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as v. Florida was any longer viable. 463 Kansas City Ry. v. Kansas, 240 U.S. 227 (1916); Kansas City, M. & B.R.R. v. Stiles, 242 U.S. 111 (1916). Similarly, the validity of a franchise tax, imposed on a domestic corporation engaged in foreign maritime commerce and assessed upon a proportion of the total franchise value equal to the ratio of local business done to total business, is not impaired by the fact that the total value of the franchise was enhanced by property and operations carried on beyond the limits of the State. Schwab v. Richardson, 263 U.S. 88 (1923). 464 Western Union Tel. Co. v. Kansas, 216 U.S. 1 (1910); Pullman Co. v. Kansas, 216 U.S. 56 (1910); Looney v. Crane Co., 245 U.S. 178 (1917); International Paper Co. v. Massachusetts, 246 U.S. 135 (1918). The costliness of multiple taxation of estates comprising intangibles can be appreciably aggravated if one or more States find that the decedent died domiciled within its borders. In such cases, contesting States may discover that the assets of the estate are insufficient to satisfy their claims. Thus, in Texas v. Florida, 462 the State of Texas filed an original petition in the Supreme Court against three other states who claimed to be the domicile of the decedent, noting that the portion of the estate within Texas alone would not suffice to discharge its own tax, and that its efforts to collect its tax might be defeated by adjudications of domicile by the other States. The Supreme Court disposed of this controversy by sustaining a finding that the decedent had been domiciled in Massachusetts, but intimated that thereafter it would take jurisdiction in like situations only in the event that an estate was valued less than the total of the demands of the several States, so that the latter were confronted with a prospective inability to collect. Corporate Privilege Taxes.—A domestic corporation may be subjected to a privilege tax graduated according to paid-up capital stock, even though the stock represents capital not subject to the taxing power of the State, since the tax is levied not on property but on the privilege of doing business in corporate form. 463 However, a State cannot tax property beyond its borders under the guise of taxing the privilege of doing an intrastate business. Therefore, a license tax based on the authorized capital stock of an out-of-state corporation is void, 464 even though there is a maximum VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00082 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1753 465 Cudahy Co. v. Hinkle, 278 U.S. 460 (1929). 466 An example of such an apportioned tax is a franchise tax based on such proportion of outstanding capital stock as is represented by property owned and used in business transacted in the taxing State. St. Louis S. W. Ry. v. Arkansas, 235 U.S. 350 (1914). 467 Atlantic Refining Co. v. Virginia, 302 U.S. 22 (1937). 468 American Mfg. Co. v. St. Louis, 250 U.S. 459 (1919). Nor does a state license tax on the production of electricity violate the due process clause because it may be necessary, to ascertain, as an element in its computation, the amounts delivered in another jurisdiction. Utah Power & Light Co. v. Pfost, 286 U.S. 165 (1932). A tax on chain stores, at a rate per store determined by the number of stores both within and without the State is not unconstitutional as a tax in part upon things beyond the jurisdiction of the State. 469 James v. Dravo Contracting Co., 302 U.S. 134 (1937). 470 Lawrence v. State Tax Comm’n, 286 U.S. 276 (1932). 471 Shaffer v. Carter, 252 U.S. 37 (1920); Travis v. Yale & Towne Mfg. Co., 252 U.S. 60 (1920). 472 New York ex rel. Cohn v. Graves, 300 U.S. 308 (1937). 473 Maguire v. Trefy, 253 U.S. 12 (1920). fee, 465 unless the tax is apportioned based on property interests in the taxing state. 466 On the other hand, a fee collected only once as the price of admission to do intrastate business is distinguishable from a tax and accordingly may be levied on an out-of-state corporation based on the amount of its authorized capital stock. 467 A municipal license tax imposed on a foreign corporation for goods sold within and without the State, but manufactured in the city, is not a tax on business transactions or property outside the city and therefore does not violate the due process clause. 468 But a State lacks jurisdiction to extend its privilege tax to the gross receipts of a foreign contracting corporation for fabricating equipment outside the taxing State, even if the equipment is later installed in the taxing State. Unless the activities which are the subject of the tax are carried on within its territorial limits, a State is not competent to impose such a privilege tax. 469 Individual Income Taxes.