Source: https://supreme.justia.com/cases/federal/us/304/307/
Timestamp: 2019-04-24 22:18:11+00:00

Document:
1. Indiana Gross Income Tax Act of 1933 imposes a tax upon gross receipts from commerce. P. 304 U. S. 309.
2. It cannot constitutionally be applied to the gross receipts derived by an Indiana corporation from sales in other States of goods manufactured by it in Indiana. P. 304 U. S. 311.
"that all bonds, notes and other evidences of indebtedness hereafter issued by the Indiana or by municipal corporations within the State upon which the said State or the said municipal corporations pay interest shall be exempt from taxation,"
is considered in connection with other provisions with which it is associated in the codification of March 11, 1919, and with regard to the fact that the State had no income tax law. So considering it, the construction adopted by the Supreme Court of Indiana confining the exemption to taxation ad valorem is not plainly wrong; consequently, the claim that to include the interest from such obligations in a tax on gross receipts would impair the contract rights of those who bought in reliance on the exemption must fail. P. 304 U. S. 314.
212 Ind. 343; 7 N.E.2d 941, affirmed in part; reversed in part.
Appeal from the reversal of a declaratory judgment declaring a taxing Act unconstitutional in certain parts, as applied to the appellant.
In this case, we are called upon to determine whether the Indiana Gross Income Tax Act of 1933, [Footnote 1] as construed and applied, burdens interstate commerce and impairs the obligation of contract in contravention of article 1, §§ 8 and 10, of the Constitution of the United States.
"So much of such gross income as is derived from business conducted in commerce between this state and other states of the United States, or between this state and foreign countries, to the extent to which the Indiana is prohibited from taxing under the Constitution of the United States of America."
in other states and foreign countries upon orders taken subject to approval at the home office. Shipments are made from the factory, and payments are remitted to the home office. Pursuant to a practice of investing surplus funds not immediately required in its business, the appellant owns and receives interest upon bonds and notes of Indiana municipal corporations which, at the time they were issued, were declared by statute to be exempt from taxation.
1. Will the threatened imposition of the tax on the gross income from the appellant's sales in interstate commerce contravene article 1, § 8, of the Constitution, which reposes in Congress power to regulate interstate and foreign commerce?
The title of the Act declares that it is a revenue measure imposing a tax upon "the receipt of gross income."
"The statute here under consideration levies a tax upon all who are domiciled within the state, based upon the privilege of domicile, and transacting business, and receiving gross income within the state and measured by the amount of gross income. [Footnote 3]"
The regulations issued by the Department of the Treasury, pursuant to authority granted by the Act, treat the exaction as a gross receipts tax, [Footnote 8] and the Attorney General says in his brief that it is a privilege tax upon the receipt of gross income. We think this a correct description.
We conclude that the tax is what it purports to be -- a tax upon gross receipts from commerce. Appellant's sales to customers in other states and abroad are interstate and foreign commerce. The Act, as construed, imposes a tax of one percent on every dollar received from these sales.
the intrastate transaction. [Footnote 15] It is because the tax, forbidden as to interstate commerce, reaches indiscriminately and without apportionment the gross compensation for both interstate commerce and intrastate activities that it must fail in its entirety so far as applied to receipts from sales interstate.
We hold that, as respects the appellant's sales of its manufactured product in interstate and foreign commerce, the statute cannot constitutionally be enforced.
2. Will the imposition of the tax in respect of interest on the bonds of Indiana municipalities violate article 1, § 10, of the Constitution of the United States?
"That all bonds, notes and other evidences of indebtedness hereafter issued by the State of Indiana or by municipal corporations within the State upon which the said State or the said municipal corporations pay interest shall be exempt from taxation. [Footnote 16]"
By an Act of March 11, 1919, tax laws of the State were codified, and the Act of 1903 was incorporated without change as clause twentieth of § 5 of the codification. [Footnote 17] The section has since been amended, but the twentieth clause remained unchanged at the date of the passage of the Gross Income Tax Act of 1933.
not intended to create a contract, and did not in fact do so, but that, if they did, the covenant did not embrace interest payable on municipal obligations, but only ad valorem taxation upon them.
