Taxation-State and Local Commons^™

Sales Taxes, Interstate Trade Barriers, And Congress: The Gulf Oil Case, M. R. Schlesinger

Michigan Law Review

The capacity of the federal government to deal with the increasingly irritating problem of interstate trade barriers is an important question high-lighted by the recent Supreme Court decision in McGoldrick v. Gulf Oil Corp. The Court there decided that in view of the superior federal authority over foreign commerce Congress could validly prohibit an otherwise legal city sales tax on imported petroleum manufactured into fuel oil and sold for use on foreign-bound ships.

Trusts - Apportionment Of Annual Taxes Between Life Tenant And Remainderman, Charles F. Dugan

Michigan Law Review

Annual taxes on real estate in Massachusetts were assessed on January 1 of each year, and were payable on July and October l, The will set up a trust to pay income to the tenant for life, and to pay the principal to the remainderman. The trustees sought to retain sufficient funds out of income to meet the next year's taxes, fearing that the tenant might not live long enough after January 1 to accumulate sufficient income to meet the taxes, and they brought this bill for instructions. The probate court entered a decree sustaining the trustees' contentions. On appeal, …

Taxation -- State Sales Taxes In Relation To Interstate Commerce -- The Berwind-White Case, Eugene Gressman

Michigan Law Review

One of the underlying theories of the constitutional framework, as exemplified by the commerce clause, is that there shall be a free national market, unhampered by state tariffs or restrictions. Congressmen are free to ward off the rigors of disastrous foreign competition by bringing home industries under the protective umbrella of high national tariffs, but state legislators are supposed to be powerless to protect their local industries from the damaging competition--that "most potent stimulant to improvement and progress"--emanating from other states.

Taxation - Privilege Tax On Foreign Corporations - Due Process And Commerce Clauses - Validity Of Formula, James W. Deer

Michigan Law Review

The state of Texas levied an annual franchise tax on all corporations, both foreign and domestic, authorized to do business within the state. The tax was assessed on the basis of the amount of the total capital stock which was allocable to Texas, the allocation being based on the proportion that Texas gross receipts bore to total gross receipts. This formula, as applied to the Ford Motor Company, gave the statutory base of $23,000,000 on which Ford paid the tax under protest. The evidence showed that the Ford Motor Company had only an assembly plant in Texas worth $3,000,000, that …

Taxation - Interstate Commerce - State Taxation Of Gasoline Of Interstate Motor Carriers, C. Eugene Gressman

Michigan Law Review

An Arkansas statute required the payment of the state tax on all gasoline carried into the state in motor vehicle fuel tanks in excess of 20 gallons. The revenue therefrom was applied for highway purposes. Appellee's buses traveled four different routes, two from Memphis through Arkansas to St. Louis and two from Memphis to cities in Arkansas. For the Memphis-St. Louis trip, 68 gallons were required, only 16 of them being used in Arkansas. These 68 gallons, plus 10 extra ones, were placed in the tank at Memphis. On arrival at the Arkansas line, each bus still had 77 gallons …

Taxation - Constitutional Law - Power Of Congress To Exempt Federal Instrumentalities From Taxation, Michigan Law Review

Michigan Law Review

The Home Owners' Loan Corporation instituted a mandamus proceeding against the clerk of the superior court of the city of Baltimore to compel the recording of a mortgage upon payment of the ordinary recording charge and without affixing stamps in compliance with the state recording tax. The lending process of the HOLC is expressly declared by Congress to be exempt from taxation. Held, the tax is invalid in so far as it purports to cover the lending process. All justices concurred. Pittman v. Home Owners' Loan Corp., 308 U. S. 21, 60 S. Ct. 15 (1939).

The Powers Of A Court Of Equity In State Tax Litigation, Maurice S. Culp

Michigan Law Review

Hitherto a state taxpayer, otherwise meeting the jurisdictional requirements of a federal district court, could secure an injunction from such a court upon a showing that there was no adequate remedy at law in the federal district court, and this regardless of the legal or equitable remedies afforded by the state courts.

