Case Name: William M. Culliton et al., Respondents, v. Samuel H. Chase et al., Appellants; McKale's, Inc. et al., Respondents, v. Samuel H. Chase et al., Appellants
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1933-09-08
Citations: 174 Wash. 363
Docket Number: No. 24491
Parties: William M. Culliton et al., Respondents, v. Samuel H. Chase et al., Appellants. McKale's, Inc. et al., Respondents, v. Samuel H. Chase et al., Appellants.
Judges: 
Reporter: Washington Reports
Volume: 174
Pages: 363–401

Head Matter:
[No. 24491.
En Banc.
September 8, 1933.]
William M. Culliton et al., Respondents, v. Samuel H. Chase et al., Appellants. McKale's, Inc. et al., Respondents, v. Samuel H. Chase et al., Appellants.
The Attorney General and John W. Hanna, Assistant, for appellant, contended,
inter alia, that a tax on income is not a tax on property: In re Opinion of the Justices (dissenting opinion), 77 N. H. 611, 93 Atl. 311; Sims v. Ahrens, 167 Ark. 557, 271 S. W. 720; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 South. 4, 25 A. L. R. 748; State ex rel. Knox v. Gulf, M. & N. R. Co., 138 Miss. 70, 104 South. 689; Trefry v. Putman, 227 Mass. 522, 116 N. E. 904, L. R. A. 1917 F, 806; Ludlow-Sayre Wire Co. v. Wollbrinck, 275 Mo. 339, 205 S. W. 196; Dubuque v. Northwestern Life Insurance Co., 29 Iowa 9; Standard Lumber Co. v. Pierce, 112 Ore. 314, 228 Pac. 812. Hence, the constitutional limitations in the 14th amendment have no application: Fleetwood v. Read, 21 Wash. 547, 58 Pac. 665, 47 L. R. A. 205; State v. Sheppard, 79 Wash. 328, 140 Pac. 332; State v. Clark, 30 Wash. 439, 71 Pac. 20; Nipges v. Thornton, 119 Wash. 464, 206 Pac. 17; State v. Hart, 125 Wash. 520, 217 Pac. 45. A graduated income tax does not violate the constitutional mandates as to uniformity or equality in the same classes of property, or in the definition of the word property as including tangibles and intangibles subject to ownership: Wilson v. Lambert, 168 U. S. 611; Myles Salt Co. v. Board of Comm’rs, 239 U. S. 478; Foster v. Hart Mining Co., 52 Colo. 459, 122 Pac. 48; State ex rel. Knox v. Gulf, M. & N. R. Co., 138 Miss. 70, 104 South. 689; State v. Pinder, 30 Del. 416, 108 Atl. 43; Lake Superior Consolidated Iron Mines v. Lord, 271 U. S. 577; Peacock & Co. v. Pratt, 121 Fed. 772; Magoun v. Illinois Trust and Savings Bank, 170 U. S. 283; Educational Films Corporation v. Ward, 282 U. S. 379; Pacific Co. v. Johnson, 285 U. S. 480; Minnesota Law Review, Vol. 12, No. 7, June, 1928.
