Featherstone v. Norman

• Decision Date: 16 April 1930
• Docket Number: 7571.
• Citation: 153 S.E. 58,170 Ga. 370
• Parties: FEATHERSTONE v. NORMAN, Tax Com'r.
• Court: Georgia Supreme Court

153 S.E. 58

170 Ga. 370

FEATHERSTONE v. NORMAN, Tax Com'r.

No. 7571.

Supreme Court of Georgia

April 16, 1930

Syllabus by the Court.

Legislature has inherent power to impose income tax without constitutional grant (Const. art. 4, § 1, par. 1).

The power of the Legislature to impose an income tax is an inherent power of that body, and the constitutional grant thereof is not necessary to enable the Legislature to exercise it.

Income tax is not "tax on property" within constitutional provision requiring uniform tax on property "property" within constitutional provision requiring ad valorem tax is distinguished from income and means corpus of estate, or investment from which income flows; income tax held not in violation of constitutional provision requiring uniformity because graduated and allowing exemption; classification of incomes for taxation, graduated scale of rates, and exemptions held for Legislature under power to classify subjects of taxation, and were reasonable and not arbitrary (Act 1929, p. 92; Const. art. 7, § 2, par. 1).

A tax on income is not a tax on property in the sense in which that word is used in article 7, § 2, par. 1, of the Constitution of this state, which declares that "all taxation shall be uniform upon the same class of subjects, and ad valorem on all property subject to be taxed within the territorial limits of the authority levying the tax."

(a) Property, incommon parlance and within the meaning of this provision of the Constitution, is used in contradistinction to income, and means the corpus of an estate or investment from which income flows. Hence income is not property within the meaning of this provision, and need not be levied ad valorem.

(b) The Income Tax Act of August 22, 1929 (Acts 1929, p. 92), does not violate the uniformity clause of this provision of the Constitution by reason of the imposition of a graduated income tax, and by reason of the exemptions from the tax by it provided.

(c) The classification of incomes for taxation, the graduated scale of rates, and the exemptions from this tax by said act are reasonable and not arbitrary, and were matters to be determined alone by the Legislature under its power to classify subjects for taxation under said provision of the constitution.

Income tax, not being property tax, does not violate constitutional provisions against tax in excess of five mills on each dollar of taxable property (Const. art. 7, § 1, par. 2; Act 1929, p 92).

The tax imposed by this act, not being a property tax, does not violate article 7, § 1, par. 2, of the Constitution of this state, in that it imposes a tax on property in excess of "five mills on each dollar *** of the property taxable in the State."

State income tax adopting certain features of federal income tax held not to vest in Congress and administrative bureaus of United States legislative power of state in violation of Constitution (Const. art. 3, § 1, par. 1; Act 1929, p. 93, § 1 et seq.).

This act does not vest in Congress and administrative bureaus and boards of the United States the legislative power of the state, in violation of article 3, § 1, par. 1, of the Constitution of Georgia, which provides that "the legislative power of the State shall be vested in a General Assembly."

State income tax act determining amount of tax by laws of United States held not unconstitutional as depriving courts of state of power of construing own laws (Act 1929, p. 93, § § 1, 7, 8, 9; Const. art. 6, § 1, par. 1).

This act does not undertake to deprive the courts of this state of the power of construing its own laws, in violation of article 6, § 1, par. 1, of the Constitution of this state, which declares that the judicial powers of this state shall be vested in the Supreme Court and the other courts therein named.

State income tax held not unconstitutional levy of poll tax (Act 1929, p. 93, § 1 et seq.; Const. art. 7, § 2, par 3).

This act does not violate article 7, § 2, par. 3, of the Constitution of this state, which provides that a poll tax shall be levied for educational purposes only, and shall not exceed $1 annually upon each poll; the tax imposed by said act being in no sense a poll tax.

State income tax requiring taxpayer to make return similar to federal tax return held not in conflict with federal act; state income tax requiring taxpayer to make return similar to federal income tax return held not to require publication of federal tax return in violation of Constitution making United States laws supreme (Act 1929, p. 93, § 1 et seq.; 26 USCA § 1025; Const. U.S. art. 6, par. 2).

