Case Name: Tri-State Transit Co. of Louisiana v. Stone, Chairman State Tax Commission
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1943-12-20
Citations: 196 Miss. 23
Docket Number: No. 35459
Parties: Tri-State Transit Co. of Louisiana v. Stone, Chairman State Tax Commission.
Judges: 
Reporter: Mississippi Reports
Volume: 196
Pages: 23–49

Head Matter:
Tri-State Transit Co. of Louisiana v. Stone, Chairman State Tax Commission.
(In Banc.
Dec. 20, 1943.
Suggestion of Error Sustained and Decree Affirmed Feb. 14, 1944.)
[16 So. (2d) 35, 16 So. (2d) 782.
No. 35459.]
Stevens & Stevens, of Jackson, for appellant.
Greek L. Rice, Attorney-General, by Jefferson Davis, Assistant Attorney-General, for appellees.
Stevens & Stevens, of Jackson, for appellant, on suggestion of error.
Greek L. Rice, Attorney-General, by W. B. Fontaine, Assistant Attorney General, for appellee, on suggestion of error.
J. H. Sumrall, of Jackson, for appellee, on suggestion of error.
Argued orally by J. M. Stevens, Sr., for appellant, and by Jefferson Davis, for appellee.

Opinion:
Alexander, J.,
delivered the opinion of the court originally.
Appellant filed its petition to revise its income tax return for the year 1941 so as to claim deduction for excess profits taxes paid to the Federal Government during that period. The petition was denied by the Commissioner and upon appeal to the State Tax Commission the former ruling was upheld. This action was reaffirmed upon appeal to the Chancery Court. Sections 29, 30, Chapter 120, Laws of 1934. Our attention has been focused upon Section 8 of this Act which is as follows: "In computing the net income there shall be allowed as deductions: (1) . . . (2) . . . (3) Taxes, other than income taxes imposed by any .authority, paid or accrued within the taxable year. ' ' At the time the Act was passed, there was no excess profits tax in force.
In the order of the Commissioner denying the right to amend the return and allow the deduction, his action was sought to be justified by the holding that such taxes were "Taxes measured by income." Whether the use of this language was an instinctive recognition of a necessity to broaden the connotation of income taxes or was consciously adroit, we need not ponder. It is apparent that the decision, by its own construction, assumed a premise which, if sound, would furnish a staunch basis for its conclusions.
Had our statute in fact allowed as deductions all taxes except those "measured by income," it would have excluded by this phrase alone not only income taxes properly so called but also such excise taxes as estate taxes, gift taxes, sales taxes and all those privilege taxes which are so admeasured. Among the latter are those upon contractors, cotton compresses, ferries, insurance companies, railroads, certain public utilities, and tobacco. Had it excepted all "excise taxes," it would have been similarly broad, yet it is extremely doubtful if even such designation would have included "income taxes."
That a tax is computed upon income does not constitute it an income tax any more than the fact that an inheritance tax computed upon property makes of it a property tax. See Enochs v. State, 133' Miss. 107, 97 So. 534. Indeed the legislature has appropriated the name "income tax" as designating a well understood excision from net income. They have preempted the phrase as a technical term and given it a popular connotation. It is differentiated from other forms of direct and excise taxes by its purpose and its permanence, by the occasion for its imposition, by its incidents and its incidence, and particularly by its name. It is not sufficient that an excess or war profits tax is likewise measured by income. It is not computed alone on the factor of the current year's income. It had a distinct purpose and occasion; its incidence is upon corporations alone; it is a war measure with a limited life expectancy. Income taxes, properly so called, have been enacted since the Civil War. Excess profits taxes were first imposed in 1917, and later repealed. The present enactment was made in 1942. It has a distinctive designation — one which, is invariably used in federal statutes to distinguish it from what aré known as income.taxes. The federal statute does not confound them but lists its exceptions as income taxes,' excess profits taxes, estate taxes, inheritance taxes, succession taxes and gift taxes. To the state's challenge that, "if an excess profits tax is not an income tax what is it?" counsel make the apt and laconic reply that it is an excess profits tax. While it is true that a corporation is never liable for an excess profits tax unless it is liable for an income tax, the reverse does not obtain. A return for income tax does not reveal liability for excess profits tax, nor will the filing of a return for the former set in motion the statute of limitation against liability for the latter. Beam v. Hamilton, 6 Cir., 289 F. 9; Rockland & Rockport Lime Corporation v. Ham (D. C.), 38 F. (2d) 239; United States v. Updike (D. C.), 1 F. (2d) 550.