Lame <& Thompson, amicus curiae, contended,
inter alia, that the proposed tax is an excise tax and not a property tax: Cooley on Taxation (4th ed.), §§ 1743, 1749-1751; 26 R. C. L. (Taxation) 142; 61 C. J. 1559; Featherstone v. Norman, 170 Ga. 370, 153 S. E. 58; Fitch v. Wisconsin Tax Commission, 201 Wis. 383, 230 N. W. 37; Indian Motorcycle Co. v. U. S., 283 U. S. 570; State ex rel. Moon Co. v. Wisconsin Tax Commission, 166 Wis. 287, 163 N. W. 639, 165 N. W. 470; Trefry v. Putman, 227 Mass. 522, 116 N. E. 904, L. R. A. 1917F, 806; Diefendorf v. Gallet, 51 Ida. 619, 10 P. (2d) 309; Black, Taxation (3rd ed.), § 199. The following cases hold that an income tax is constitutional: Standard Lumber Co. v. Pierce, 112 Ore. 314, 228 Pac. 812; Ludlow-Sayre Wire Co. v. Wollbrinck, 275 Mo. 339, 205 S. W. 196; Waring v. Mayor of Savannah, 60 Ga. 93; Glasgow v. Rouse, 43 Mo. 479; Sims v. Ahrens, 167 Ark. 557, 271 S. W. 720; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 South. 4, 25 A. L. R. 748; State ex rel. Knox v. Gulf, M. & N. R. Co., 138 Miss. 70, 104 South. 689; Savannah v. Hartridge, 8 Ga. 23; Shields v. Williams, 159 Tenn. 349, 19 S. W. (2d) 261; Clark v. Maxwell, 197 N. C. 604, 150 S. E. 190; Young v. Illinois Athletic Club, 310 Ill. 75, 141 N. E. 369, 30 A. L. R. 985; Stanley v. Gates, 179 Ark. 886, 19 S. W. (2d) 1000. The weight of authority is-that income is not “property” for tax purposes: Eliasberg Bros. Mercantile Co. v. Grimes, 204 Ala. 492, 86 South. 56, 11 A. L. R. 300; Hattiesburg Grocery Co. v. Robertson, supra; State ex rel. Knox v. Gulf, M. & N. R. Co., supra; Sims v. Ahrens, supra;. Young v. Illinois Athletic Club, supra; State ex rel. Bundy v. Nygaard, 163 Wis. 307, 158 N. W. 87, L. R. A. 1917E, 563; Brushaber v. U. P. R. Co., 240 U. S. 1; State ex rel. Manitowoc Gas Co. v. Wisconsin Tax Commission, 161 Wis. 111, 152 N. W. 848; Stony Brook R. R. Corp. v. Boston & Maine R. R. Co., 260 Mass. 379, 157 N. E. 607, 53 A. L. R. 700. Even if income be held to be property, tbe requirement of uniformity is not violated: Clark v. Maxwell, supra; Ludlow-Sayre Wire Co. v. Wollbrinck, supra; Alderman v. Wells, 85 S. C. 507, 67 S. E. 781, 27 L. R. A. (N. S.) 864; New Orleans v. Fourchy, 30 La. An. 910; Diefendorf v. Gallet, supra; Tekoa v. Reilly, 47 Wash. 202, 91 Pac. 769; State ex rel. Bolens v. Frear, 148 Wis. 456, 134 N. W. 673, 135 N. W. 164, Ann. Cas. 1913A, 1147, L. R. A. 1915B, 569; Cooley, Taxation, §1760.
Grinstead, Laube, Laughlin & Meakim, E. W. Anderson, and Yantis & Brodie, amici curiae, contended,
inter alia, that tbe law is presumptively valid: State ex rel. Mullen v. Howell, 107 Wash. 167, 181 Pac. 920; State ex rel. Carroll v. Superior Court, 113 Wash. 54, 193 Pac. 226; Record Publishing Co. v. Monson, 123 Wash. 569, 213 Pac. 13. The constitution is a limitation merely on tbe legislative power: State v. Clark, 30 Wash. 439, 71 Pac. 20; State v. Ide, 35 Wash. 576, 77 Pac. 961, 67 L. R. A. 280, 102 Am. St. 914; Thurston County v. Tenino Stone Quarries, 44 Wash. 351, 87 Pac. 634, 9 L. R. A. (N. S.) 306; Walker v. Spokane, 62 Wash. 312, 113 Pac. 775, Ann. Cas. 1912C, 994; Paine v. Port of Seattle, 70 Wash. 294, 126 Pac. 628, 127 Pac. 580; Litchman v. Shannon, 90 Wash. 186, 155 Pac. 783; Standard Oil Co. v. Graves, 94 Wash. 291, 162 Pac. 558. In taxation there is a broader power of classification than in any other exercise of legis lative power: Bell’s Gap R. R. Co. v. Pennsylvania, 134 U. S. 232; