Opinion of the Justices

• Citation: 255 A.2d 655
• Parties: . Supreme Judicial Court of Maine. Questions Propounded by the House in an Order Dated
• Decision Date: 06 June 1969
• Court: Supreme Judicial Court of Maine (US)

Page 655

255 A.2d 655

OPINION OF THE JUSTICES of the Supreme Judicial Court Given

Under the Provisions of Section 3 of Article VI of

the Constitution.

Supreme Judicial Court of Maine.

Questions Propounded by the House in an Order Dated June 6, 1969.

Answered June 10, 1969.

WHEREAS, it appears to the House of Representatives of the 104th Legislature that the following are important questions of law, and that the occasion is a solemn one; and

WHEREAS, there is pending before the 10th Legislature Legislative Document No. 1568 which proposes in section F thereof the enactment of a tax on income derived from certain intangibles; and

WHEREAS, the constitutionality of the proposed tax on income derived from certain intangibles has been questioned; and

WHEREAS, it is important that the Legislature be informed as to the constitutionality of Section F of Legislative Document No. 1568; now, therefore, be it

ORDERED, that the Justices of the Supreme Judicial Court are hereby respectfully requested to give to the House of Representatives, according to the provisions of the Constitution, on its behalf, their opinion on the following questions, to wit:

1. Do the provisions of Legislative Document No. 1568 providing for a tax on income derived from certain intangibles violate the provisions of Article IX, Section 8 of the Constitution of Maine?

2. Do the provisions of Legislative Document No. 1568 providing for a tax on income derived from certain intangibles violate the provisions relating the equal protection contained in the Fourteenth Amendment to the Constitution of the United States and in the Constitution of Maine, Article I, Section 6-A?

3. Do the provisions of Legislative Document No. 1568 providing for a tax on income derived from certain intangibles violate the provisions relating to due process contained in the Fourteenth Amendment to the Constitution of the United States and in the Constitution of Maine, Article I, Section 6-A?

Name: Richardson

Town: Cumberland

HOUSE OF REPRESENTATIVES

READ & On motion of Mr. Richardson of Cumberland

TABLED PENDING PASSAGE

Under the rules

June 5, 1969

Bertha W. Johnson

Clerk

HOUSE OF REPRESENTATIVES

Speaker laid before the House

The Order was PASSED

June 6, 1969

Bertha W. Johnson

Clerk

A true copy,

ATTEST: (s) Bertha W. Johnson

(Mrs.) Bertha W. Johnson

Clerk of the House

ONE HUNDRED AND FOURTH LEGISLATURE

Legislative Document No. 1568

House of Representatives, June 2, 1969 Filed by Mr. Richardson of Cumberland. Printed under House Rule 33.

BERTHA W. JOHNSON, Clerk

STATE OF MAINE

IN THE YEAR OF OUR LORD NINETEEN HUNDRED SIXTY-NINE

SECTION F

Sec. 1. R.S., T. 36, Part. 9, additional. Title 36 of the Revised Statutes is amended by adding a new part 9, to read as follows:

PART 9

TAX ON INCOME FROM INTEREST AND DIVIDENDS

CHAPTER 821

INCOME TAX-INTEREST AND DIVIDENDS

§ 5701. Definitions

1. Assessor 'Assessor' means the State Tax Assessor.

2. Resident. 'Resident' shall have reference to place of domicile.

§ 5702. Rate

An annual tax upon income shall be levied at the rate of 6%.

§ 5703. Conformity to laws

It is the intention of this chapter, and it shall be construed, anything contained in this chapter to the contrary notwithstanding, not to impose any tax upon any income in violation of the Constitution or laws of the United States, or in violation of the Constitution of this State.

§ 5704. Who taxable

Taxable income is that received during the calendar year prior to the assessment of the tax by:

1. Individuals. Individuals who are residents of this State on January 1st in any year, and individuals who have ceased to be residents of this State during the preceding calendar year for such part of the year as they were resident in this State;

2. Partnerships, etc. Partnerships, associations and trusts, the beneficial interest in which is not represented by transferable shares, and as provided in this chapter;

3. Fiduciaries. Fiduciaries deriving their appointment from a court of this State, and as provided in this chapter.

§ 5705. What taxable

Income of the following described classes is taxable:

1. Interest. Interest from bonds, notes, money at interest and from all debts due the person to be taxed, except interest from notes or bonds of this State, deposits in any savings bank, building and loan association, credit union, or savings department of any loan and trust company or national bank in this State or in those of any state which exempts from taxation the principal or income of deposits in such institutions in this State owned by residents of that state, and notes or bonds of any political subdivision of this State.

