermont formula was constructed; third, to determine whether there are reasons of law or policy why other states should not adopt schemes similar to Vermont's; and, fourth, to consider in light of the foregoing some of the recurring problems concerning the treatment of nonresidents under state income tax statutes.

Real Property Tax Relief For The Elderly, Edsell M. Eady Jr.

University of Michigan Journal of Law Reform

This article focuses on the elderly person's problem of coping with real property taxation. Although property taxes vary in intensity from place to place, the elderly bear a particularly heavy burden. The property tax generally does not reflect a taxpayer's ability to pay, since it is usually levied in proportion to the value of real property rather than in relation to a homeowner's income. Thus people with low incomes may have to pay a greater percentage of their incomes as real property tax than people with higher incomes. The real property tax can be a formidable problem for an elderly …

The Real Estate Investment Trust: State Tax, Tort, And Contract Liabilities Of The Trust, Trustee, And Shareholder, Michigan Law Review

Michigan Law Review

This Comment will attempt to alert potential investors in and trustees of REITs to the full extent of the liabilities that they could suffer for contract debts incurred in the name of the trust and torts committed by trust personnel. Since state tax considerations also play a significant role in investment decisions, the manner in which each state taxes the REIT and its shareholders on income derived from property and business in that state will also be investigated. Finally, a rational path out of the morass created by current state law will be articulated in order to prompt renewed discussion …

The Walz Decision: More On The Religion Clauses Of The First Amendment, Paul G. Kauper

Michigan Law Review

The principal thrust of this Article is to determine the contribution made by the Walz decision to the body of ideas that has been developed by the Court in its application of the interdependent free exercise and establishment limitations of the first amendment, to point up any distinctively new emphases, and to suggest the implications of these new ideas and emphases for important cases coming before the Court at its 1970-1971 term.

Judicial Tax Courts For The States: A Modern Imperative, William D. Dexter

University of Michigan Journal of Law Reform

There has been growing discontent among tax gatherers and taxpayers alike over the disposition of state and local tax disputes. Concern centers on the nature of appellate review and its availability irrespective of the tax involved or the amount or subject matter in controversy. In many jurisdictions the system of review in tax cases presents an unwieldy array of alternative administrative and judicial avenues of review which are confusing to the prospective tax appellant and destructive of economy and uniformity in the system. This article will assess the need for a specialized judicial court to review the initial disposition of …

Review Of Michigan And Federal Estate And Tax Planning, By P. Chirco And S. Ward, Douglas A. Kahn

Reviews

Any evaluation of a book of this nature must be made in light of its purpose and its intended audience. The authors recognize that estate and tax planning is too broad a subject to be treated comprehensively in a single volume, and, consequently, they quite properly made no effort in that direction. Rather, their apparent purpose was to furnish the non-specialist with an annotated form book containing textual discussions of tax and estate planning problems, with particular emphasis on local Michigan law.

Advertised Value Of Trading Stamps Is Basis For State Sales Tax--Red Head Premium Co. V. Schneider, Michigan Law Review

Michigan Law Review

Taxpayer, a trading stamp company, indicated in its catalog the number of stamps necessary to acquire various items of merchandise, and advertised in the catalog and on the face of each stamp that when exchanged for these items each stamp had a value of one cent. Consumers could, however, exchange the stamps for cash rather than merchandise at the rate of one mill per stamp. In addition, consumers not holding sufficient stamps to acquire a particular item of merchandise could make up the difference in cash by paying approximately two thirds of the advertised stamp value. Customers dealing strictly on …

Federal Estate Tax Burden Borne By A Dissenting Widow, Douglas A. Kahn

Articles

Renunciation of her deceased husband's will entitles a widow to a specified percentage of the husband's net estate (or a dower interest) in lieu of any benefits she would otherwise have received under the will. The size of the dissenting widow's share differs among the several states, but the normal range is from one third to one half of her husband's net estate. In some jurisdictions the widow's share is determined, in whole or in part, according to the portion to which she would be entitled if her husband had died intestate, but in these jurisdictions the widow's share generally …

Widow's Succession In Common-Law Property State To Husband's Rights In Her Half Of Community Property Is Taxable And Valued At One-Half Of Entire Community--In Re Kessler's Estate, Michigan Law Review

Michigan Law Review

While residing with his wife in California, decedent purchased stock, which under California law became community property. The couple later moved to Ohio, a common-law property state, where decedent died. An Ohio probate court approved the executor's determination that the widow's one-half interest in the stock was not subject to the Ohio succession tax. On appeal by the state tax commissioner to the Ohio Supreme Court, held, reversed, three judges dissenting. A wife's succession to her husband's right to manage and control her half of the community property is subject to the Ohio succession tax on joint and survivorship …

Constitutional Law - Due Process - Collection Of State Use Tax From Nonresident Vendor, Jerome M. Salle

Michigan Law Review

Plaintiff, a Georgia corporation not qualified to do business in Florida, solicited orders for merchandise from Florida residents through independent brokers who forwarded the orders to plaintiff's Georgia office for acceptance. Plaintiff did not maintain any place of business in Florida nor have any regular employee or agent there. In a suit to enjoin the enforcement of a distress warrant issued upon plaintiff's failure to collect the Florida use tax, the chancellor denied relief and the Florida Supreme Court affirmed. On appeal to the United States Supreme Court, held, affirmed, one Justice dissenting. Enforcement of the statute requiring collection …

Constitutional Law - Governmental Immunity - Immunity Of Agent Of Federal Government To State Taxation, Robert M. Steed S.Ed.

