Sims v. Ahrens, (No. 114.)

CourtSupreme Court of Arkansas
Writing for the CourtSmith
Citation167 Ark. 557,271 S.W. 720
Docket Number(No. 114.)
Decision Date19 January 1925
PartiesSIMS, State Comptroller, v. AHRENS et al.
271 S.W. 720
167 Ark. 557
SIMS, State Comptroller,
v.
AHRENS et al.
(No. 114.)
Supreme Court of Arkansas.
January 19, 1925.
On Rehearing, May 4, 1925.
Rehearing Denied May 18, 1925.

Appeal from Pulaski Chancery Court; Jno. E. Martineau, Chancellor.

Suit by J. E. Ahrens and others against M. E. Sims, State Comptroller. Decree for plaintiffs, and defendant appeals. Affirmed.

J. S. Utley, Atty. Gen., and Wm. T. Hammock, Asst. Atty. Gen., for appellant.

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J. C. Marshall, of Little Rock, for appellees.

Archer Wheatley, Basil Baker, Arthur L. Adams, and Horace Sloan, all of Jonesboro, amici curiæ.

SMITH, J.


This appeal involves the constitutionality of Act 345 of the Acts of the General Assembly of 1923. Gen. Acts 1923, p. 282.

The title to this act is as follows:

"An act to be entitled an act to levy a sale or gross income tax of one-tenth of one per-centum or one dollar ($1.00) on each one thousand ($1,000.00) dollars on the gross incomes of every resident of the state of Arkansas, and by natural persons not residents of this state who shall have received one thousand dollars or more per annum from and after March 31, 1923, to be levied and collected annually beginning April 1, 1924, for the sole use and benefit of the public schools of Arkansas and for other purposes."

A portion of section 1 of this act reads as follows:

"A tax is hereby imposed upon every resident of the state of Arkansas, which shall be levied, collected and paid annually upon and with respect to his or her entire gross income as herein defined at rates as follows: One-tenth of one per centum or one dollar on each one thousand dollars, and at that rate of one-tenth of one per cent. on each and every dollar over and above one thousand dollars from the gross income from all property owned and from every business, trade, profession or occupation, carried on in this state, and a like tax is hereby imposed and shall be levied and collected and paid annually to the State Comptroller of this state by natural persons not residents of this state."

Section 2 of the act defines the term "gross income," as employed in section 1 of the act as follows:

"The term `gross income': Includes gains, profits and income derived from salaries, wages or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, business, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever, including gains or profits or income derived through estates or trusts by the beneficiaries thereof, whether as distributed or as distributable shares, income from property acquired by gift, bequest, devise or descent. The amount of all such items shall be included in the gross income for the taxable year in which received by the taxpayer."

The appellees in this case — who were the plaintiffs below — are residents and citizens of this state, and have earned incomes upon which they will be required to pay taxes, if the act under review is valid. The income of one plaintiff had been earned as a manager of an insurance company; that of another from rents received on real estate; a third earned wages as a locomotive engineer; while the fourth had derived profits from his business as a merchant; and these plaintiffs seek by this suit to enjoin the state comptroller from attempting to enforce the payment of the tax imposed by Act 345 on their respective incomes. The court below held the act unconstitutional, and granted the relief prayed, and this appeal is prosecuted to reverse that decree.

It is quite obvious that the incomes of the plaintiffs are subject to the tax, if the act itself is valid. The act is all-comprehending. It includes gains, profits, and income derived from salaries, wages, or compensation for personal service, of whatever kind and in whatever form paid. It includes income derived from professions, vocations, trades, business, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of, or interest in, such property. It includes also incomes from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits. And, after thus including all apparent sources of income, there was added, out of a superabundance of caution that no source of income might be overlooked, the inclusive words, "and income derived from any source whatever."

The tax authorized by this act, whatever else may be said of it, is both an occupation tax and an income tax, because income derived from all pursuits or callings are taxed, except certain exempted income enumerated in section 4 of the act, and which need not be recited here.

It is not a privilege tax, and cannot be sustained as such, because no attempt is made to distinguish between occupations which are of common right and those which might be designated as privileges and taxed as such. All are alike subject to the tax.

