in re Opinion of the Justices
| Citation | 220 Mass. 613,108 N.E. 570 |
| Parties | In re OPINION OF THE JUSTICES. In re TAXATION. |
| Decision Date | 12 April 1915 |
| Court | United States State Supreme Judicial Court of Massachusetts |
The order requested the opinion of the Justices of the Supreme Judicial Court on certain questions relating to taxation, as follows:
Ordered that in view of the great changes which have taken place in the physical and financial character of intangible personal property since the adoption of the present tax system; of the fact that the present system of taxing such property has ceased to be equitable or propertional as regards the owners of other kinds of property, and fails to produce the public revenue which it should produce; of the inequality inefficiency and disproportionality which arises from the attempt to levy taxes upon all kinds of property at a definite and (within each city or town) uniform percentage of its capital or market value, without regard to the physical differences or to the differences in earning power or income which exist between the various kinds of property; of the fact that no system of administration or enforcement can be devised which will make the actual result of the present system reasonably equal or propertional; and of the fact that during long periods in the history of the commonwealth tax laws more suitable to present conditions than the present system have been enacted and maintained under a charter or constitutional limitation that taxes upon property shall be proportional.
Ordered that the opinion of the Justices of the Supreme Judicial Court be required by the General Court upon the following important questions of law:
First. Can the General Court, either under the provision of the Constitution authorizing the Legislature to 'impose and levy proportional and reasonable assessments, rates and taxes upon all the inhabitants of and persons resident and estates lying within the said commonwealth,' or under any other provision of the Constitution, for the purpose of correcting the inequalities of the statutory tax system now in force, of securing a much needed revenue from certain kinds of property which now pay (as compared with other property) a smaller tax or none at all, of making the tax laws of the commonwealth more truly equal and proportional than they now are and thus more responsive to the constitutional requirements, enact, as was done under the province charter in execution of a tax clause substantially idential with that in the state Constitution, that certain forms of property shall be assessed upon their market value and other forms of property upon a certain number of times their annual value, the total assessments thus reached to be taxed at a rate uniform for each town or city: Provided that the figures or multipliers used be fixed by some state authority, or by the General Court itself, with a view to securing a stricter parity of contribution, having regard to either the capital or the annual value of property, and the taxes levied upon it, between the different classes of property and their owners in this commonwealth than is possible under the present system; and provided that the intent and probable effect of the law is not to discriminate in the matter of taxation against certain forms of property or their owners in favor of the owners of other kinds of property, but that the intent and probable effect of the law is to secure a greater equality of contribution between the owners of different kinds of property, a more truly proportional system of taxation throughout the commonwealth, a uniform rate in each town or city, and a larger public revenue than is possible under the present law.
Second. Can the General Court, under the provision of the Constitution authorizing it to impose and levy reasonable duties and excises, impose and levy a reasonable duty or excise upon incomes derived from intangible personal property such as money on deposit or at interest, debts due the taxpayer, public stocks and securities and stocks, bonds, notes or other evidences of indebtedness of corporations, domestic and foreign; and can it also levy at a uniform rate throughout the commonwealth a reasonable duty or exciseupon incomes derived from professions, trades and employments?
Third. Can the General Court----
(a) Exempt from taxation such stocks of foreign corporations and such bonds, debentures, bills and notes of domestic or foreign corporations (not already so exempt) as may be proved by the holders thereof to be secured by, to represent or to derive their valuse directly from, tangible property (not through the holdings of stocks or bonds of other corporations): Provided that such tangible property is taxable where it is located; and provided that the tax commissioner does not find that such of said tangible property as may be situated within the commonwealth is inadequately assessed locally for purposes of taxation; and
(b) Grant to the holders thereof the privilege (subject to the payment of a reasonable excise or duty thereon): First, of establishing the existence of such facts by filing with the tax commissioner evidence thereof satisfactory to him; and, having established such facts, second, of procuring the registration of such securities by the tax commissioner to indicate that they are exempt from taxation?
Forth. Can the General Court under the Constitution provide that moneys due an inhabitant of this commonwealth from any foreign corporation or any person or persons not residing within the commonwealth, and all stock, bonds, notes or other evidneces of indebtedness issued by foreign corporations and held by inhabitants of this commonwealth shall have no situs within the commonwealth for purposes of taxation and shall not be taxed under the provisions of parts I and II of chapter 490 of the Acts of the year 1909? And can the General Court then levy a reasonable duty or excise upon the income derived by inhabitants of the commonwealth from the foregoing classes of property?
These questions are propounded with a view to legislation as recommended or suggested in the inaugural address of his excellency the Governor, in a statement of the tax commissioner entitled 'The Intent and Operation of the Tax Laws of Massachusetts,' Senate Document No. 440, and in certain petitions to the General Court, and with special view to certain bills now pending before the Legislature, being Senate Documents Nos. 438, 439, 445 and 446, providing for a reform in our tax laws along the lines above suggested. Said message, statement and bills are now under serious consideration by the Legislature, and copies thereof are submitted herewith.
And the Justices are respectfully requested to receive any briefs or arguments upon the validity of either of the measures hereby referred which may be transmitted to them by the joint committee on taxation or by any person.
To the Honorable the Senate and the House of Representatives of the Commonwealth of Massachusetts:
We, the undersigned Justices of the Supreme Judicial Court, having considered the questions stated in the order of the honorable Senate and House of Representatives, dated March 18, 1915, and transmitted to us on March 24, 1915, respectfully submit the following answers:
The order contains certain recitals of facts. In substance they are that the present system has failed to result in proportional and reasonable taxation upon the residents of, and the estates lying within, the commonwealth, and has effected extremely unequal and disproportionate distribution of the burdens of taxation, and that some change is imperatively demanded. These statements are accepted as the conclusions of the members of the General Court touching the administration of the system of taxation established by the statutes of the commonwealth. It is not within our province to determine whether the evils set forth in the order may be remedied by methods open to the Legislature under the Constitution. Even the facts stated do not warrant a stretching of the Constitution beyond its fair meaning in order to accomplish an end which at present may be regarded as desirable. The Constitution must be interpreted according to the reasonable import of its words. The principles established by it cannot be varied to meet real or fancied exigencies, but must be applied without modification to new conditions as they arise. The Constitution as framed is the only guide. To change its terms is within the power of the people alone. We have not considered the abstract questions in all their aspects, but have treated them as confined to the pending bills copies of which were transmitted. Opinion of the Justices, 217 Mass. 607, 105 N.E. 440.
The answers to all these questions depend upon the interpretation of c. 1, § 1, art. 4, of the Constitution of Massachusetts whereby the General Court is empowered 'to impose and levy proportional and reasonable assessments, rates and taxes, upon all the inhabitants of, and persons resident, and estates lying, within the said commonwealth, and also to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise, and commondities, whatsoever, brought into, produced, manufactured, or being within the same.' These words contain the entire grant to tax. They comprehend two general powers, one to lay assessments, rates and taxes upon persons and property, the other to impose duties or excises upon commodities. These two branches of the taxing power are clearly separated. They are different in kind and are expressed in different terms. The power to tax, which includes the power to levy assessments, rates and taxes, relates to persons and property. The power in this respect is not boundless. It is restricted to the extent that it must be 'proportional and reasonable.'...
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