Klein v. Board of Tax Sup Rs of Jefferson County, Ky
| Decision Date | 24 November 1930 |
| Docket Number | No. 11,11 |
| Citation | 75 L.Ed. 140,282 U.S. 19,51 S.Ct. 15,73 A.L.R. 679 |
| Parties | KLEIN v. BOARD OF TAX SUP'RS OF JEFFERSON COUNTY, KY |
| Court | U.S. Supreme Court |
Messrs. Edmund F. Trabue and Homer W. Batson, both of Louisville, Ky., for appellant.
Messrs. M. B. Holifield, of Mayfield, Ky., and Samuel B. Kirby, Jr., of Louisville, Ky., for appellee.
[Argument of Counsel from pages 19-21 intentionally omitted] 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, 18 S.W.(2d) 1009.
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 per cent (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,' etc. 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 per cent 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 per cent of all their property is arbitrary and denies to him the equal protection of the laws.
This contention was so thoroughly disposed of by the Court of Appeals that it is not necessary to deal with the argument for the appellees that if section 4088, is invalid the general tax law stands unaffected and unqualified and the appellant still must pay the tax. It will be enough to present an abridgement of the considerations that prevailed. There is no doubt that a State may tax a corporation and also tax the holders of its stock. Tennessee v. Whitworth, 117 U. S. 129, 136, 6 S. Ct. 645, 29 L. Ed. 830. The owners are different and, although the appellant calls it a mischievous fiction, the property is different. While no doubt the property and expectations of the corporation are the backbone of the value of the shares, yet the latter may get additional value from another source. In this case the appellant alleges that the price of shares was much enhanced by rumors of a stock dividend, which of course would have added nothing to the property of the corporation. On the other hand there is no constitutional obligation to tax both the corporation and the holders of its stock. See Kidd v. Alabama, 188 U. S. 730, 732, 23 S. Ct. 401, 47 L. Ed. . If the corporation having all its property in the State has paid taxes upon the whole, usually it would be just not to tax the stockholders in respect of values derived from what already has borne its share. And what would be true in the case supposed would be true when the corporation was paying for the great body of its property although some small fraction happened to be outside of the State. Thus we come to the usual question of degree and of...
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