The act makes no attempt to restrict the imposition of the tax to such occupations as might be taxed as privileges, but imposes the tax as a unit on the entire income of every person subject to its provisions without regard to the source of the income, and the act must, therefore, stand or fall in its entirety, as its provisions are not separable. The act proposes a scheme of taxation which is either valid or void, as no separation of the sources of the income was contemplated by the Legislature. Oliver v. Southern Trust Co., 138 Ark. 389, 212 S. W. 77; Nixon v. Allen, 150 Ark. 244, 234 S. W. 45.

The tax in question is a state tax, and is levied for the use and benefit of the public schools of the state, and the first question presented is whether the state can levy such a tax for any state purpose. If the conclusion is reached that such a tax cannot be

Page 722

levied for state purposes, it will be unnecessary to consider any of the other objections interposed to the act.

In approaching the consideration of this question, it may be said that we do not have to search the Constitution for express authority to levy the tax. The power to levy it exists as an inherent right, unless the Constitution has denied the right to the state to levy taxes of this character.

The question is by no means new in this state. The question arose very early in the history of the state, and was first decided in the case of Stevens and Woods v. State, 2 Ark. 291, 35 Am. Dec. 72, and was considered in other early cases. We do not stop to review these cases, but will first consider the case of Baker v. State, 44 Ark. 134, because it was the first case to arise under our present Constitution, and these earlier cases were there reviewed.

In the case of Baker v. State, supra, the appellant had been indicted for "unlawfully engaging in business as an agent for the sale of sewing machines," without obtaining the license required by the act which he was charged with having violated. It was pointed out in the Baker Case that there was some apparent conflict in the early cases on this subject, and on that account the court was urged to take the subject up anew, and consider it de novo; but the court declined to do this for the reason, there stated, that this confusion had been recognized and considered in the case of Washington v. State, 13 Ark. 752, and the earlier cases were there reconciled; Chief Justice Cockrill, in delivering the opinion in the Baker Case, said:

"In an attempt to extricate itself from this difficulty, the court held [in the Washington Case] that there was no restraint upon the power of the Legislature to authorize counties and towns to regulate or tax callings and pursuits, but there was a restriction in that regard upon legislation for the purpose of raising a state revenue. This distinction has never been questioned by this court, but has been recognized and approved from time to time. McGee v. Mathis, 21 Ark. 40; Straub v. Gordon, 27 Id. 625; Barton v. City of Little Rock, 33 Id. 442; City of Little Rock v. Board, etc., 42 Id. 160."

After recognizing the Washington Case as having definitely decided the question that the Legislature might authorize counties and towns to regulate or tax callings or pursuits for the purpose of raising revenue, but that there was a restriction in that regard upon legislation for the purpose of raising state revenue, Chief Justice Cockrill took occasion to say that the decisions reviewed did not limit the power of legislation for state purposes to the taxing of such privileges as were technically known as such at the common law, that is to say, that the Legislature has a discretion to adjudge what are privileges, and such callings and pursuits as may be classed as privileges may be taxed for state purposes, but the court there clearly decided that unless a particular calling or pursuit might be classed as a privilege it was not subject to taxation for state purposes.

Upon the authority of the case of Baker v. State, supra, this court has consistently held that cities and towns may, when so authorized by the Legislature, tax callings and pursuits to raise revenue for municipal purposes, such taxes being commonly designated as occupation taxes. Among other cases in which it was so held are City of Little Rock v. Prather, 46 Ark. 471; Fort Smith v. Scruggs, 70 Ark. 549, 69 S. W. 679, 58 L. R. A. 921, 91 Am. St. Rep. 100; Laprairie v. City of Hot Springs, 124 Ark. 346, 187 S. W. 442; Davies v. Hot Springs, 141 Ark. 521, 217 S. W. 769; Pine Bluff Transfer Co. v. Nichol, 140 Ark. 320, 215 S. W. 579.

And upon the authority of Baker v. State, supra, this court has, with equal consistency, held that the state could not impose such taxes for state...