—A State may tax annually the entire net income of resident individuals from whatever source received, 470 as jurisdiction is founded upon the rights and privileges incident to domicile. A State may also tax the portion of a nonresident’s net income which is derived from property owned, and from any business, trade, or profession carried on, by him within its borders, 471 based upon the State’s dominion over the property or activity from which it is derived and the obligation to contribute to the support of a government which secures the collection of such income. Accordingly, a State may tax residents on income from rents of land located outside the State; from interest on bonds physically without the State and secured by mortgage upon lands similarly situated; 472 and from a trust created and administered in another State, and not directly taxable to the trustee. 473 Further, VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00083 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1754 AMENDMENT 14—RIGHTS GUARANTEED 474 Guaranty Trust Co. v. Virginia, 305 U.S. 19, 23 (1938). Likewise, even though a nonresident does no business within a State, the latter may tax the profits realized by the nonresident upon his sale of a right appurtenant to membership in a stock exchange within its borders. New York ex. rel. Whitney v. Graves, 299 U.S. 366 (1937). 475 Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113 (1920); Bass, Ratcliff & Gretton Ltd. v. Tax Comm’n, 266 U.S. 271 (1924). The Court has recently considered and expanded the ability of the States to use apportionment formulae to allocate to each State for taxing purposes a fraction of the income earned by an integrated business conducted in several States as well as abroad. Moorman Mfg. Co. v. Bair, 437 U.S. 267 (1978); Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425 (1980); Exxon Corp. v. Department of Revenue, 447 U.S. 207 (1980). Exxon refused to permit a unitary business to use separate accounting techniques that divided its profits among its various functional departments to demonstrate that a State’s formulary apportionment taxes extraterritorial income improperly. Bair, 437 U.S. at 276–80, implied that a showing of actual multiple taxation was a necessary predicate to a due process challenge but might not be sufficient. 476 Evidence may be submitted which tends to show that a State has applied a method which, albeit fair on its face, operates so as to reach profits which are in no sense attributable to transactions within its jurisdiction. Hans Rees’ Sons v. North Carolina, 283 U.S. 123 (1931). 477 Matson Nav. Co. v. State Board, 297 U.S. 441 (1936). 478 Wisconsin v. J.C. Penney Co., 311 U.S. 435, 448–49 (1940). Dissenting, Justice Roberts, along with Chief Justice Hughes and Justices McReynolds and Reed, stressed the fact that the use and disbursement by the corporation at its home office of income derived from operations in many States does not depend on and cannot be controlled by, any law of Wisconsin. The act of disbursing such income as divithe fact that another State has lawfully taxed identical income in the hands of trustees operating therein does not necessarily destroy a domiciliary State’s right to tax the receipt of income by a resident beneficiary. 474 Corporate Income Taxes: Foreign Corporations.—A tax based on the income of a foreign corporation may be determined by allocating to the State a proportion of the total, 475 unless the income attributed to the State is out of all appropriate proportion to the business there transacted. 476 Thus, a franchise tax on a foreign corporation may be measured by income, not just from business within the state, but also on net income from interstate and foreign business. 477 Inasmuch as the privilege granted by a State to a foreign corporation of carrying on business supports a tax by that State, it followed that a Wisconsin privilege dividend tax, could be applied to a Delaware corporation despite it having its principal offices in New York, holding its meetings and voting its dividends in New York, and drawing its dividend checks on New York bank accounts. The tax could be imposed on the ‘‘privilege of declaring and receiving dividends’’ out of income derived from property located and business transacted in Wisconsin, equal to a specified percentage of such dividends, the corporation being required to deduct the tax from dividends payable to resident and nonresident shareholders. 478 VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00084 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1755 dends, he contended is ‘‘one wholly beyond the reach of Wisconsin’s sovereign power, one which it cannot effectively command, or prohibit or condition.’’ The assumption that a proportion of the dividends distributed is paid out of earnings in Wisconsin for the year immediately preceding payment is arbitrary and not borne out by the facts. Accordingly, ‘‘if the exaction is an income tax in any sense it is such upon the stockholders (many of whom are nonresidents) and is obviously bad.’’ See also Wisconsin v. Minnesota Mining Co., 311 U.S. 452 (1940). 479 Equitable Life Soc’y v. Pennsylvania, 238 U.S. 143 (1915). 480 Provident Savings Ass’n v. Kentucky, 239 U.S. 103 (1915). 481 State Bd. of Ins. v. Todd Shipyards, 370 U.S. 451 (1962). 482 Continental Co. v. Tennessee, 311 U.S. 5, 6 (1940) (emphasis added). 483 Palmetto Ins. Co. v. Connecticut, 272 U.S. 295 (1926). 484 St. Louis Compress Co. v. Arkansas, 260 U.S. 346 (1922). Insurance Company Taxes.