The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-07-09

Ihat there should be deducted from II
sum bearing the same ratio thereto
that the amount invested in bonds of
the United States bore to it's capital
stock, and that the law requiring a tax
without such reduction was unconsti-
tutional and void. 1t was held that
the tax was not upon the capital stock,
nor upon any bonds included therein.
but upon the corporate franchise or
business of the company. but the
method reSorted to was merely
means of determining the amount of
the tax to be exacted each year, the
court holding that, The validity of the
tax can in no way be dependent upon
the mode which the state may deem fit
to adopt in fixing the amount for any
year which IL will exact for the fran
chise. No constitutional objection lies
in the way of legislative body pre-
scribing any mode of measurement to
determine the amount it will charge
for the privilege it bestows.
Different methods have been re-
sorted to by the states by which to
compute the amount of tax to be
charged to corporations for the exer-
else of their franchise or corporate
privileges. but these are not, 1t mas
been held a tax upon property, not
tax on the stock dividends, earnings,
or receipts from the business done, but
are the means employed to ascertain
what would be a just tax to impose
The same rule is ecognized by the
supreme court of Kansas in the case
McNaIl vs. Insurance Co., 65 Kansas,
694.
This was franchise tax upon insur-
ance companies doing business in this
state. The method prescribed for the
ascertainment of the amount to be
exacted for each company was similar
to that laid down for express compan-
les. The amount received by them IN
premiums for the year ending 31st OF
December next preceding in this
state should be reported to the super
intendent of insurance. The amount
of tax to be levied in the case of COM
panies not organized under the laws or
this state two per cent and upon Tor
eign companies four per cent upon
the amount of premiums reported.
The same objection was urged in that
case as in this, that the law if enforced
for the year 1899, the same year the
law was enacted, would be retroactive
To this the court responds: while II
is a principle of statutory construc-
ton that laws are to be so interpreted
as to give them prospective rather
than a retroactive effect, this rule is
not infringed by sustaining the meth
cd employed, which the law author
ICES, of ascertaining the amount of the
tax to be paid by computing 1t from
the volume of business done in the
preceding year by the company sought
to be charged
Counsel appearing before the board
on behalf of the express companies
seemed to think that certain remarks
tive to the penalty prescribed for nom
payment of the tax distinguishes that
case from this. The nature of the tax
is the same in both cases, and the
same power that is authorized to i'm
pose the one gives effect to the other.
The penalty for non-payment in the
insurance cases is the withdrawal of
the privilege by the state to continue
in business, but any other method of
the tax which would have
been effectual would have been equal
ly valid and the nature of the law
would have remained unchanged. The |
necessity of adopting such an extreme |
in the case of insurance COM |
panies was obvious. In the case or
express companies who have property
within the state the ordinary methods
of enforcing taxes would be suffi- |
ciently effective. The method of mere |
ly enforcing a tax can have no effect !
In obviating the objection to the re- |
troactive principle of a law.
The all sufficient answer both in !
that case as we'll as in this is that the |
tax not for the past but for the pres |
ent year. and that the method of |
the amount to be charged i
for the present year is arrived at by /
taking the receipts and earnings for |
the preceding year.
The objection is by the board over |
ruled July Sth, 1907.