In view of this recent legislation, it becomes important to ascertain the new limitation upon the equity powers of the federal district courts in state tax litigation. Likewise, because of these new rigid limitations upon the jurisdiction of the federal courts, the attitude of the state courts of …

Constitutional Law - Privileges And Immunities Of Federal Citizenship - Discriminatory Tax On Out-Of-State Bank Deposits - Colgate V. Harvey Overruled, C. Eugene Gressman

Michigan Law Review

A Kentucky statute imposed on its citizens an annual ad valorem tax on their bank deposits outside the state at the rate of fifty cents per $100 and at the same time imposed on their bank deposits within the state a similar tax at the rate of ten cents per $100. Decedent, a resident and citizen of Kentucky, died in 1929. On several prior tax assessment dates, he had large funds on deposit in New York banks which he failed to report for taxation purposes. The state brought suit against the executor to recover the tax, interest, and penalties. The …

Schools And School Districts - School Elections - Tax Limitations - Bond Issues - Qualifications Of Electors Under Michigan Constitution, John S. Pennell

Michigan Law Review

The plaintiff submitted to the school district electors two propositions: (1) that of increasing the tax limitation from 1.5 per cent to 1.802 per cent of the assessed valuation, and (2) that of bonding the school district in the amount of $182,600 for improvements. Both at the registration of voters, and at the election, the qualifications of the electors were tested by the school code. On the tax limitation question, all registered school electors were permitted to vote. On the question of the bond issue, only those registered electors who owned property assessed for school taxes in the district were …

Taxation - Constitutional Objections To Release Of Delinquent Taxes And Accrued Penalties Thereon, Michigan Law Review

Michigan Law Review

In 1933, the Ohio legislature passed an act exempting from taxation certain property of interurban railway companies for a period of three years from January 1, 1932, and a subsequent act in 1935 extended the exemption for two more years. Relator, a taxpayer, sought by mandamus to compel the state tax commission to collect the taxes for all the years in question. Held, the act was unconstitutional as applied to the 1932 taxes already assessed because it violated a provision of the state constitution forbidding retroactive laws. State ex rel. Struble v. Davis, 132 Ohio St. 555, 9 …

Taxation - Ad Valorem Taxes - Tax On Gross Earnings As Evasion Of Constitutional Prohibition Of Ad Valorem Taxes, Ward P. Allen

Michigan Law Review

An Oklahoma statute imposed a tax of four per cent of the gross earnings of all freight cars owned, rented, leased, or used by any freight line company within the state, giving the state tax commission power to raise or lower the rate so that the tax should be "as nearly as practicable, the equal of the amount of tax such . . . companies would pay if their cars were taxed on an ad valorem basis." Held, although purporting to be measured by gross earnings, the tax is neither a gross earnings tax, nor a specific property tax, …

Taxation-Income Tax -Jurisdiction -Trusts - State Tax On Resident Beneficiary's Net Income From Trust Established And Administered By Non-Resident Trustee, Allan A. Rubin

Michigan Law Review

The state of Virginia imposed an income tax upon the income received by a resident of Virginia as beneficiary of a discretionary trust established and administered in New York by a resident of New York, which state had levied and collected an income tax on the entire income of the trust fund. Petitioner protested the payment of the Virginia tax, alleging the taking of property without due process of law and the denial of equal privileges in contravention of the Fourteenth Amendment of the Federal Constitution. Held, that the tax was valid, since it was ascertained by the beneficiary's …

Some Aspects Of Intangibles Taxation In Michigan, Robert S. Ford

Michigan Law Review

If any new form of taxation is adopted at the present session of the Michigan legislature, it is likely to be a low rate tax on intangible personal property. Several bills authorizing such a tax have been introduced at legislative sessions in the past, but public sentiment is probably more favorable now than at any other time. Just recently the Tax Study Commission, which was appointed last year by Governor Murphy, recommended that "appropriate legislation" be enacted for the imposition of a low rate tax on intangibles. It is the purpose in this article to analyze briefly some of the …

Carriers - State Taxation Of Interstate Motor Carriers, Thomas K. Fisher

Michigan Law Review

Appellant, an Ohio corporation, was engaged exclusively in interstate commerce as a common carrier of property for hire by motor vehicle. In 1937 the Georgia legislature passed a Maintenance Tax Act which provided, inter alia, for a tax, graduated according to manufacturer's rated capacity, on each motor common carrier for hire, and a tax, substantially smaller in the respective rated capacities, on each motor vehicle not used as a common carrier for hire. Appellant contested the validity of the tax on the grounds that it was repugnant to the commerce clause of the Constitution and that it violated the equal …

