170
The Green Bag
stock, and that reference was made to the capital stock for the purpose of determining the amount of the tax. The court cited with approval the case
to three-quarters of one per cent on the
total amount of deposits.”12 Undoubtedly, a corporate franchise
of Munroe Savings Bank v. Rochester,9
tax computed on income would operate _ the same on the treasury of the corpora
to the effect that where a state tax is imposed as a property tax, so much of
tion as a tax levied directly upon income. From the financial point of view of the
the property as is invested in United
corporation, there would be little to
States bonds is to be deducted,—“but
choose between them. Economic iden tity, however, does not establish identity of legal effect. This proposition was forcibly asserted by Justice Moody in delivering the opinion of the court in
this rule can have no application to an assessment upon a franchise, where a reference to property is made only to
ascertain the value of the thing assessed." ImHome Insurance Co. v. New York,
Home Savings Bank v. Des Moines13
the court placed reliance upon a prior decision, appealed from the Supreme
when he said: “If the state has not the
Court of Connecticut, where a savings
power to levy this tax, we will not in quire whether another tax which it
bank, to the extent that its deposits were invested in United States securities,
might lawfully impose would have the
sought to escape the burdens of a tax equivalent to a certain percentage on the
stands for the proposition that the
same ultimate incidence."
This case
capital of a corporation, invested in
total amount of deposits.10 The federal
United States securities, may not be
Supreme Court, conceding its illegality viewed as a tax on the deposits, and
taxed by merely adopting as a measure of taxable value the value of the shares in the hands of the stockholders, although such shares are themselves taxable. The
observing that a corporate franchise or privilege is a thing of value and tax able, ruled that reference was made to the total amount of deposits, "not as the subject-matter of assessment, but
asthe basis for computingthe tax. . . .” In this connection, it is interesting to compare the argument of the counsel
for the corporation, to the effect that a franchise tax, “estimating its value by the money it has secured, is the same thing in substance as taxing the money received,” with that employed by those who argue that a tax on a corporate
validity of a tax on that which consti tutes the measure of taxable value, no
more than its invalidity, is conclusive of the validity of the real subject—matter of the tax.
We may therefore consistently con clude that while Congress may not levy a general tax on incomes without appor tionment, whenever the income of a
corporation represents the fair and rea sonable value of a right, privilege or
franchise, computed on its income, is
substantially a tax on the income.11 The force of this decision is not dimin ished by the fact that the statute did not purport to be a franchise tax, but
simply a tax on the corporation “equal 9 37 N. Y. 365. 10 Society for Savings v. Coils, 6 Wall. 594. ‘1 See also the argument of Mr. Bristow in Home Insurance Co. v. New York, 119 U. S. 133.
1' A similar result was reached in a Massachu setts case, where a "tax on account of its depos itors" of a certain percentage on the amount of its deposits was held to be a franchise tax on the bank, and not a tax on property, i. 0., the deposits. Provident Institution v. Mass., 12 Allen (Mass) 312; 6 Wallace 611. In this case, a tax on the deposits would have been doubly objectionable, as an unproportional property tax under the state
constitution, and as being in part invested in federal securities. See also Comm. v. People's Savings Bank, 5 Allen 428. 1' 205 U. S. 503.
