282 U.S. 19 (1930), 11, Klein v. Board of Tax Supervisors of Jefferson County, Kentucky

Docket NºNo. 11
Citation282 U.S. 19, 51 S.Ct. 15, 75 L.Ed. 140
Party NameKlein v. Board of Tax Supervisors of Jefferson County, Kentucky
Case DateNovember 24, 1930
CourtUnited States Supreme Court

Page 19

282 U.S. 19 (1930)

51 S.Ct. 15, 75 L.Ed. 140

Klein

v.

Board of Tax Supervisors of Jefferson County, Kentucky

No. 11

United States Supreme Court

Nov. 24, 1930

Argued October 29, 30, 1930

APPEAL FROM THE COURT OF APPEALS OF KENTUCKY

Syllabus

1. In Kentucky, corporate shares are not taxed to their owner if at least 75% of the total property of the corporation is taxable in Kentucky and the corporation pays the taxes thereon; but if less than 75% of the corporation's property is taxable in Kentucky, the shareholder is taxed upon the full value of his shares. Held that this classification is not unreasonable, and does not deny the equal protection of the law to shareholders who are taxed. P. 22.

2. The property of shareholders in their shares, and the property of the corporation, are distinct property interests. A state may tax the corporation and also tax the shareholders, but is under no constitutional obligation, taxing the one, to tax the other also. P. 23.

3. To tax a shareholder upon the full value of his share when a part only of the corporation's property is within the state is not to tax property outside of the jurisdiction of the state. P. 24.

4. If a corporation is a fiction, it is a fiction created by law with intent that it shall be acted on as if true. The corporation is a person, and its ownership is a nonconductor that makes it impossible to attribute an interest in it property to it members. Id.

5. The Fourteenth Amendment does not require that land and stock in corporation be taxed at the same rate or by the same tests of value. Id.

230 Ky. 182 affirmed.

Appeal from a judgment of the Court of Appeals of Kentucky which affirmed a judgment sustaining on appeal an assessment made by a county board of tax supervisors.

Page 22

HOLMES, J., lead opinion

MR. JUSTICE HOLMES delivered the opinion of the Court.

This is an appeal from a judgment of the Court of Appeals of Kentucky affirming the validity of a state tax and the constitutionality of the statutes under which the tax was imposed. 230 Ky. 182.

Holders of stock in a corporation generally are required to list their shares for taxation, but it is provided that

the individual stockholders of a corporation at lease seventy-five percent (75%) of whose total property is taxable in Kentucky shall not be required to list their shares for taxation so long as the corporation pays taxes on all its property in Kentucky,

&c. Kentucky Statutes, § 4088. Ed. Carroll, 1930. Acts 1924, c. 116, § 2, pp. 402, 406. The appellant contends that this section makes the tax contrary to the Fourteenth Amendment. The appellant owned shares in the Standard Sanitary Manufacturing Company, a New Jersey corporation, less than seventy-five percent of whose total property was taxable in Kentucky. He was taxed as contemplated, and he says that the discrimination between himself and holders of stock in a corporation paying taxes on more than seventy-five percent of all their property is arbitrary, and denies to him the...

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