Taxation - Public Utilities - Implied Condition In Utility Franchise Of Tax Exemption, Allen A. Rubin

Michigan Law Review

In 1917 the city of New York and the New York Municipal Railway Corporation, predecessor in interest of the appellant, the New York Rapid Transit Corporation, entered into a contract for the operation of part of the city's transit system. The Transit Corporation was thereby obligated to furnish its services for a five cent fare, which by city charter provision could not be changed without the approval on referendum of a majority of the qualified voters. Other relevant portions of the contract provided that the corporation should pay all taxes upon its property and taxes incurred in connection with the …

Taxation - Interstate Commerce -Compensating Use Tax, Menefee D. Blackwell

Michigan Law Review

The California Use Tax Act of 1935 imposed an excise tax on the storage or use of personal property purchased in other states and brought into California. Plaintiff railway, engaged in both intrastate and interstate commerce, purchased supplies out of the state and imported them for the purpose of adding to and replacing worn out and broken equipment necessary for the operation of its offices and road. Some of the property acquired was stored a short period of time before it was used and some was used immediately on arrival for the purpose for which it had been imported. The …

Constitutional Law - Validity Of State Occupation Tax On Contractors With The Federal Government, James H. Kilbourne

Michigan Law Review

The increasing burden of both federal and state taxation during the past decade has multiplied the attempts by some of those affected to establish, in the courts, immunity from certain taxes. The limitations of the power of the governments to tax have, then, special significance for one who seeks, in that fashion, to challenge the imposition of a tax on himself. Two cases recently decided by the Supreme Court involved one of those limitations-that which denies to the states the power to enforce a tax which impedes the exercise of the powers of the federal government.

Taxation - Stevedoring As Interstate Commerce - Constitutionality Of Occupation Tax, Ralph Winkler

Michigan Law Review

The state of Washington enacted a business privilege tax, the amount of which was to be determined on a gross income basis. A domestic corporation had been servicing vessels engaged in interstate commerce in two ways-it supplied stevedores to the vessels, and it did the work of loading and unloading. In a bill to enjoin the collection of this tax the Supreme Court of Washington dismissed the suit on the ground that the corporation was not engaged in interstate commerce. On appeal, held (1) furnishing stevedores to the vessels without maintaining control over the operations of the workmen is a …

Taxation - Compensating Use Tax - Theory - Burden On Interstate Commerce, Brackley Shaw

Michigan Law Review

The California Use Tax Act of 1935 imposes an excise tax on the storage or use of personal property purchased in other states and brought into California. Plaintiff railroad bought materials and supplies in other states and stored them in California before installation on its interstate railroad system, and the tax was assessed on them. Held, the tax is unconstitutional as applied to such property as a direct burden on interstate commerce. Where the property was purchased for the sole purpose of being reserve equipment in an interstate commerce plant it is employed in interstate commerce from the time …

Taxation - Jurisdiction To Tax Intangibles - Business Situs, William Stout Gordon

Michigan Law Review

The appellant, a Delaware corporation doing business in Minnesota, held the controlling interest in the stock of a large number of banks in numerous states. It transacted its corporate business and fiscal affairs in Minnesota and maintained a business office there. A property tax was imposed by Minnesota upon appellant's shares of stock in Montana and North Dakota state banking corporations. Appellant contended that, since Montana and North Dakota had imposed a property tax on the same shares, the Minnesota tax was contrary to the Fourteenth Amendment. The Court held that the shares of stock had acquired a "business situs" …

Constitutional Law - Validity Of A Compensating Use Tax - Commerce Clause, William J. Isaacson

Michigan Law Review

Plaintiffs, appellees in this court, while engaged in the construction of a federal dam, brought into the state machinery purchased at retail in other states. The Washington Tax Commission demanded payment of a use tax on the machinery so purchased as required by the 1935 tax statutes. The plaintiffs refused to comply with the commission's order and received an in junction in the federal district court. The Washington legislature, under the heading "Compensating Tax," levied a two per cent excise on the use of all personal property purchased at retail after the effective date, the tax to be measured by …

Taxation - Jurisdiction Of A State To Tax Personal Incomes, Jack L. White

Michigan Law Review

There have been comparatively few decisions of the United States Supreme Court involving questions of the jurisdiction of a state to impose income taxes, so that each case that has been reported has called for an adjustment of the earlier statements of the law in that field. Such a case was recently decided. It is the purpose of this comment to consider the earlier cases in the light of that decision, and to determine what proportion of the income of a resident, and of a non-resident, a state may tax.