"Where bonds or stocks are now or may hereafter be exempted from taxation, the accrued interest on such bonds or dividends on such stocks shall be listed and assessed, unless otherwise exempted, without regard to the time when the same is to be paid."
302 U. S. 95. We are unable, therefore, to hold that the decision of the Supreme Court is plainly wrong, even upon the assumption that, in adopting the statutory exemption, the legislature intended to, and in fact did, contract with purchasers of municipal bonds.
As respects the tax demanded on appellant's gross income from its business in interstate commerce, the judgment is reversed and, as respects the tax on interest received from obligations issued by municipalities of the State, the judgment is affirmed. The cause will be remanded for further proceedings not inconsistent with this opinion.
MR. JUSTICE McREYNOLDS is of opinion that the challenged judgment should be reversed in toto.
Indiana Acts 1933, c. 50, Ind.Stat.Ann. (Burns) § 64-2601 ff.
Compare Miles v. Department of Treasury, 209 Ind. 172, 188, 199 N.E. 372, 379.
Compare Matson Navigation Co. v. State Board, 297 U. S. 441, 297 U. S. 444.
Compare American Mfg. Co. v. St. Louis, 250 U. S. 459; Oliver Iron Mining Co. v. Lord, 262 U. S. 172; Hope Natural Gas Co. v. Hall, 274 U. S. 284; Utah Power & Light Co. v. Pfost, 286 U. S. 165.
Compare Postal Telegraph Cable Co. v. Adams, 155 U. S. 688; United States Express Co. v. Minnesota, 223 U. S. 335; Pullman Co. v. Richardson, 261 U. S. 330.
Indiana Acts of 1932, c. 10, p. 17.
Article 2 of the Regulations states: "The gross income tax of 1933 is primarily and in effect a gross receipts tax. . . ." Article 16 states that the "tax shall apply to and be levied and collected upon all gross income received. . . ."
See Western Live Stock v. Bureau of Revenue, 303 U. S. 250.
Cook v. Pennsylvania, 97 U. S. 566; Fargo v. Michigan, 121 U. S. 230; Philadelphia & Southern Mail S.S. Co. v. Pennsylvania, 122 U. S. 326; Galveston, H. & S.A. Ry. Co. v. Texas, 210 U. S. 217; Meyer v. Wells Fargo & Co., 223 U. S. 298; Minnesota Rate Cases, 230 U. S. 352, 230 U. S. 400; Crew Levick Co. v. Pennsylvania, 245 U. S. 292; United States Glue Co. v. Oak Creek, 247 U. S. 321, 247 U. S. 328; New Jersey Bell Telephone Co. v. Tax Board, 280 U. S. 338, 280 U. S. 349; Fisher's Blend Station v. State Tax Commission, 297 U. S. 650, 297 U. S. 655; Puget Sound Stevedoring Co. v. Tax Commission, 302 U. S. 90; Western Live Stock v. Bureau of Revenue, 303 U. S. 250.
Crew Levick Co. v. Pennsylvania, 245 U. S. 292; Spalding & Bros. v. Edwards, 262 U. S. 66, 262 U. S. 69; Cooney v. Mountain States Tel. Co., 294 U. S. 384, 294 U. S. 393.
Compare Bass, Ratcliff & Gretton v. State Tax Comm'n, 266 U. S. 271, 266 U. S. 280; Educational Films Corp. v. Ward, 282 U. S. 379, 282 U. S. 387-388.
"Persons resident and/or domiciled in Indiana who are engaged in business, the legal situs and location of which is in states other than Indiana, and the activities of such business are carried on in states other than Indiana, will not be required to pay tax upon the gross receipts therefrom."
"That, with respect to individuals resident in Indiana and corporations incorporated under the laws of Indiana authorized to do and doing business in any other state and/or foreign country, the term 'gross income' shall not include gross receipts received from sources outside the Indiana in cases where such gross receipts are received from a trade or business situated and regularly carried on at a legal situs outside the Indiana, or from activities incident thereto. . . ."
Oliver Iron Mining Co. v. Lord, 262 U. S. 172; Hope Natural Gas Co. v. Hall, 274 U. S. 284; American Mfg. Co. v. St. Louis, supra.