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36 practice notes
  • Fernwood Lumber Co. v. Mississippi State Tax Commission, 30655
    • United States
    • Mississippi Supreme Court
    • September 25, 1933
    ...115; Norris v. Cary, 237 N.W. 113; Norris v. Cary (Wis.), 238 N.W. 415; Falk v. Ross (Wis.), 230 N.W. 64, Syl. 3; Sims v. Ahrens (Ark.), 271 S.W. 720, Syl. 1; In re Opinion of the Justices, 165 N.E. 900; Cooley on Taxation, sections 15, 743; Redfield v. Fisher (Ore.), 292 P. 813, at 817; Gu......
  • Hunton v. Commonwealth
    • United States
    • Virginia Supreme Court of Virginia
    • January 16, 1936
    ...623, decided on March 16, 1935, the highest court of Maine, in a unanimous decision, reached the same conclusion. See also, Sims Ahrens, 167 Ark. 557, 271 S.W. 720, 730, 735; Featherstone Norman, 170 Ga. 370, 153 S.E. 58, 65, 70 A.L.R. 449, 459; Diefendorf Gallet, 51 Idaho 619, 10 P.(2d) 30......
  • Hale v. Iowa State Board of Assessment and Review, No. 16
    • United States
    • United States Supreme Court
    • November 8, 1937
    ...of the property. The 1851 Code provision is almost identical. 6 The Code in force at that time was the one of 1873. 7 Sims v. Ahrens, 167 Ark. 557, 271 S.W. 720; Stanley v. Gates, 179 Ark. 886, 19 S.W.(2d) 1000; Waring v. Savannah, 60 Ga. 93, 100; Featherstone v. Norman, 170 Ga. 370, 379, 1......
  • Hunton v. Commonwealth
    • United States
    • Virginia Supreme Court of Virginia
    • January 16, 1936
    ...March 16, 1935, the highest court of Maine, in a unanimous decision, reached the same conclusion.[183 S.E. 877] See, also, Sims v. Ahrens, 167 Ark. 557, 271 S.W. 720, 730, 735; Featherstone v. Norman, 170 Ga. 370, 153 S.E. 58, 65, 70 A.L.R. 449, 459; Diefendorf v. Gallet, 51 Idaho, 619, 10 ......
  • Request a trial to view additional results
36 cases
  • Fernwood Lumber Co. v. Mississippi State Tax Commission, 30655
    • United States
    • Mississippi Supreme Court
    • September 25, 1933
    ...115; Norris v. Cary, 237 N.W. 113; Norris v. Cary (Wis.), 238 N.W. 415; Falk v. Ross (Wis.), 230 N.W. 64, Syl. 3; Sims v. Ahrens (Ark.), 271 S.W. 720, Syl. 1; In re Opinion of the Justices, 165 N.E. 900; Cooley on Taxation, sections 15, 743; Redfield v. Fisher (Ore.), 292 P. 813, at 817; Gu......
  • Hunton v. Commonwealth
    • United States
    • Virginia Supreme Court of Virginia
    • January 16, 1936
    ...623, decided on March 16, 1935, the highest court of Maine, in a unanimous decision, reached the same conclusion. See also, Sims Ahrens, 167 Ark. 557, 271 S.W. 720, 730, 735; Featherstone Norman, 170 Ga. 370, 153 S.E. 58, 65, 70 A.L.R. 449, 459; Diefendorf Gallet, 51 Idaho 619, 10 P.(2d) 30......
  • Hale v. Iowa State Board of Assessment and Review, No. 16
    • United States
    • United States Supreme Court
    • November 8, 1937
    ...of the property. The 1851 Code provision is almost identical. 6 The Code in force at that time was the one of 1873. 7 Sims v. Ahrens, 167 Ark. 557, 271 S.W. 720; Stanley v. Gates, 179 Ark. 886, 19 S.W.(2d) 1000; Waring v. Savannah, 60 Ga. 93, 100; Featherstone v. Norman, 170 Ga. 370, 379, 1......
  • Hunton v. Commonwealth
    • United States
    • Virginia Supreme Court of Virginia
    • January 16, 1936
    ...March 16, 1935, the highest court of Maine, in a unanimous decision, reached the same conclusion.[183 S.E. 877] See, also, Sims v. Ahrens, 167 Ark. 557, 271 S.W. 720, 730, 735; Featherstone v. Norman, 170 Ga. 370, 153 S.E. 58, 65, 70 A.L.R. 449, 459; Diefendorf v. Gallet, 51 Idaho, 619, 10 ......
  • Request a trial to view additional results

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