The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1920-04-01
RULE ON THREE
TAX QUESTIONS
State Commission Gives
New Ruling of Recent
Court Decisions.
ON STOCK DIVIDENDS

Recent opinions of the attorney gem
erals of New York and Missouri and
the decisions of the United States Sd
preme court on the taxability of stock
dividends and exemptions to non-resi-
dents, have given rise to three impor-
tant questions affecting administration
OF the Wisconsin income tax law.
Realizing the necessity for a uniform
rule throughout the state, the tax
commission has decided it's policy I'M
der the three conditions.
Regarding the claim for exemption
OF compensation paid to railway en-
ployees during the period of federal
control, it rules that:
I'm this situation we believe that
there is no occasion for changing the
established practice, and assessors of
incomes are therefore advised that all
compensation paid to. railroad officers
and employees during the period of fed
eral control is taxable income, and
should be taxed in the same manner,
and to the same extent as if such roads
were operated by their private owners"
) Section 1087m-5 of the income tax
law prescribes certain personal exemp-
lions in computing the income of in
dlvldual taxpayers, but subdivision (e)
expressly provides that "the aforesaid
exemption shall not apply to incomes
derived from sources within the state
by non-residents thereof" The effect
of these provisions is to grant person
al exemptions to residents of Wiscon-
sin, and deny them to residents of
other states. The. United States Su-
preme court recently held that SINH
lar provision of the New York income
tax act violates section of article w
of the United States constitution, pro-
viding that "the citizens of each state
shall be entitled to all privileges and
immunities of citizens in the several
states" The commission has decided
that sit is more than probably that
the recent explicit opinion of the
United States Supreme court in the
New York case would be followed by
the Supreme court of this state, should
the question come before it. 1t is
therefore recommended that in COM
putting the taxable income of non-resi-
dent individuals they be allowed the
same exemptions as if they were resi-
dents of the state.''
The decision of the United States
Supreme court in the case of Eisner
VS.. Macomber on the question of the
taxability of stock dividends rests up
on different grounds. This case mere
ly holds that stock dividends are not
income within the meaning of the
sixteenth amendment, authorizing con-
gress to pass income tax laws without
apportionment according to population.
The implication is that if such divi-
dends are taxable at all, it can only
be by direct tax apportioned among
the states according to population as
required by sections and 9 of article
| of the constitution. But this article
is limitation on the power of con-
gress and has no direct application to
the states, and therefore the decision
is not binding in the application of the
Wisconsin law The commission holds
that taxation of stock dividends under
our law is confined to such dividends
received by Wisconsin stockholders
from corporations whose income is in
whole or in part derived from sources
without the state. In other words.
stock dividends are taxable under our
law only when and to the extent that
they represent profits accrued since
1911 which have not been taxed to the
corporations distributing them"