Reed v. Bjornson
| Decision Date | 23 March 1934 |
| Docket Number | 29,971 |
| Parties | SIDNEY R. REED v. GUNNAR B. BJORNSON AND OTHERS |
| Court | Minnesota Supreme Court |
Proceeding in the district court for Ramsey county against the members of the Minnesota tax commission, the attorney general, and the comptroller of the state of Minnesota, under L. 1933, c. 286, the declaratory judgments act, to determine the constitutionality of L. 1933, c. 405, imposing income taxes and franchise or privilege taxes measured by income. Defendants demurred to the complaint, the demurrer was overruled, Hugo O. Hanft, Judge, and defendants appealed, the court having certified the question involved as important and doubtful. Reversed.
Constitution -- construction of statute -- presumption in favor of constitutionality.
1. Every presumption is in favor of the constitutionality of an act of the legislature, and such an act should not be declared unconstitutional except when the court is satisfied after most careful consideration that it conflicts with some provision of the state or federal constitution.
Taxation -- power of taxation -- nature, origin, and extent.
2. The power of taxation is inherent in sovereignty and under our system of government reposes in the legislature, except as limited by the state or the national constitution. Except as so limited, it is exhaustive and embraces every conceivable subject of taxation.
Taxation -- equality and uniformity -- constitutional provisions.
3. The provision in art. 9, § 1, of our constitution, which was adopted in 1906 and which provides that taxes shall be uniform upon the same class of subjects, is no more restrictive upon the legislature's power to tax or classify than is the clause in the fourteenth amendment to the constitution of the United States, which forbids a state to enact any law which denies to any person within its jurisdiction the equal protection of the laws.
Constitution -- power to classify for taxation purposes -- equality and uniformity of classification.
4. The power to classify subjects for taxation is primarily with the legislature, whose classification must not be unreasonable arbitrary, or discriminatory but must operate equally and uniformly upon all persons in similar circumstances.
Taxation -- income tax -- equality and uniformity of classification -- constitutional provisions.
5. The graduated feature of the income tax law is a legitimate exercise of the legislature's power to classify and operates equally and uniformly upon all in like circumstances and does not contravene the uniformity provision of our constitution or the due process or equal protection clauses of the national constitution. Where a classification is justified under the state and national constitutions, courts cannot interfere unless it brings a result clearly fanciful or arbitrary.
Taxation -- income tax -- exemptions -- equality and uniformity of classification.
6. The exemptions provided for by the income tax law are a legitimate exercise of the legislature's power to classify and of its inherent power to exempt when exercised equally and uniformly.
Constitution -- construction -- maxim expressio unius.
7. The maxim expressio unius does not apply to constitutions with the same force that it does to statutes. If a contested enactment is not prohibited either by the letter or the spirit of the constitution it is authorized. The enumeration of compulsory exemptions in art. 9, § 1, of the state constitution does not forbid making others which do not offend the uniformity clause or the federal constitution. City of Minneapolis v. Armson, 188 Minn. 167, 246 N.W. 660, distinguished.
Taxation -- double taxation -- income tax -- constitutional provisions.
8. Double taxation is not forbidden by the state or national constitutions unless it results in lack of uniformity or offends the due process or equal protection clauses. The income tax does not so offend.
Harry H. Peterson, Attorney General, William S. Ervin and David J. Erickson, Assistant Attorneys General, and Joseph M. Donahue, for appellants.
Fowler, Carlson, Furber & Johnson and G. A. Youngquist, for respondent.
Henry Spindler, amicus curiae, filed a brief in behalf of State Income Tax Committee, Inc.
Charles F. Keyes, amicus curiae, filed a brief in support of the contention of appellants.
Abbott, MacPherran, Dancer, Gilbert & Doan, amici curiae, filed a brief in support of the contention of respondent.
This was a proceeding under the uniform declaratory judgments act to test the constitutionality of L. 1933, c. 405, an act imposing income taxes and franchise or privilege taxes measured by income for the benefit of school districts of the state. The complaint sets up the enactment of the law, that the plaintiff comes within its terms as subject to the income tax provision thereof, and that the defendant tax commissioners have demanded that he file a return and pay the tax and are threatening the enforcement thereof. From an order overruling a demurrer interposed by the defendants and certifying that the questions involved are important and doubtful the defendants have brought this appeal. No question is raised as to the validity of the declaratory judgments act, and we follow the Supreme Court of the United States in holding that it authorizes a proceeding which amounts to a justiciable controversy. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730, 87 A.L.R. 1911.
The act whose constitutionality is here in question provides for an income tax at graduated rates and with exemptions. The principal constitutional objections are that those features offend art. 9, § 1, of the state constitution, which provides that taxes shall be uniform upon the same class of subjects, and contravene that part of the fourteenth amendment to the constitution of the United States, which prohibits a state from denying to any person within its jurisdiction the equal protection of the laws. Other objections are raised and will be later considered.
We are not concerned with the public policy involved in the imposition of such a tax. That responsibility is wholly with the legislature within the constitutional limitations which the people of the state and nation have prescribed. Aside from such limitations, the only check on that branch of the government in the matter of taxation is its responsibility to its constituents. We are not concerned with the tax as a part of any social program, liberal or conservative, and this is not the place for our views as to the expediency, advisability, or economic justice or injustice of such a tax. We are concerned only with the sound interpretation of the constitution of this state and of the United States. If we err in our construction of the latter, our views may be corrected by the Supreme Court. Our interpretation of our own constitution is of course final.
1. We approach the solution of the questions presented under the guidance of certain elementary and fundamental rules, among which is that which invokes every presumption in favor of the constitutionality of an act of the legislature, and that the court should not declare such an act unconstitutional except when satisfied after the most careful consideration that it conflicts with some provision of the state or federal constitution. State ex rel. Hildebrandt v. Fitzgerald, 117 Minn. 192, 134 N.W. 728. On the other hand, we may not stretch the constitution to suit the convenience of the hour.
2. It is elementary that the power of taxation is inherent in sovereignty and that under our system of government it reposes in the legislature, except as it is limited by the state or the national constitution. In other words, the constitutional provisions are not a grant of, but a limitation upon, this power, and except in so far as thus limited it is exhaustive and embraces every conceivable subject of taxation. State v. Wells Fargo & Co. 146 Minn. 444, 179 N.W. 221; Brushaber v. Union Pacific R. Co. 240 U.S. 1, 36 S.Ct. 236, 60 L.Ed. 493, 501, L.R.A. 1917D, 414, Ann. Cas. 1917B, 713. Such being the case, it is not to be questioned that the legislature has power to levy an income tax at the flat rate and without exemption, unless that tax be illegal from the standpoint of double taxation, a question which we shall discuss later in this opinion.
3. Our uniformity clause was the major restriction placed upon the legislature by the present art. 9, § 1, when adopted by the people in 1906. Prior to that time our constitution had required taxes to be as "nearly equal as may be and that all property upon which taxes are levied shall have a cash valuation and be equalized and uniform throughout the state." The present art. 9, § 1, requiring taxes to be "uniform on the same class of subjects," was adopted under circumstances which conclusively show that it was the purpose of the people to relieve the legislature of the rather narrow restrictions theretofore placed upon that branch of the government by the constitution and to enlarge its powers in regard to taxation. As well said by Mr. Justice Sutherland in his dissenting opinion in Home B. & L. Assn. v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 245, 78 L.Ed. 255, 276, 88 A.L.R. 1481:
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