—A privilege tax on the gross premiums received by a foreign life insurance company at its home office for business written in the State does not deprive the company of property without due process, 479 but such a tax is invalid if the company has withdrawn all its agents from the State and has ceased to do business, merely continuing to receive the renewal premiums at its home office. 480 Also violative of due process is a state insurance premium tax imposed on a nonresident firm doing business in the taxing jurisdiction, which obtained the coverage of property within the State from an unlicenced out-of-state insurer which consummated the contract, serviced the policy, and collected the premiums outside that taxing jurisdiction. 481 However, tax may be imposed upon the privilege of entering and engaging in business in a State, even if the tax is a percentage of the ‘‘annual premiums to be paid throughout the life of the policies issued.’’ Under this kind of tax, a State may continue to collect even after the company’s withdrawal from the State. 482 A State may lawfully extend a tax to a foreign insurance company that contracts with an automobile sales corporation in a third State to insure its customers against loss of cars purchased through it, so far as the cars go into possession of a purchaser within the taxing State. 483 On the other hand, a foreign corporation admitted to do a local business, which insures its property with insurers in other States who are not authorized to do business in the taxing State, cannot constitutionally be subjected to a 5% tax on the amount of premiums paid for such coverage. 484 Likewise a Connecticut life insurance corporation, licensed to do business in California, that negotiated reinsurance contracts in Connecticut, received payment of premiums thereon in Connecticut, and was there liable for payment of losses claimed thereunder, cannot be subjected by California to a privilege tax measured by gross premiums derived from such contracts, notwithstanding that the contracts reinsured other insurers authorized to do business in California and protected policies effected in California on the lives of VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00085 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1756 AMENDMENT 14—RIGHTS GUARANTEED 485 Connecticut General Co. v. Johnson, 303 U.S. 77 (1938). When policy loans to residents are made by a local agent of a foreign insurance company, in the servicing of which notes are signed, security taken, interest collected, and debts are paid within the State, such credits are taxable to the company, notwithstanding that the promissory notes evidencing such credits are kept at the home office of the insurer. Metropolitan Life Ins. Co. v. City of New Orleans, 205 U.S. 395 (1907). But when a resident policyholder’s loan is merely charged against the reserve value of his policy, under an arrangement for extinguishing the debt and interest thereon by deduction from any claim under the policy, such credit is not taxable to the foreign insurance company. Orleans Parish v. New York Life Ins. Co., 216 U.S 517 (1910). Premiums due from residents on which an extension has been granted by foreign companies also are credits on which the latter may be taxed by the State of the debtor’s domicile. Liverpool & L. & G. Ins. Co. v. Orleans Assessors, 221 U.S. 346 (1911). The mere fact that the insurers charge these premiums to local agents and give no credit directly to policyholders does not enable them to escape this tax. 486 Turpin v. Lemon, 187 U.S. 51, 58 (1902); Glidden v. Harrington, 189 U.S. 255 (1903). 487 McMillen v. Anderson, 95 U.S. 37, 42 (1877). 488 Bell’s Gap R.R. v. Pennsylvania, 134 U.S. 232, 239 (1890). 489 Hodge v. Muscatine County, 196 U.S. 276 (1905). residents therein. The tax cannot be sustained whether as laid on property, business done, or transactions carried on, within California, or as a tax on a privilege granted by that State. 485 Procedure in Taxation Generally.—Exactly what due process is required in the assessment and collection of general taxes has never been decided by the Supreme Court. While it was held that ‘‘notice to the owner at some stage of the proceedings, as well as an opportunity to defend, is essential’’ for imposition of special taxes, it has also ruled that laws for assessment and collection of general taxes stand upon a different footing and are to be construed with the utmost liberality, even to the extent of acknowledging that no notice whatever is necessary. 486 Due process of law as applied to taxation does not mean judicial process; 487 neither does it require the same kind of notice as is required in a suit at law, or even in proceedings for taking private property under the power of eminent domain. 488 Due Process is satisfied if a taxpayer is given an opportunity to test the validity of a tax at any time before it is final, whether before a board having a quasi-judicial character, or before a tribunal provided by the State for such purpose. 489 Notice and Hearing in Relation to Taxes.