Utah Power & Light Co. v. Pfost, 286 U. S. 165; Federal Compress & Warehouse Co. v. McLean, 291 U. S. 17; Chassaniol v. Greenwood, 291 U. S. 584.
Acts of Indiana 1903, c. CLXXIX p. 322.
Acts of Indiana 1919, c. 59, § 5 (twentieth), p. 203.
South Bend v. University of Notre Dame Du Lac, 69 Ind. 344, 348; Read v. Yeager, 104 Ind.195, 199, 3 N.E. 856.
MR. JUSTICE BLACK, dissenting, in part.
"a tax, measured by the amount or volume of gross income, . . . upon . . . all residents of the Indiana, and upon the gross income derived from sources within the Indiana, of all persons and . . . companies, . . . who are not residents of . . . Indiana, but are engaged in business in this state."
There is no contention that the statute was inspired by any spirit of antagonism or hostility to interstate commerce, or that it discriminates against interstate commerce in amount or method of application.
"Legislative history indicates that one of the purposes of the Gross Income Tax Law was to redistribute governmental burdens and relieve property of a tax burden which was thought to be too great."
Appellant is an Indiana corporation engaged in the business of manufacturing and selling road machinery. All of the machinery is manufactured in Indiana. Its office, only plant, and all its properties are located in Indiana. Its products are sold to ultimate purchasers in Indiana and other States by independent distributors or through sales agents of appellant. All sales must be approved by, and all payments made to appellant's office in Indiana. While appellant is thus engaged in interstate commerce, obviously a major portion of its activities takes place in Indiana.
The prevailing judgment here is that Indiana cannot constitutionally impose this tax measured by the gross income received by appellant in Indiana from that substantial part of its products (manufactured in Indiana) sold to purchasers in other States. It is held that the tax, thus applied, is prohibited by § 8, article 1 of the Federal Constitution, which provides that: "The Congress shall have Power . . . to regulate Commerce . . . among the several states. . . ."
The Indiana tax is not invalidated on the ground that it violates any law passed by Congress under this constitutional power to regulate interstate commerce.
"like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the Constitution. [Footnote 2/6] "
The question, therefore, is whether, in the absence of regulatory legislation by Congress condemning state taxes on gross receipts from interstate commerce, the commerce clause, of itself, prohibits all such state taxes as "regulations" of interstate commerce, even though general, uniform, and nondiscriminatory.
All state taxes on gross receipts from interstate commerce do not discriminate against, or impose extraordinary burdens upon, that commerce. Those that do not do no more than impose a normal burden of government upon that commerce. On the other hand, some state gross income taxes may be designed or applied so as seriously to impede the freedom of interstate commerce. If interstate commerce should be so impeded, Congress might, under its commerce power, find it "necessary and proper" to condemn all state taxes on gross receipts in order to "carry into execution" its granted power to regulate and protect interstate commerce. [Footnote 2/7] We are not here confronted with such a congressional enactment. Should the Indiana law, and all state taxes on gross receipts from interstate commerce, as such, in the absence of such enactment, be condemned as a regulation of interstate commerce in the constitutional sense?
regulation of it in a constitutional sense, nice distinctions are to be expected."
"Recognizing that not every local law that affects commerce is a regulation of it in a constitutional sense, this Court has held that local taxes may be laid on property used in the commerce; that its value for taxation may include the augmentation attributable to the commerce in which it is employed; and, finally, that the equivalent of that value may be computed by a measure related to gross receipts when a tax of the latter is substituted for a tax of the former. [Footnote 2/8] "
"The tax in the present case is laid upon the gross receipts for transportation as such. Those receipts are followed, and caused to be accounted for by the company dollar for dollar. It is those specific receipts, or the amount thereof (which is the same thing) for which the company is called upon to pay the tax. They are taxed not only because they are money or its value, but because they were received for transportation. No doubt a ship owner, like any other citizen, may be personally taxed for the amount of his property or estate, without regard to the source from which it was derived, whether from commerce or banking or any other employment. But that is an entirely different thing from laying a special tax upon his receipts in a particular employment. . . ."