2. Dividends. Dividends, other than stock dividends paid in new stock of the company issuing the same, on shares in all corporations and joint stock companies organized under the laws of any state, territory or nation, except Maine state banks, trust companies, building and loan associations or national banks.

3. -partnerships. Dividends, other than stock dividends paid in new stock of the partnership, association or trust issuing the same, on shares in patnerships, associations or trusts the beneficial interest

in which is represented by transferable shares.

§ 5706. Exemption

One thousand dollars of each income otherwise taxable shall be exempt.

§ 5707. Income from pledged property

For the purposes of this chapter, any securities or property of the classes designated in this chapter producing taxable income, held in pledge, or on margin, or otherwise as security for a debt of the owner, whether standing in the name of the owner or of any other person, shall be deemed the property of the owner, and the income arising therefrom shall be included in his total taxable income.

§ 5708. Capital distribution

No distribution of capital, whether in liquidation or otherwise, shall be taxable as income, but accumulated profits shall not be regarded as capital.

§ 5709. Nontaxable income

No tax shall be levied under this chapter upon any income otherwise taxable under this chapter, which is received by any literary and scientific or benevolent and charitable institution entitled to property tax exemption under the laws of this State, for the purposes for which it is established; or which is received by any trustee for the use of the State or any of its political subdivisions, or for the use of such organization for such purposes.

§ 5710. Decedents' estates

The estates of deceased persons who last dwelt in this State shall be subject to the taxes imposed by this chapter upon all taxable income received by such persons during their lifetime, which has not already been taxed. The income received by such estates during administration shall be taxable to the estate, except such proportion thereof as equals the proportion fo the estate to be distributed no nontaxable persons or organizations. The assessor and executors and administrators of estates may effect a settlement by compromise of any question of doubt or dispute arising under this section.

§ 5711. Income from trusts

The income received by estates held by trustees, any one of whom is a resident of this State, or has derived his appointment from a court of this State, shall be subject to the taxes imposed by this chapter to the extent that the persons to whom the income from the trust is payable, or for whose benefit it is accumulated are residents of this State.

§ 5712. Accumulations

Income accumulated in trust for the benefit of unborn or unascertained persons shall be taxed as if accumulated for the benefit of residents of this State.

§ 5713. From nonresident trustees

If a resident of this State receives income from one or more trustees, none of whom is a resident of this State or has derived his appointment from a court of this State, such income shall be subject to the taxes imposed by this chapter if it would be taxable to such resident if received by him from its source.

§ 5714. Guardians, etc.

Sections 5710 to 5713 shall apply to guardians, conservators, trustees in bankruptcy, receivers and assignees for the benefits of creditors, so far as apt, to the taxable income received by them and to their beneficiaries, and to corporations acting as trustees or in any other fiduciary capacity.

§ 5715. Partnerships

Partnerships having a usual place of business in this State, any member of which is a resident thereof, shall be subject to taxes imposed by this chapter. If any of the members of the partnership are not residents

of this State only so much of the income thereof as is proportionate to the aggregate interest of the partners who are residents of this State in the profits of the partnership shall be taxed.

§ 5716. Partners

The tax shall be assessed on such a partnership by the name under which it does business, and the partners shall not be taxed with respect to the taxable income derived by them from such a partnership.

§ 5717. Members of partnership outside the State.

A resident of this State who is a member of a partnership having no usual place of besiness in this State, who receives income from such partnership derived from such a source that it would be taxable if received directly from such source by such partner, shall as to such income be subject to the taxes imposed by this chapter.

§ 5718. Application of sections

Sections 5715 to 5717 shall apply, so far as apt, to associations and trusts, but not partnerships, associations and trusts, the beneficial interest in which is represented by transferable shares.

§ 5719. Small business corporations; information reports

Every small business corporation within this State, the stockholders of which have elected, or elect, to report their share of the corporation's taxable income upon their individual federal income tax returns, pursuant to federal tax laws and regulations, shall annually on or before May 1st file a list of the names and addresses of all stockholders during the preceding year together with the amount of dividends...