—‘‘Of the different kinds of taxes which the State may impose, there is a vast number of which, from their nature, no notice can be given to the taxpayer, nor would notice be of any possible advantage to him, such as poll taxes, license taxes (not dependent upon the extent of his business), and generally, specific taxes on things, or persons, or occupations. In such cases the legislature, in authorizing the tax, VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00086 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1757 490 Hagar v. Reclamation Dist., 111 U.S. 701, 709–10 (1884). 491 111 U.S. at 710. 492 McMillen v. Anderson, 95 U.S. 37, 42 (1877). fixes its amount, and that is the end of the matter. If the tax be not paid, the property of the delinquent may be sold, and he be thus deprived of his property. Yet there can be no question that the proceeding is due process of law, as there is no inquiry into the weight of evidence, or other element of a judicial nature, and nothing could be changed by hearing the taxpayer. No right of his is, therefore, invaded. Thus, if the tax on animals be a fixed sum per head, or on articles a fixed sum per yard, or bushel, or gallon, there is nothing the owner can do which can affect the amount to be collected from him. So, if a person wishes a license to do business of a particular kind, or at a particular place, such as keeping a hotel or a restaurant, or selling liquors, or cigars, or clothes, he has only to pay the amount required by law and go into the business. There is no need in such cases for notice or hearing. So, also, if taxes are imposed in the shape of licenses for privileges, such as those on foreign corporations for doing business in the State, or on domestic corporations for franchises, if the parties desire the privilege, they have only to pay the amount required. In such cases there is no necessity for notice or hearing. The amount of the tax would not be changed by it.’’ 490 Notice and Hearing in Relation to Assessments.—‘‘But where a tax is levied on property not specifically, but according to its value, to be ascertained by assessors appointed for that purpose upon such evidence as they may obtain, a different principle comes in. The officers in estimating the value act judicially; and in most of the States provision is made for the correction of errors committed by them, through boards of revision or equalization, sitting at designated periods provided by law to hear complaints respecting the justice of the assessments. The law in prescribing the time when such complaints will be heard, gives all the notice required, and the proceedings by which the valuation is determined, though it may be followed, if the tax be not paid, by a sale of the delinquent’s property, is due process of law.’’ 491 Nevertheless, it has never been considered necessary to the validity of a tax that the party charged shall have been present, or had an opportunity to be present, in some tribunal when he was assessed. 492 Where a tax board has its time of sitting fixed by law and where its sessions are not secret, no obstacle prevents the appearance of any one before it to assert a right or redress a wrong and in the business of assessing taxes, this is all that can be rea- VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00087 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1758 AMENDMENT 14—RIGHTS GUARANTEED 493 State Railroad Tax Cases, 92 U.S. 575, 610 (1876). 494 Nickey v. Mississippi, 292 U.S. 393, 396 (1934). See also Clement Nat’l Bank v. Vermont, 231 U.S. 120 (1913). A hearing before judgment, with full opportunity to submit evidence and arguments being all that can be adjudged vital, it follows that rehearings and new trials are not essential to due process of law. Pittsburgh C.C. & St. L. Ry. v. Backus, 154 U.S. 421 (1894). One hearing is sufficient to constitute due process, Michigan Central R.R. v. Powers, 201 U.S. 245, 302 (1906), and the requirements of due process are also met if a taxpayer, who had no notice of a hearing, does receive notice of the decision reached there and is privileged to appeal it and, on appeal, to present evidence and be heard on the valuation of his property. Pittsburgh C. C. & St. L. Ry. v. Board of Pub. Works, 172 U.S. 32, 45 (1898). 495 St. Louis Land Co. v. Kansas City, 241 U.S. 419, 430 (1916); Paulsen v. Portland, 149 U.S. 30, 41 (1893); Bauman v. Ross, 167 U.S. 548, 590 (1897). 496 Tonawanda v. Lyon, 181 U.S. 389, 391 (1901). 497 Londoner v. Denver, 210 U.S. 373 (1908). 498 Withnell v. Ruecking Constr. Co., 249 U.S. 63, 68 (1919); Browning v. Hooper, 269 U.S. 396, 405 (1926). Likewise, the committing to a board of county supervisors of authority to determine, without notice or hearing, when repairs to an existing drainage system are necessary cannot be said to deny due process of law to landowners in the district, who, by statutory requirement, are assessed for the cost thereof in proportion to the original assessment. Breiholz v. Board of Supervisors, 257 U.S. 118 (1921). 499 Fallbrook Irrigation Dist. v. Bradley, 164 U.S. 112, 168, 175 (1896); Browning v. Hooper, 269 U.S. 396, 405 (1926). sonably asked. 493 Nor is there any constitutional command that notice of an assessment as well as an opportunity to contest it be given in advance of the assessment. It is enough that all available defenses may be presented to a competent tribunal during a suit to collect the tax and before the demand of the State for remittance becomes final. 