Norris v. Cary
| Decision Date | 14 October 1931 |
| Citation | 205 Wis. 626,238 N.W. 415 |
| Court | Wisconsin Supreme Court |
| Parties | NORRIS v. CARY, COUNTY CLERK, ET AL. |
On motion for rehearing.--[By Editorial Staff.]
Motion denied.
For former opinion, see 237 N. W. 113.
Upon the motion for rehearing, a brief was filed by the appellants which convinces us that the decision in this case should be clarified as to the ruling on the constitutionality of the law there involved.
In the matter before us, we considered the law as it applied to the facts there presented, and did not state as fully as we might have that the constitutionality of the statute was directly the issue. We did not expressly state in the opinion that all receipts of that character by the executor are not income and are not subject to tax as such under the income tax law. 237 N. W. 113.
[1][2][3] In applying income tax laws, the courts look beyond the mere form to the substance of the transaction for the purpose of ascertaining the nature of the property resulting from sale or descent. Miller v. Tax Commission, 195 Wis. 219, 217 N. W. 568. Items of the character considered in this case, uncollected at the time of the death fix themselves into the estate, become part of the corpus, are subject to inheritance tax, but cannot be treated as income. Article 8, § 1, Wis. Const., provides the authority for imposing taxes on incomes, privileges, and occupations, and, while it authorizes the imposition of graduated taxes, it is on income only; therefore an act which attempts to impose an income tax on what is, and is commonly understood to be, principal, capital, or corpus of an estate, is void.
It seems clear that no authority is given by the Constitution and no power has been created by which the Legislature can change that which has always been capital at the time of descent into income when it is collected by the executor.
While the facts in Herzberg v. Wis. Tax Commission, 194 Wis. 126, 215 N. W. 936, 937, cited in the opinion, arose before this law was enacted, the doctrine followed there is based upon principles so fundamental that their integrity has not been disturbed by any constitutional amendment or legislative enactment.
[4] In the decision in this case, we held that the specific property descending to respondent was principal or corpus, and could not be taxed as income. It is established, of course, that an income tax is not a tax on property but a tax against the recipient of the income. State ex rel. Manitowoc...
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