In Curley v. Moore, 137 Misc. 312, 244 N. Y. S. 580, cited by appellee, a private agreement to apportion income taxes was held to have intended to include excess profits taxes. In addition to the circumstances that a private contract was being construed, the court called attention to the fact that at the time of the contract an excess profits tax was in force. The case is not helpful'.
The excess profits tax ' has been designated as one imposed "in addition to other taxes." Chapman v. United States, 64 Ct. Cl. 247. It has been described as a "separate, distinct, and then novel source of revenue." Beam v. Hamilton, supra [289 F. 12], wherein it was pointed out that a "distinction between ordinary income taxes and excess profits taxes was clearly recognized." In La Belle Iron Works v. United States, 256 U. S. 377, 41 S. Ct. 528, 65 L. Ed. 998, they are referred to as "special taxation." This tax was in its essentials an emergeiicy measure primarily to conscript for war purposes the excess profits of corporations engaged in supplying the tools of war. In no unreal sense, it fixes a ceiling upon unusual war profits. Let it be assumed that the proposal to limit individual income to $25,000' had become statutory. Could it be supposed that a 'taxpayer whose net salary was $50',000 would be liable for an income tax computed on the latter figure! After a cessation of hostilities, the excess profits tax will unquestionably by its terms and purpose be discontinued. But the income tax as a permanent source of governmental revenue will undoubtedly remain. Income taxes fall upon individuals, associations, partnerships, corporations, estates and trusts. If the earnings of corporations do not exceed a certain previously ascertained figure, they are not liable for an excess profits tax. They regularly pay a tax upon their income, while under the latter tax they in a rather literal sense pay the income.
It would seem as logical to identify all estate taxes with inheritance taxes. Indeed our statute does so, but by express terms. Yet even they are not necessarily identical. Turner v. Cole, 118 N. J. Eq. 497, 179 A. 113; 28 Am. Jur., p. 10. Nomenclature cannot be ignored when terms have been given a technical meaning by popular usage.
Diversities of definition are apt to follow when the tax is analyzed solely by legalistic tests. For example, in Washington Mutual Savings Bank v. Chase, 157 Wash. 351, 290 P. 697, 71 A. L. R. 232, a tax " according to or measured by" the net income of corporations, although denominated by the statute a privilege tax, was held to be in effect an income tax. On the other hand, in Evans v. McCabe, 164 Tenn. 672, 52 S. W. (2d) 159, 617, a tax calculated upon a percentage basis of the income derived from stocks and bonds and designated in the statute as an income tax was held not to be an income tax. • It should not be questioned that under our statute the tax in the former case, although construed as an income tax, would be an allowable deduction, while in the latter case the tax, although held not to be an income tax, would not be deductible. In both cases the courts in making detours around constitutional barriers collided with popular-no tions. As an example of restricted application, income from estates has been held not liable for an " income tax." Gavit v. Irwin (D. C.), 275 F. 643, 648. Under the Act of Oct. 3, 1913, 38 St. L. 166, c. 16.
Nor may we risk violence to legislative intent by .defining alike all terms which fall within general categories. Under the all inclusive word "taxes," there may be found the genus excise taxes under which there are several species, for example, privilege, income, estate and gift or social security taxes. Estate or inheritance taxes have been held to be taxes upon a privilege. Enochs v. State, 133 Miss. 107, 97 So. 534. Yet they are not mentioned in our privilege tax code. Legacies are gifts but an 'estate tax'' is not a 'gift tax. ' ' All capitation taxes are poll taxes, yet a "poll tax," as is here generally understood and technically so referred to, means a particular form of tax for a special purpose. Used loosely, a municipal street tax is a poll tax. Indeed, in City of Faribault v. Misener, 20 Minn. 396, a commutable highway or road tax is so designated. Yet, in our local glossary of terms, the two have achieved a distinct import.
The two forms of taxation here involved are set forth in separate chapters, always separately referred to and are administered separately, each pursuant to distinct regulations. By Section 227 of the Act of October 21, 1942, 26 U. S. C. A., Int. Rev. Code, sec. 734, Section 734 of the Internal Revenue Code, as amended, was amended so as, for certain purposes, to include within the definition of "income taxes" all excess profit taxes. (See 56 Statutes at Large, p. 921). This amendment first appeared in the Act of March 7, 1941, sec. 11, 55 Stat. 27. While such a provision, if included in our statute, would have settled the matter, it was not done, and it is significant that this declaration was deemed necessary by the Congress for its particular purposes. Nor may this recognized necessity inure to the appellee's advantage since this provision was not only enacted long after our statute but also in positive recognition of its non-inclusion in the absence of such arbitrary enactment.