494 However, when assessments based on the enjoyment of a special benefit are made by a political subdivision, a taxing board or court, the property owner is entitled to be heard as to the amount of his assessments and upon all questions properly entering into that determination. 495 The hearing need not amount to a judicial inquiry, 496 although a mere opportunity to submit objections in writing, without the right of personal appearance, is not sufficient. 497 Generally, if an assessment for a local improvement is made in accordance with a fixed rule prescribed by legislative act, the property owner is not entitled to be heard in advance on the question of benefits. 498 On the other hand, if the area of the assessment district was not determined by the legislature, a landowner does have the right to be heard respecting benefits to his property before it can be included in the improvement district and assessed, but due process is not denied if, in the absence of actual fraud or bad faith, the decision of the agency vested with the initial determination of benefits is made final. 499 The owner has no constitutional right to be heard in opposition to the launching of a project which may end in assessment, and once his land has been duly in- VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00088 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 AMENDMENT 14—RIGHTS GUARANTEED 1759 500 Utley v. Petersburg, 292 U.S. 106, 109 (1934); French v. Barber Asphalt Paving Co., 181 U.S. 324, 341 (1901). See also Soliah v. Heskin, 222 U.S. 522 (1912). Nor can he rightfully complain because the statute renders conclusive, after a hearing, the determination as to apportionment by the same body which levied the assessment. Hibben v. Smith, 191 U.S. 310, 321 (1903). 501 Hancock v. Muskogee, 250 U.S. 454, 458 (1919). Likewise, a taxpayer does not have a right to a hearing before a state board of equalization preliminary to issuance by it of an order increasing the valuation of all property in a city by 40%. Bi-Metallic Co. v. Colorado, 239 U.S. 441 (1915). 502 City of Detroit v. Parker, 181 U.S. 399 (1901). 503 Paulsen v. Portland, 149 U.S. 30, 38 (1893). 504 National Safe Deposit Co. v. Stead, 232 U.S. 58 (1914). 505 Pierce Oil Corp. v. Hopkins, 264 U.S. 137 (1924). Likewise, a tax on the tangible personal property of a nonresident owner may be collected from the custodian or possessor of such property, and the latter, as an assurance of reimbursement, may be granted a lien on such property. Carstairs v. Cochran, 193 U.S. 10 (1904); Hannis Distilling Co. v. Baltimore, 216 U.S. 285 (1910). 506 The duty thereby imposed on the employer has never been viewed as depriving him of property without due process of law, nor has the adjustment of his system of accounting been viewed as an unreasonable regulation of the conduct of business. Travis v. Yale & Towne Mfg. Co., 252 U.S. 60, 75, 76 (1920). cluded within a benefit district, the only privilege which he thereafter enjoys is to a hearing upon the apportionment, that is, the amount of the tax which he has to pay. 500 More specifically, where the mode of assessment resolves itself into a meremathematical calculation, there is no necessity for a hearing. 501 Statutes and ordinances providing for the paving and grading of streets, the cost thereof to be assessed on the front foot rule, do not, by their failure to provide for a hearing or review of assessments, generally deprive a complaining owner of property without due process of law. 502 In contrast, when an attempt is made to cast upon particular property a certain proportion of the construction cost of a sewer not calculated by any mathematical formula, the taxpayer has a right to be heard. 503 Collection of Taxes.—States may undertake a variety of methods to collect taxes. For instance, collection of an inheritance tax may be expedited by a statute requiring the sealing of safe deposit boxes for at least ten days after the death of the renter and obliging the lessor to retain assets found therein sufficient to pay the tax that may be due the State. 504 A State may compel retailers to collect such gasoline taxes from consumers and, under penalty of a fine for delinquency, to remit monthly the amounts thus collected. 505 In collecting personal income taxes, most States require employers to deduct and withhold the tax from the wages of employees. 506 States may also use various procedures to collect taxes from prior tax years. To reach property which has escaped taxation, a State may tax estates of decedents for a period prior to death and VerDate Jul<13>2004 05:44 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00089 Fmt 8222 Sfmt 8222 \\GSDDPC41\YOURS-AND-MINE\CON046.SGM CON046 1760 AMENDMENT 14—RIGHTS GUARANTEED 507 Bankers Trust Co. v. Blodgett, 260 U.S. 647 (1923). 508 International Harvester Corp. v. Goodrich, 350 U.S. 537 (1956). 509 League v. Texas, 184 U.S. 156 (1902). 510 Palmer v. McMahon, 133 U.S. 660, 669 (1890). 511 Scottish Union & Nat’l Ins. Co. v. Bowland, 196 U.S.

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