"It [the tax under consideration] is not a general tax on the incomes of all the inhabitants of the state, but a special tax on transportation companies. Conceding, however, that an income tax may be imposed on certain classes of the community distinguished by the character of their occupations, this is not an income tax on the class to which it refers, but a tax on their receipts for transportation. . . . It is clearly not such, but a tax on transportation only."
tax applied to the particular business of transportation. Consequently, the Court did not decide whether a state could constitutionally impose a general gross income tax (such as Indiana's) to an interstate business (such as appellant's) not involving transportation. Crew Levick Co. v. Pennsylvania, 245 U. S. 292, December, 1917, and United States Glue Co. v. Oak Creek, 247 U. S. 321, June, 1918, marked the all-inclusive condemnation of state taxes on gross receipts from interstate commerce, as a class -- without regard to discrimination or generality.
"whether a state tax imposed upon the business of selling goods in foreign commerce, insofar as it is measured by the gross receipts from merchandise shipped to foreign countries, is in effect a regulation of foreign commerce or an impost upon exports within the meaning of the pertinent clauses of the Federal Constitution."
as to impede or discourage the conduct of the commerce. A tax upon the net profits has not the same deterrent effect, since it does not arise at all unless a gain is shown over and above expenses and losses, and the tax cannot be heavy unless the profits are large. Such a tax, when imposed upon net incomes from whatever source arising, is but a method of distributing the cost of government, like a tax upon property, or upon franchises treated as property, and if there be no discrimination against interstate commerce, either in the admeasurement of the tax or in the means adopted for enforcing it, it constitutes one of the ordinary and general burdens of government, from which persons and corporations otherwise subject to the jurisdiction of the states are not exempted by the Federal Constitution because they happen to be engaged in commerce among the states."
A tax upon property used in interstate commerce, even with an augmented value due to such use, is not a regulation of commerce, is valid, and is within the powers of the state. [Footnote 2/10] Yet, the constitutional validity of a tax on property does not turn upon whether the property is profitable to its owner. Gross receipts from interstate commerce, as from all sources, vary, and will probably rise and fall with property values. Therefore, the total amount exacted from interstate commerce under a gross receipts tax can fluctuate just as the total paid under a property tax. Since property and corporate franchises used in interstate commerce can be constitutionally taxed by States whether profitable or unprofitable, it seems difficult to justify a constitutional test for state income taxes based upon existence or absence of profit.
It has been suggested, however, that Indiana might by law apportion to itself that part of a tax on gross receipts from interstate commerce to which it is entitled. Such an apportionment by Indiana would, in effect, fix the portion of such a tax for the other forty-seven States which appellant's interstate business might touch. Indiana has no authority to determine what, how, when, or to what extent other States may tax within their respective boundaries. If such power of apportionment or allocation exists at all, it must be true that the only repository of a power touching complex and national aspects of interstate commerce is not Indiana, not the Judiciary, but the National Congress.
Interstate commerce constitutes a large part of the business of the nation. Until Congress, in the exercise of its plenary power over interstate commerce, fixes a different policy, it would appear desirable that the States should remain free to adopt tax systems imposing uniform and nondiscriminatory taxes upon interstate and intrastate business alike.
create direct, extraordinary, and unjust burdens upon interstate commerce, and that this possibility requires that all state taxes on gross interstate commerce receipts be condemned as within the prohibition of the Commerce Clause. Congress was undoubtedly given the exclusive power to regulate commerce in order that undue, unjust, and unfair burdens might not be imposed upon such commerce. [Footnote 2/15] It was not intended, however, that interstate commerce should enjoy a preferred status over intrastate business, or to remove those engaged in interstate commerce from the ordinary and usual burdens of the government which affords such commerce protection. [Footnote 2/16] A court may act to protect a litigant from unfair and unjust burdens upon the litigant's interstate business. Yet it would seem that only Congress has the power to formulate rules, regulations, and laws to protect interstate commerce from merely possible future unfair burdens. Here, the record does not indicate any charge or proof of an existing extraordinary, unfair, or multiple tax burden on appellant. The tax burden from which appellant is here exempted is one which the local taxpayers of Indiana must bear. As a result, an unjust and unfair burden is actually imposed upon intrastate business because of an apprehension of a possible future injury to interstate commerce. The control of future conduct, the prevention of future injuries, and the formulation of regulatory rules in the fields of commerce and taxation all present legislative problems.