Michigan Law Review

E. I. du Pont de Nemours and Company contracted with the Atomic Energy Commission to construct and operate the Savannah River Project for development of the hydrogen bomb for a fee of one dollar. Under the contract du Pont was to purchase all materials and supplies with funds furnished by the United States, title to vest in the government immediately when it passed from the vendor. South Carolina attempted to apply its sales and use taxes to these purchases. In an action by the United States and du Pont before a statutory three-judge district court to enjoin collection of these …

Constitutional Uniformity And Equality In State Taxation, Wade J. Newhouse

Michigan Legal Studies Series

The method of approach and arrangement of materials are developed during the course of the monograph. Therefore, it is not necessary to repeat them here. The purpose of the study is twofold. First, it should provide background material for constitutional revision. Second, it should aid counsel and court in deciding cases arising under existing constitutional limitations and state legislatures in drafting tax measures in such a way that pitfalls in existing limitations are avoided. The greater part of this monograph was prepared during a two year period from June 1951 to 1953, while I was a Research Assistant with the …

Michigan Title Examinations And The 1954 Revenue Code's New General Lien Provisions, L. Hart Wright

Michigan Law Review

Title examiners, and more particularly their clients, have long suffered from a controversy-limited almost exclusively to Michigan- involving the methods by which the United States Treasury Department could perfect general federal tax liens. The December 1952 issue of the Michigan Law Review carried an article by the present writer pointing up the irreconcilable difference which has existed for a quarter of a century between the type of record notice which the Treasury was willing to provide prospective bona fide purchasers et al., and the quite different and more demanding type which the Michigan Legislature insisted upon if the local offices …

Constitutional Law-Commerce Clause-State Taxation Of Interstate Commerce, Theodore J. St. Antoine S.Ed.

Michigan Law Review

Appellant express company, a Delaware corporation, did only interstate business within the state of Virginia. Virginia levied a state tax on intangible personal property and money owned by express companies doing business within the state, and set off their real estate and tangible personal property for local levies. In addition to the property tax, the Virginia statute provided for an "annual license tax . . . for the privilege of doing business in this State." The tax was "equal to two and three-twentieths per centum upon the gross receipts . . . earned in this State on business passing through, …

Constitutional Law-Commerce Clause-State Taxation Of Interstate Air Carriers, Robert B. Olsen

Michigan Law Review

Plaintiff, an interstate air carrier, was incorporated in Delaware, and the home port of its planes was in Minnesota. It conducted regularly scheduled flights in and between twelve states. No landings were ever made in Delaware. Nebraska, one of the states in which landings were made by plaintiff, levied an ad valorem tax on a proportion of the Hight equipment of the plaintiff measured by the proportion of the total use of the equipment that was attributable to Nebraska. Plaintiff contended that the commerce clause of the United States Constitution precluded Nebraska from imposing any tax whatever upon such Hight …

The Legal Basis For Municipal Income Taxes In Michigan, Arthur M. Wisehart

Michigan Law Review

The purpose of this article is to explore the legal difficulties which might beset a Michigan municipality attempting to impose an income tax. Because of the similarity of some of these difficulties to those encountered in other jurisdictions, it is hoped that this study will be useful outside of as well as within the state of Michigan.

Constitutional Law-Commerce Clause-State Taxation Of Vessels Engaged In Interstate Commerce, David W. Rawlinson S.Ed.

Michigan Law Review

The Standard Oil Company, an Ohio corporation, owned boats and barges which it employed in transporting oil on the Mississippi and Ohio Rivers. These vessels were registered in Ohio but stopped in Ohio only occasionally for fuel or repairs. The maximum distance traversed by these vessels on waters bordering Ohio was 17½ miles. An ad valorem personal property tax levied by the Tax Commissioner of Ohio on all these vessels was upheld by the Supreme Court of Ohio. On appeal, held, reversed, Justices Black and Minton dissenting. Since these vessels are subject to the property taxes of other states …

Municipal Corporations--Annexation-Violation Of Due Process, Joseph M. Kortenhof S.Ed.

Michigan Law Review

The City of Silver Grove brought a proceeding to incorporate within its boundaries a parcel of defendant railroad's land under a general law of annexation. It was shown that the land sought to be annexed contained nothing but switchyards, roundhouses, refrigeration plants and other facilities designed exclusively for railroad purposes. It was further shown that the city could make no use of the land nor could it benefit the land in any way since the railroad had complete electrical, sanitation and police facilities. Defendant railroad entered a remonstrance to which the city generally demurred. The trial court sustained the demurrer. …

Conflict Of Laws-Enforcement Of Foreign Claims For Taxes And Workmen's Compensation Premiums, C. J. Rice S. Ed.