Taxation - Business Situs Of Intangibles - Assets, Donald H. Larmee

Michigan Law Review

Defendant holding company, a Delaware corporation, was engaged in a chain banking business in the northwest. It held the stocks of its subsidiaries, the banks, at its business headquarters, which was located in Minnesota. The holding company protested the payment of the Minnesota money and credits tax on stocks of six Montana and two North Dakota subsidiary banks. The holding company argued that it had already paid a tax on the stock to the states in which the banks were incorporated, and that the Minnesota tax thus resulted in double taxation and was contrary to the due process clause of …

Taxation - Exemption Of Federal Instrumentality -Property Of A Governmental Agency Used For Non-Governmental Purpose, Virginia M. Renz

Michigan Law Review

Oklahoma attempted to tax property used by the lessee of restricted Indian land in producing oil and gas. It was argued that the property was not taxable because the lessee was a federal instrumentality, and Congress had not consented to its taxation. Held, property is not exempt from a non-discriminatory ad valorem state tax merely because it is the property of a federal instrumentality. There should be no exemption unless the taxation imposes a direct burden upon the exertion of a federal governmental power. Taber v. Indian Territory Illuminating Oil Co., (U. S. 1937) 57 S. Ct. 334.

Taxation - Situs Of Intangibles - Business Situs, Michigan Law Review

Michigan Law Review

A manufacturing corporation incorporated in Delaware and maintained a nominal office there, but had branch offices and factories in several states. Its principal office was in West Virginia. All contracts made by the branch offices were subject to approval by the home office and withdrawals from the bank deposits in the several states were under the control of the home office. A West Virginia statute placed an ad valorem property tax on corporations whose bank deposits and accounts receivable were "liable to taxation." The state court applied the statute to the bank deposits in banks outside the state and to …

Taxation - Special Assessments For Street Lighting, Herbert J. Bloom

Michigan Law Review

The city of Los Angeles, under the authority of the "Public Works and Utility Act" of California, passed two ordinances levying special assessments for street lighting purposes upon abutting property specially benefited according to the front foot rule. The validity of the ordinance ordering the necessary lighting posts and appliances, which were installed before the present proceeding was brought, was conceded. The other ordinance provided for the furnishing of electric current to light the public streets for a period of fourteen months. This was contested by the plaintiff, who owned three lots subject to the assessment, on the ground that …

Taxation-Validity Of Tax On Income Of Superintendent Of School Cafeteria System -Sovereign Immunity, Elbridge D. Phelps

Michigan Law Review

Petitioners, husband and wife, residents of Texas, made returns of community income for the year 1932, listing as exempt the salary of the wife who was superintendent of a non-profit cafeteria system operated by the Ft. Worth public schools for the exclusive patronage and benefit of teachers and students. The Commissioner of Internal Revenue refused the exemption and levied a deficiency tax of $105. On appeal from an affirmance of the commissioner's decision by the Board of Tax Appeals, held, reversed on the ground that the operation of the cafeteria system was a proper exercise of a governmental function …

Conflict Of Laws -Enforceability Of Tax Judgment In Courts Of A Sister State - Full Faith And Credit

Michigan Law Review

A court of competent jurisdiction in Wisconsin gave the plaintiff a judgment against the defendants an Illinois corporation, for truces levied by Wisconsin upon income earned in that state. A federal district court in Illinois, relying on a theory that one state should not undertake to enforce the revenue laws of a sister state, dismissed an action on the judgment instituted by the plaintiff. The plaintiff appealed. Held, principles of comity and the "full faith and credit" clause of the Federal Constitution require that the action be entertained. Milwaukee County v. M. E. White Co., 296 U.S. 268, …

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 …

Taxation - State Income Tax On Interstate Railway - Constitutionality

Michigan Law Review

The plaintiff railway, doing local and interstate business, brought suit to recover payment made under a state net income tax measured by the difference between gross operating revenues for the whole business proportioned by the ratio of track mileage within and outside the state and operating expenses similarly proportioned. Held, such a formula for taxing the local income of a concern doing both intrastate and interstate business was not on its face invalid and the mere showing that the plaintiff's local costs were higher than the system average without also showing that intrastate revenues were not correspondingly greater did …