such a tax can be fairly and uniformly applied to both interstate and intrastate commerce, and in effect actually denies a State the privilege of using such a tax unless willing to impose unjust and unequal burdens upon its own citizens engaged in intrastate commerce.
business under the protection of their respective States. Under these circumstances, nondiscriminatory sales taxes in those States upon the distributors create no unfair multiplication of taxes, and would not be unconstitutional. [Footnote 2/23] The manufacturer who receives protection under the laws of Indiana and the distributors who receive protection under the laws of the States in which products are sold should be subject to uniform, nondiscriminatory taxes imposed by the sovereign power of the States in which both do business under State protection.
of vesting in Congress the right to regulate commerce with foreign nations and among the States was to insure uniformity of regulation against conflicting and discriminating State legislation. [Footnote 2/25]"
". . . is also, in addition to the restraint which those provisions [the Commerce Clause] impose by their own force on the State, the unquestioned power of Congress, under the authority to regulate commerce among the States, to interpose, by the exercise of this power, in such a manner as to prevent the State from any oppressive interference with the free interchange of commodities by the citizens of one State with those of another. [Footnote 2/26]"
in interstate commerce. Many arguments which we might believe to be sound can be advanced against the legislative policy of a gross receipts tax. These objections, however, are not the criterion of its constitutionality. With the wisdom of such fiscal policy of a State we are not concerned. [Footnote 2/27] The interests of interstate commerce will best be fostered, preserved, and protected, in the absence of direct regulation by the Congress, by leaving those engaged in it in the various States subject to the ordinary and nondiscriminatory taxes of the States from which they receive governmental protection. For these reasons I believe that the entire judgment of the court below should be affirmed.
"the gross receipts of the taxpayer received as compensation for personal services, and the gross receipts of the taxpayer derived from trades, businesses or commerce, and the gross receipts proceeding or accruing from the sale of property, tangible or intangible, real or personal, or service, or any or all of the foregoing, and all receipts by reason of the investment of capital, including interest, discount, rentals, royalties, fees, commissions or other emoluments, however designated. . . ."
Section 1(f), c., Indiana Acts 1933.
Acts of Indiana 1933, p. 1085 (Act approved March 9, 1933). The Gross Income Tax Law was approved February 27, 1933, Acts 1933, Indiana, c. 50, 78th Sess., p. 388.
"The obtaining of funds to replenish impoverished treasuries was the principal goal of the state legislatures in 1933. Relief to property also was a much sought-after end. Property relief was accorded through reduced appropriations, lowered tax limits, and collection leniency. The drive for new revenue resulted in the adoption of gross income or gross sales taxes in fifteen states. . . ."
"The development of the gross income or gross sales taxes is probably the outstanding tax news of the year."
The Tax Magazine, Vol. 12, February, 1934, page 63, "State Tax Legislation, 1933," Raymond E. Manning. Id., see p. 365, "Chart of State Sales, Gross Income, and License Taxes."
"Indiana's fiscal strain was not to be found in the state government until the $1.50 property tax limitation adopted by the legislature in 1932 cut almost in half the state rate on property, which had been furnishing not far from one-fourth of total state revenues (including motor vehicle taxes). Coupled with a drastic shrinkage in assessed valuations and a demand for increased state aid to localities, this made it imperative for the state government to seek new revenue sources even though the other tax yields had been holding up fairly well through 1931-32. . . ."
"It is evident that the local tax situation was the chief factor bringing about the sweeping change in the state's own system. For one not intimately acquainted with conditions in Indiana, it is not easy to locate from the available data the precise sources of trouble, but, whatever they may have been, the tax limitation law crystalized them, and the result is a threatened breakdown of governmental finance in many localities unless the state succeeds in carrying out its greatly increased program of aid to localities through highway and school moneys. . . ."
