Merchants Manufacturers Nat Bank of Pittsburg v. Commonwealth of Pennsylvania

Citation42 L.Ed. 236,167 U.S. 461,17 S.Ct. 829
Decision Date24 May 1897
Docket NumberNo. 301,301
CourtUnited States Supreme Court

This case comes on a writ of error to the supreme court of the state of Pennsylvania, and involves the validity of the statute of that state of date June 8, 1891 (Laws Pa. 1891, p. 240), in respect to the taxation of national banks. The decision of that court was in favor of its validity. 168 Pa. St. 309, 31 Atl. 1065. Sections 6 and 7 of the statute contain these provisions:

'Sec. 6. In case any bank or savings institution incorporated by the state or the United States shall elect to collect annually from the shareholders thereof a tax of eight mills on the dollar upon the par value of all shares of said bank or savings institution that have been subscribed for or issued, and pay the same into the state treasury on or before the first day of March in each year, the shares and so much of the capital and profits of such bank as shall not be invested in real estate shall be ex- empt from local taxation under the laws of this commonwealth.

'Sec. 7. That from and after the passage of this act, every national bank located within this commonwealth, which shall fail to elect to collect annually from the shareholders thereof a tax of eight mills on the dollar upon the par value of all the shares of said bank that have been subscribed or issued, shall, on or before the twentieth day of June in each and every year, make to the auditor-general a report in writing, verified by the oath or affirmation of the president or cashier, setting forth the full number of shares of the capital stock issued by such national bank, and the actual value thereof, whereupon it shall be the duty of the auditor-general to assess the same for taxation at the same rate as that imposed upon other moneyed capital in the hands of individual citizens of this state, that is to say, at the rate of four mills upon each dollar of the actual value thereof.'

J. M. Wilson, for plaintiff in error.

J. P. Elkin, for defendant in error.

Mr. Justice BREWER, after stating the facts in the foregoing language, delivered the opinion of the court.

The validity of this statute is challenged by plaintiff in error on three grounds. The first is that its operation results in a lack of uniformity of taxation upon the same class of subjects, to wit, shares of national banks within the state; and the argument of counsel is that it conflicts with article 9, § 1, of the constitution of the state of Pennsylvania, which requires that 'all taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax.'

It is sufficient to say in reference to this contention that the decision of the supreme court of the state of Pennsylvania sustaining the statute is conclusive in this court as to any question of conflict between it and the state constitution. Bridge Co. v. Dix, 6 How. 507; Bucher v Railroad Co., 125 U. S. 555, 8 Sup. Ct. 974; Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 232, 10 Sup. Ct. 533; Lewis v. Monson, 151 U. S. 545, 14 Sup. Ct. 424; Adams Express Co. v. Ohio, 165 U. S. 194, 17 Sup. Ct. 305; Long Island Water-Supply Co. v. City of Brooklyn, 17 Sup. Ct. 718.

If it be said that a lack of uniformity renders the statute obnoxious to that part of the fourteenth amendment to the federal constitution which forbids a state to 'deny to any person within its jurisdiction the equal protection of the laws,' it becomes important to see in what consists the lack of uniformity. It is not in the terms or conditions expressed in the statute, but only in the possible results of its operation. Upon all bank shares, whether state or national, rests the ordinary state tax of four mills. To every bank, state and national, and all alike, is given the privilege of discharging all tax obligations by collecting from its stockholders and paying eight mills on the dollar upon the par value of the stock. If a bank has a large surplus, and its stock is in consequence worth five or six times its par value, naturally it elects to collect and pay the eight mills, and thus in fact it pays at a less rate on the actual value of its property than the bank without surplus, and whose stock is only worth par. So it is possible, under the operation of this law, that one bank may pay at a less rate upon the actual value of its banking property than another; but the banks which do not make this election, whether state or national, pay no more than the regular tax. The result of the election, under the circumstances, is simply that those electing pay less. But this lack of uniformity in the result furnishes no ground of complaint under the federal constitution. Suppose, for any fair reason affecting only its internal affairs, the state should see fit to wholly exempt certain named corporations from all taxation. Of course, the indirect result would be that all other property might have to pay a little larger rate per cent. in order to raise the revenue necessary for the carrying on of the state government, but this would not invalidate the tax on other property, or give any right to challenge the law as obnoxious to the provisions of the federal constitution.

Again, it will be perceived that this inequality in the burden results from a privilege offered to all, and in order to induce prompt payment of taxes, and payment without litigation. To justify the propriety of such inducement, we need look no further than the present litigation. It is common practice in the states to offer a discount for payment before the specified time, and impose penalties for nonpayment at such time. This, of course, results in inequality of burden, but it does not invalidate the tax. The inequality of result comes from the election of certain taxpayers to avail themselves of privileges offered to all. It was well said by Mr. Justice Williams, speaking for the supreme court of Pennsylvania, in the opinion in the present case: 'The argument is that inequality of burden establishes the unconstitutionality of the law under which the tax is levied. If the validity of our tax laws depends upon their ability to stand successfully this test, there are none of them that can stand.' Indeed, this whole argument of...

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