Source: http://www.chanrobles.com/usa/us_supremecourt/309/560/case.php
Timestamp: 2017-10-23 04:28:22
Document Index: 554419087

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

Section 16 of the Oklahoma Income Tax Law of 1935, S.L.1935, c. 66, art. 6, [Footnote 1] 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 chanroblesvirtualawlibrary
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. [Footnote 2] 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. chanroblesvirtualawlibrary
R.S. § 5219, 12 U.S.C. § 548, copied in the margin, [Footnote 3] 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. The plain meaning of the amendment is confirmed by its legislative history showing beyond doubt that Congress intended to authorize a franchise chanroblesvirtualawlibrary
The power of Congress to authorize a state to impose a tax on the franchise of a national banking association cannot now be doubted. 70 U. S. 389; Helvering v. Gerhardt, 304 U. S. 405, 304 U. S. 411-412n; Federal Land Bank v. Priddy, 295 U. S. 229, 295 U. S. 234-235. Any immunity attaching to the franchise by virtue of R.S. § 5219 as it read prior to the 1926 amendment, compare Pittman v. Home Owners' Corp., 308 U. S. 21, could be withdrawn by Congress and the franchise subjected to state taxing power, just as national bank shares were so subjected by the Act of June 3, 1864. Van Allen v. Assessors, 3 Wall. 573. See Des Moines National Bank v. Fairweather, 263 U. S. 103; Peoples National Bank v. Board of Equalization,@ 260 U.S. 702.
The power of a state to levy a tax on a legitimate subject, such as a franchise, measured by net assets or net income including tax exempt federal instrumentalities or their income, is likewise well settled. 73 U. S. 147, 220 U. S. 165, and followed in Educational Films Corp. v. Ward, 282 U. S. 379. Compare Pacific Co. v. Johnson,@ 285 U. S. 480, 285 U. S. 490. The tax immunity conferred on the securities owned by appellant has not been shown to be any greater in extent than that conferred on the federal securities included in the measure of the taxes sustained in the cited cases.
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; New York ex rel. Amoskeag Savings Bank v. Purdy, 231 U. S. 373, 375 [argument of counsel -- omitted]; Covington v. First National Bank, 198 U. S. 100; Lionberger v. Rowse, 9 Wall. 468. 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. New York ex rel. Amoskeag Savings Bank v. Purdy, 231 U. S. 373, 375 [argument of counsel -- omitted]; Covington v. First National Bank, 198 U. S. 100. [Footnote 6] We think the same purpose to prevent actual discrimination, but to allow the states considerable freedom in working out an equitable tax system chanroblesvirtualawlibrary
This brief survey suffices to show that, considering all the taxes imposed upon business and mercantile corporations doing business in the state, the scheme of taxation adopted by Oklahoma does not discriminate against national banking associations. Discrimination is not shown merely because a few individual corporations, out of a class of several thousand which ordinarily bear the same or a heavier tax burden, may sustain a lighter tax than that imposed on national banking associations. Compare New York ex rel. Amoskeag Savings Bank v. Purdy, 231 U. S. 373, at 231 U. S. 393; Lionberger v. Rowse, 9 Wall. 468. Judged in the light of the established policy of Congress with respect to this subject, the 1935 Oklahoma taxing statute cannot be held to violate the provisions of R.S. § 5219. chanroblesvirtualawlibrary