However, the point need not be belabored. The foregoing discussion has been extended merely to indicate, typical bases of differentiation which have been generally recognized. While we have sought to rivet upon the impartial mind the conviction that the original, technical and popular implications of the tern* coincide, we should not and do not ignore relevant conventional aids to construction. The legislature did not in terms exclude excess profits from the allowable deduction of all "taxes." It could not have had in mind that "income taxes" then included "excess profits taxes" for the simple reason that the latter did not then exist. The point is narrowed then to whether they intended to include all future taxes computed upon income. Properly analyzed, the statute provides in substance that all taxes except income taxes may be deducted in the return. No matter what sort of taxes have been paid, they are deductible unless they have been paid as income taxes. The language used must be given its usual and common signification. Town of Union v. Ziller, 151 Miss. 467, 118 So. 293, 60 A. L. R. 1155; Warburton-Beacham Supply Company v. City of Jackson, 151 Miss. 503, 118 So. 606; Chattanooga Sewer Pipe Works v. Dumler, 153 Miss. 276, 120 So. 450, 62 A. L. R. 999; Green v. Weller, 32 Miss. 650; In re Park (D. C.), 8 F. (2d) 544; Reinecke v. Smith, 289 U. S. 172, 53 S. Ct. 570, 77 L. Ed, 1109. In Duggan v. Bay Street Railway Company, 230 Mass. 370, 374, 119 N. E. 757, 758, L. R. A. 1918E, 680, the court said: "It is a principle of general scope that a statute must be interpreted according to the intent of the makers, to be ascertained from its several parts and all its words construed by the ordinary and approved usage of the language, unless they have acquired a peculiar meaning in the law." .Certainly when the words have been given "a peculiar meaning in the law" which is the same as their "approved usage," the case is yet stronger. Sec tion 1394, Code 1930, provides that "All words and phrases contained in the statute are used according to their common and ordinary acceptation and meaning . . . " While this section provides also that technical words shall be construed in their technical sense, it is not found to have a double thrust because, as stated, the two meanings are the same.
Insofar as a revenue act operates to deprive the citizen of property, it should be construed strictly. Black, Interpretation of Law, p. 515. Provisos or exceptions which take a case' out of a general rule should be so construed as not to include cases not falling fairly within its terms, Id., p. 435. Where there is an enumeration of exceptions, they are to be strictly construed so as to exclude all others. Crawford, Statutory Construction (1940), pp. 610, 611. Let it be assumed that the legislature had used the term ' ' excess profits taxes, ' ' it could not be reasonably supposed that this would operate to include surtaxes, although both are superimposed upon normal income bases. Our court has held that sales taxes are taxes on income. Notgrass Drug Company v. State, 175 Miss. 358, 165 So. 884; Compress of Union v. Stone, 188 Miss. 49, 193 So. 329. It would not, however, commend itself to even a prejudiced mind that such taxes are comprised within the popular and accepted meaning of "income taxes."
In Clement v. Stone, 195 Miss. 774, 15 So. (2d) 517, decided by the court November 8, 1943, we were construing a tax of the State of Tennessee designated an income tax. It was in a literal sense such a tax since it dealt solely with income from stocks and bonds. It is important, however, that we were at the same time construing the same term as used in our statute. The question was whether the State of Tennessee had that which we call an income tax, as regards the application of our reciprocity clause. We held with the Tax Commission's view that the foreign statute was not an income tax as comprehended by our income tax law. The circumstance that it was computed upon income was not found sufficient to meet our definition. It is not an unreasonable assumption that if that state had only an excess profits tax on corporations, the same result would have been reached.
We have not of course considered the feasibility nor advisability of thus enlarging the ordinary meaning by legislative action. Nor have we tested their language by lexicon to see what it could mean but have sought to find what they did mean. Our views are summarized in the conclusion that our statute did not by express terms nor implication include excess profits taxes within the terms "income'taxes," but that it then meant that there may be deducted all ' ' taxes ' ' except what was then and had been popularly and legally known and designated as income taxes to which both individuals and corporations are subject.
As stated by Justice Holmes in New York Trust Company v. Eisner, 256 U. S. 345, 41 S. Ct. 506, 507, 65 L. Ed. 963, 983, 16 A. L. R. 660, when discussing whether an estate tax was direct or indirect, "That matter also is disposed of by Knowlton v. Moore [178 U. S. 41, 20 S. Ct. 747, 44 L. Ed. 969] not by an attempt to make some scientific distinction, which would be at least difficult, but on an interpretation of language by its traditional use. . . . Upon this point a page of history is worth a volume of logic. ' '
The deduction ought to have been allowed.
Reversed and remanded.