Source: https://www.law.cornell.edu/supremecourt/text/309/560
Timestamp: 2015-03-01 12:43:06
Document Index: 433490572

Matched Legal Cases: ['art. 6', '§ 887', '§ 888', '§ 16', '§ 5219', '§ 548', '§ 5219', '§ 548', '§ 16', '§ 5219', '§ 548', '§ 5219', '§ 5219']

TRADESMENS NAT. BANK OF OLKAHOMA CITY v. OKLAHOMA TAX COMMISSION. | LII / Legal Information Institute
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309 U.S. 560 (60 S.Ct. 688, 84 L.Ed. 947)
TRADESMENS NAT. BANK OF OLKAHOMA CITY v. OKLAHOMA TAX COMMISSION.
[HTML] Mr. E. A. Walker, of Oklahoma City, Okl., for appellant.
Section 16 of the Oklahoma Income Tax Law of 1935, S.L.1935, c. 66, art. 6, 68 Okl.St.Ann. § 887,
lays a tax upon every national banking association located or doing business within the state 'according to, or measured by, its net income' at the rate of six per centum. Section 17, 68 Okl.St.Ann. § 888, provides for a similar tax upon state banks and Morris Plan Companies.
The appellee Oklahoma Tax Commission, in assessing appellant's tax for the year 1936 under § 16, included in gross income the dividends received by appellant on stock owned by it in a federal reserve bank and the interest received on bonds and notes issued pursuant to acts of Congress declaring the income from such securities tax exempt.
The present suit was brought by appellant to recover that portion of the tax, paid under protest, which resulted from including such dividends and interest in the computation.
R.S. § 5219, 12 U.S.C. 548, 12 U.S.C.A. § 548, copied in the margin,
authorizes four alternative methods whereby a state may impose a tax on national banking associations located within its limits. Method numbered (4) provides for a tax on such associations 'according to, or measured by' 'the entire net income received from all sources' subject only to certain restrictions as to the rate. This method was added to the three previously authorized under R.S. § 5219 by an amendment of March 25, 1926, c. 88, 44 Stat. 223, 12 U.S.C.A. § 548. The plain meaning of the amendment is confirmed by its legislative history showing beyond doubt that Congress intended to authorize a franchise tax measured by net income including interest on tax-immune federal securities.
Oklahoma in the 1935 act expressly followed and adopted the method thus authorized in the amendment. See First National Bank v. Oklahoma Tax Commission, 185 Okl. 98, 90 P.2d 438. Subsection (b) of § 16 expressly declares that the state thereby adopts method numbered (4) authorized by R.S. § 5219, 12 U.S.C. 548, 12 U.S.C.A. § 548.
Appellant finally contends that the tax here in question violates the restriction in R.S. § 5219 that 'the rate shall not be higher than * * * the highest of the rates assessed * * * upon mercantile, manufacturing, and business corporations doing business' within the state.
A consideration of the course of judicial decision on R.S. § 5219 and its predecessors can leave no doubt that the various restrictions it places on the permitted methods of taxation are designed to prohibit only those systems of state taxation which discriminate in practical operation against national banking associations or their shareholders as a class. Compare First National Bank v. Hartford, 273 U.S. 548, 47 S.Ct. 462, 71 L.Ed. 767, 59 A.L.R. 1; People of State of New York ex rel. Amoskeag Savings Bank v. Purdy, 231 U.S. 373, 375, 34 S.Ct. 114, 58 L.Ed. 274; Covington v. First National Bank, 198 U.S. 100, 25 S.Ct. 562, 49 L.Ed. 963; Lionberger v. Rowse, 9 Wall. 468, 19 L.Ed. 721. Thus it is not a valid objection to a tax on national bank shares that other moneyed capital in the state or shares of state banks are taxed at a different rate or assessed by a different method unless it appears that the difference in treatment results in fact in a discrimination unfavorable to the holders of the shares of national banks. People of State of New York ex rel. Amoskeag Savings Bank v. Purdy, 231 U.S. 373, 375, 34 S.Ct. 114, 58 L.Ed. 274; Covington v. First National Bank, 198 U.S. 100, 25 S.Ct. 562, 49 L.Ed. 963.
We think the same purpose to prevent actual discrimination but to allow the states considerable freedom in working out an equitable tax system is discernable in the particular restriction upon which appellant relies.
67 Cong.Rec. 57605762, 58225823, 60826089.