"The campaign in support of the [gross receipts] tax . . . was led by the Indiana Farm Bureau, which secured the signatures of a large number of farmers on a petition urging the passage of a sales tax. On February 12, a meeting of farmers and other property owners was held, and several thousand marched to the capitol. For several years, the bureau had been urging the reduction of property taxes, and, partly as a result of its efforts, the $1.50 law was passed in the special session of 1932, limiting the state levy to 15 cents and all local levies to $1.35 per $100 of assessed value. . . ."
"The Indianapolis Real Estate Board, in addition to cooperating with the Indiana Farm Bureau, worked with the Indiana Real Estate Association and the Federation of Community Civic Clubs. A meeting of all these organizations, held on February 10, 1933, passed resolutions favoring the sales tax."
"The Sales Tax in the American States," Haig and Shoup, (1934, Columbia University Press), 238, 241, 242.
Cf. 22 U. S. Ogden, 9 Wheat. 1, 22 U. S. 196-197. Since Congress has not acted upon this subject, the present case does not involve a manifestation by Congress of its paramount and exclusive authority to regulate an aspect of interstate commerce with which the states may deal (because of its local nature) until Congress acts. Cf. New York Central & H. R. Co. v. County of Hudson, 227 U. S. 248.
Cf. Houston, E. & W. T. Ry. Co. v. United States (The Shreveport Case), 234 U. S. 342, 234 U. S. 350 et seq.
". . . the bare fact that one is carrying on interstate commerce does not relieve him from many forms of state taxation which add to the cost of his business. He is subject to a property tax on the instruments employed in the commerce . . . , and if the property devoted to interstate transportation is used both within and without the state, a tax fairly apportioned to its use within the state will be sustained. . . . Net earnings from interstate commerce are subject to income tax . . . , and, if the commerce is carried on by a corporation, a franchise tax may be imposed, measured by the net income from business done within the state, including such portion of the income derived from interstate commerce as may be justly attributable to business done within the state by a fair method of apportionment. . . . All of these taxes in one way or another add to the expense of carrying on interstate commerce, and in that sense burden it; but they are not for that reason prohibited."
Western Live Stock v. Bureau of Revenue, 303 U. S. 250.
". . . it is not everything that affects commerce that amounts to a regulation of it, within the meaning of the Constitution. . . ."
". . . we think it may safely be laid down that the gross receipts of railroad or canal companies, after they have reached the treasury of the carriers, though they may have been derived in part from transportation of freight between States, have become subject to legitimate taxation. It is not denied that net earnings of such corporations are taxable by State authority without any inquiry after their sources, and it is difficult to state any well founded distinction between the lawfulness of a tax upon them and that of a tax upon gross receipts, or between the effects the work upon commerce, except perhaps in degree."
State Tax on Railway Gross Receipts, 15 Wall. 284, 82 U. S. 293, 82 U. S. 296.
"The tax [ 82 U. S. 15 Wall. 284] on gross receipts was held not to be repugnant to the Constitution because imposed on the railroad companies in the nature of a general income tax, and incapable of being transferred as a burden upon the property carried from one State to another. . . ."
". . . It is as important to leave the rightful powers of the State in respect to taxation unimpaired as to maintain the powers of the Federal government in their integrity."
"In the second of the cases recently decided, the whole Court agreed that a tax on business carried on within the State and without discrimination between its citizens and the citizens of other States, might be constitutionally imposed and collected. . . ."
"It is to be observed that Congress has never undertaken to exercise this power in any manner inconsistent with the municipal ordinance under consideration, and there are several cases in which the Court has asserted the right of the State to legislate, in the absence of legislation by Congress, upon subjects over which the Constitution has clothed that body with legislative authority."
Osborne v. Mobile, 16 Wall. 479, 83 U. S. 481-482.
Cf. Cudahy Packing Company v. Minnesota, 246 U. S. 450, 246 U. S. 453-454; United States Express Co. v. Minnesota, 223 U. S. 335, 223 U. S. 345, 223 U. S. 347.
Dayton-Goose Creek Ry. Co. v. United States, 263 U. S. 456, 263 U. S. 478.
State Railroad Tax Cases, 92 U. S. 575, 92 U. S. 606; cf. Ohio Tax Cases, 232 U. S. 576, 232 U. S. 590.