Michigan Law Review

By reason of work done in Ohio, defendant-employer came within the provisions of that state's compulsory workmen's compensation law. The State of Ohio sought to collect insurance premiums due the state fund by an action brought in a Kentucky court. Defendant demurred on the ground that the claim was in the nature of one for taxes, and hence unenforceable extraterritorially. On appeal from an order sustaining the demurrer, held, reversed. Regardless of whether or not the claim for premiums can be classified as one for taxes, Kentucky courts may act as forums for the collection of foreign tax claims. …

Constitutional Law-Commerce Clause-State Taxation Of Commerce, Allan Neef S.Ed.

Michigan Law Review

Plaintiff, a Massachusetts manufacturing corporation operating on a mail order-f.o.b. delivery basis, maintained a branch office and warehouse in Chicago. While some over-the-counter sales were consummated in Chicago, this office acted mainly as a headquarters for an engineering staff maintained as a service to customers, and as a conduit for orders placed by Illinois customers with the company. Orders received at the branch office were forwarded to Massachusetts for acceptance or rejection, and some filled orders were shipped to customers by way of the local outlet as a means of reducing freight costs. Although the Chicago office did not solicit …

Constitutional Law--Import-Export Clause--Validity Of A State Gross Receipts Tax On Common Carriers Transporting Imports And Exports, Roger D. Anderson S.Ed.

Michigan Law Review

The State of Maryland levied a nondiscriminatory gross receipts tax on revenues of common carriers operating within the state, apportioned on the basis of trackage within Maryland to trackage everywhere. Petitioners, who are common carriers operating within Maryland, objected to this tax to the extent that it constituted a tax on gross receipts derived from transporting imports and exports on the grounds that it violated the import-export clause. The court of appeals of Maryland declared the tax valid. On appeal, held, affirmed. Where the tax is on an activity connected with the import or export of goods, rather than …

Constitutional Law-Commerce Clause-State Taxation Of Interstate Commerce, William H. Bates

Michigan Law Review

Appellant, a Missouri corporation, was domiciled in Illinois and engaged in interstate trucking of commodities to and from Connecticut. The appellant had twenty-seven employees, office equipment, pick-up trucks and two terminals within Connecticut. Approximately one-third to one-half of appellant's business originated in Connecticut, but a very small percentage of the total mileage traveled by its trucks lay within the state. Appellant was not engaged in intrastate commerce, nor had it been authorized to transact such business. Under the Connecticut Corporation Business Tax Act of 1935 appellant was assessed for taxes and penalties. The statute imposed a franchise tax upon certain …

Taxation-Immunity Of Federal Bonds To State Taxation, Lenamyra Saulson

Michigan Law Review

A New Jersey statute imposed a tax on domestic stock insurance corporations on the value of intangible property exclusive of tax-exempt property but required an assessment against all intangible property of not less than fifteen per cent of capital and surplus in excess of liabilities. In conformity with this statute, a tax was imposed on the appellant, a domestic stock insurance corporation, of fifteen per cent of the entire net worth, without deduction of the principal amount of tax-exempt United States bonds and accrued interest thereon. The appellant appealed to the United States Supreme Court on the ground that the …

Constitutional Law-Exports-Immunity From State Taxation, Paul E. Anderson S.Ed.

Michigan Law Review

Article 1, section 10 of the Constitution provides, "No State shall, without the consent of Congress, lay any imposts or duties on imports or exports . . . . " This clause places a limitation on state taxing power. The basic problem is to determine at what point goods in the process of being manufactured and prepared for foreign shipment become exports. If the goods are found to be exports, they are immune to state taxation. Two recent Supreme Court decisions have dealt with this question in an attempt to lay down a general rule applicable to future situations. Because …

State Taxation Of Interstate Commerce--What Now?, Robert C. Brown

Michigan Law Review

Perennial indeed have been the problems of state taxation affecting interstate commerce and the problems of intergovernmental taxation as between state and federal governments. The two problems are quite similar except that the intergovernmental problem is mutual while the interstate problem affects only state taxing power. But both are alike in that the restrictions on the taxing power are entirely judicial, and that while some restrictions are desirable they must themselves be limited lest we have not regulation but destruction of taxing power.

The intergovernmental problem is virtually settled with the allowance of non-discriminatory taxation on both sides, except as …

Municipal Corporations-Circumventing Municipal Debt Limitations, Joseph F. Gricar S.Ed.

Michigan Law Review

Since municipalities are frequently indebted to the permissible extent of the constitutional, statutory, and charter debt limitations, they are constantly seeking methods of finance which avoid the debt limits. Three devices have received judicial sanction. First: Where a separate and distinct. corporation such as a school or drain district has been created it may operate with a separate debt limit over the same territory as the governing municipality. Second: Where the project to be financed is income-producing, the financing bond issue, if made self-liquidating, will not Gome within the debt limitations. Although incorporated authorities have been extensively used to administer …