Our Income Tax Act is not in conflict with section 1025, c. 19, of title 26 of the USCA; and does not violate article 6, par. 2, of the Constitution of the United States, which declares that "this Constitution, and the laws of the United States which shall be made in pursuance thereof, *** shall be the supreme law of the land."

Error from Superior Court, Fulton County; E. D. Thomas, Judge.

Action by M. C. Featherstone against R. C. Norman. Judgment for defendant, and plaintiff brings error.

Affirmed.

State income tax act determining amount of tax by laws of United States held not unconstitutional as depriving courts of state of power of construing own laws (Act 1929, p. 93, §§ 1, 7, 8, 9; Const. art. 6, § 1, par. 1).

The Income Tax Act of 1929 is as follows:

"Section 1. On the net income of every person, firm, or corporation residing or doing business in this State, except insurance companies which pay to the State a tax upon premium income, after making such deductions as are allowed by the laws of the United States in the system by them adopted for determining net incomes and such increases and deductions as are hereinafter provided for in determining a proper taxable income, there shall be levied and collected by the State of Georgia an income tax similar to that of the United States, but at the rate and according to the scale hereinafter set forth; the same to be returned, calculated, ascertained, and paid according to the system and rules hereinafter set forth.

"Sec. 2. Whenever any such person, firm, or corporation residing or doing business in this State makes an income-tax return to the United States, or is legally bound so to do, such person being hereinafter briefly referred to, for convenience, as a taxpayer, it shall be his duty to make at the same time a like return to the State of Georgia and file the same with the State Tax Commissioner for the purpose of a State tax on income. Such duplicate return shall furnish the same information as is contained in his return to the United States, shall be made on a blank form to be furnished by the Tax Commissioner, and shall ascertain the taxable net income in the same way as in the return to the United States; but before ascertaining the net income taxable by the State, the following changes shall be made:

"1. To the amount ascertained under the laws of the United States as the net income taxable by the United States, there shall be added in said return the gross amount of any salary received by the taxpayer during the tax year, or accrued to him during said period as a public official or employee of the State, or of any county, municipal corporation, or other political division thereof, and the net amount of any fees, perquisites, or other emolument from said sources or any of them, paid to him during the same period for official compensation, except in the cases of the Governor of the State and of the several Judges of the Supreme Court, the Court of Appeals, and the Superior Court, who shall not be required to include their salaries paid or accruing for any term existing at the time of the passage of this Act.

"2. From the amount so ascertained as the taxable net income shall be deducted any salary paid to the taxpayer by the United States or accrued to him from the same source as an official salary for any service rendered by him to the United States, and any and all interest paid to him on any bond or bonds or other obligation of the United States.

"If neither of the changes indicated by subparagraphs 1 and 2 above is made, the net income taxable by the State of Georgia shall be the same as that taxable by the United States, and the tax payable thereon to the State of Georgia shall be one third of that payable to the United States. But in case the net taxable income be changed as the result of complying with subparagraphs 1 or 2 above, the tax payable to the State shall be increased or reduced so as to be one third of what would have been payable to the United States under their laws upon such increased or reduced taxable net income.

"Sec. 3. Any person, firm, or corporation who makes no income-tax return to the United States because of having no sufficient income taxable by the United States to call for such return under the laws of the United States, but who would have such sufficient income if his salary, fees or perquisites from the State or subdivision thereof were taxable by the United States, shall be liable and is hereby required to make to the State of Georgia an original return on the same or similar form as would be used in making a duplicate return as required in section 2 of this Act, indicating in some appropriate way whether the same is an original return. In such case the tax liability to the State shall be one third of what it would be to the United States if said income were by them taxable. In any case where a non-resident corporation having an office and doing business in this State makes its income-tax return in some other State, such corporation shall make an original return to the Tax Commissioner of Georgia, confined to its business done in this State, upon like principles as are in

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