"But profits themselves are not susceptible of ascertainment with certainty and precision except as the result of inquiries too minute to be practicable. The returns of the taxpayer call for an exercise of judgment, as well as for a transcript of the figures on his books. They are subject to possible inaccuracies almost without number. Salaries of superintendence, figuring as expenses, may have been swollen inordinately; appraisals of plant, of merchandise, of patents, of what not, may be erroneous or even fraudulent. In the words of a student of the problem,"
"statements of profits are affected both by accounting methods and by the optimistic or pessimistic light in which the future is viewed at the time when the accounts are made up."
". . . These difficulties and dangers bear witness to the misfortune of forcing methods of taxation within a Procrustean formula. If the state discerns in business operations uniformities and averages that seem to point the way to a system easier to administer than one based upon a report of profits, and yet likely in the long run to work out approximate equality, it ought not to be denied the power to frame its laws accordingly."
Stewart Dry Goods Co. v. Lewis, 294 U. S. 550, 294 U. S. 576-577.
Philadelphia & Sou. S.S. Co. v. Pennsylvania, 122 U. S. 326, 122 U. S. 346.
See Woodruff v. Parham, 8 Wall. 123, 75 U. S. 137.
American Mfg. Co. v. St. Louis, 250 U. S. 459.
Apparently, if the Indiana tax had been "on the privilege of manufacturing, measured by the total gross receipts from sales of the manufactured goods, both intrastate and interstate," instead of designated as "a tax, measured by the amount or volume of gross income" received from manufacturing and sales interstate and intrastate, the tax would be held valid. See Western Live Stock v. Bureau of Revenue, 303 U. S. 250.
Hump Hairpin Co. v. Emmerson, 258 U. S. 290, 258 U. S. 294; Maine v. Grand Trunk Railway Co., 142 U. S. 217; Wisconsin & Michigan Ry. Co. v. Powers, 191 U. S. 379; United States Express Co. v. Minnesota, 223 U. S. 335, 223 U. S. 343.
Hump Hairpin Co. v. Emmerson, supra at 258 U. S. 295.
"That the receipt of income by a resident of the territory of a taxing sovereignty is a taxable event is universally recognized. Domicil itself affords a basis for such taxation. Enjoyment of the privileges of residence in the state and the attendant right to invoke the protection of its laws are inseparable from responsibility for sharing the costs of government. 'Taxes are what we pay for civilized society.' . . . Neither the privilege nor the burden is affected by the character of the source from which the income is derived. For that reason, income is not necessarily clothed with the tax immunity enjoyed by its source. . . . It may tax net income from operations in interstate commerce, although a tax on the commerce is forbidden, United States Glue Co. v. Oak Creek, 247 U. S. 321; Shaffer v. Carter, . . . [252 U.S. 37, 252 U. S. 50]."
New York ex rel. Cohn v. Graves, 300 U. S. 308, 300 U. S. 312-313. The dissent called attention to the fact that not only was the New York taxpayer subject to an income tax in that State by the decision, but that "New Jersey, in addition to tax on the land measured by its value, may lay a tax upon the income received by the owner for its use." Id., p. 300 U. S. 318.
"A state tax upon merchandise brought in from another state or upon its sales, whether in original packages or not, after it has reached its destination and is in a state of rest, is lawful only when the tax is not discriminating in its incidence against the merchandise because of its origin in another state."
"Sonneborn Bros. v. Cureton [262 U.S. 506] at 262 U. S. 516. . . . Neither the power to tax nor the police power may be used by the state of destination with the aim and effect of establishing an economic barrier against competition with the products of another state or the labor of its residents. . . . They are thus hostile in conception, as well as burdensome in result. The form of the packages in such circumstances is immaterial, whether they are original or broken."
Sonneborn Bros. v. Cureton, 262 U. S. 506.
See Philadelphia & Sou. S.S. Co. v. Pennsylvania, supra.
County of Mobile v. Kimball, 102 U. S. 691, 102 U. S. 697.
Woodruff v. Parham, 8 Wall. 123, 75 U. S. 140.
Cf. Purity Extract Co. v. Lynch, 226 U. S. 192.

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