New-York tribune., 1920-03-02
US. Supreme Court Rules
Exemptions Should Be
Given Citizens of Other
States as Well as N. Y.
Law Being Framed
To Remedy Defect
Present Act Held To Be
Unconstitutional in Its
Discriminatory Features

WASHINGTON, March 1.-THE New
York State Income Tax law was de-
clared unconstitutona by the Supreme
Court of the United States to-day in
a decision written by Justice pitney
and concurred in by Justice McRey-
nolds.
The right Of the state to tax in.
comes was upheld by the court, but the
tax imposed upon non-residents of the
state who work in New York, or who
are paid by New York employers, was
declared to be discriminatory and in
violation Of the Federal Constitution.
The constitutionality of the law was
contested by the Yale & Towne Com
pany, who fought the law in the Dis
trict Court of New York The Dis
trict Court declared the law uncon-
stitutonal because it Disseminated
against employees of the Yale & Towne
Company who lived in New Jersey and
Connecticut, but who were employed
in New York, and the Supreme Court
sustained the decision.
Privileges Abridged
IN its decision, the Supreme Court
pointed out that the New York income
tax law of 1919 not only imposed a tax
on the net income of persons residing
in New York State, which the court
held the state had right to do, but
it taxed non-residents of the state on
different basis. Specific exemptions
foJ e A.
the law, the court pointed out, while
in the case of non-residents the ex-
emptions were granted only in case the
states in which the persons taxed lived
granted similar exemptions to the resi-
dents Of New York within their border.
The provisions of the law taxing non
residents, the courts decision Declared,
violated Section 2 Of Article - of the
Constitution of the United States.
"The act abridges the privileges and
immunities to which such citizens are
entitled" the Supreme Court ruled.
THE particular incidence of the dis
elimination is upon the citizens of Con-
necticut and New Jersey, neither of
which states has an income tax law.
The case is typical, it being matter
sity due to the geographical situation
of that city (New York; in close prox-
unity to the neighboring states, many
thousands of men and women residents
and citizens of those states 90 daily
from their homes to the city and earn
their livelihood there. They pursue
their several occupations side by side
with residents of the State Of New
York-in effect competing with them as
to wages, salaries and other terms of
employment. Whether they must pay a
tax upon the first $1,000 or $4,000 Of
their income, while their associates
and competitors who reside in New
York do not, makes a substantial diff
ference.
Discrimination Not Accidental
Under the circumstances as dis
closed, we are unable to find adequate
ground for the discrimination and are
constrained to hold that it is an un-
warranted denial to the citizens of
Connecticut and New Jersey of the
privileges and immunities enjoyed by
the citizens of New York.
This is not case of occasional, or
accidental, inequality due to circum-
general rule operating to the disad-
vantage of all non-residents, including
those who are citizens of the neigh
boring states and favoring all resi-
dents, including those who are citizens
of the taxing States"
The exemptions granted non-resi-
dents on income from other sources
than their salaries received in the
State of New York, in the opinion of
the court, were not counter-b balance d
fby the specific exemption granted the
residents of New York under the act.
:, The contention raised by the New
York State Comptroller during hearing
OF. the case before the Supreme Court,
that the law was passed with the be-
lief that other states would enact SINH
lar laws that would eventually equalize
the tax, the courts decision declared,
was wholly speculative" The decision
continues:
"New York has no authority to leeis-
late for adjoining states. In view of
the provisions of the Constitution Of
the United States, q discrimination by
the State of New York against the citi-
zens of adjoining states would not be
cured were those states to establish
like determinations against citizens of
the State of New York.
"A state may not barter away tha
right, conferred upon it's citizens by
the Constitution of the United States.
to enjoy the privileges and immunities s
of citizens when they go into other
states. Nor can discrimination be cor
rected by retaliation; to prevent this
was one of the chief ends sought to be
accomplished by the adoption of the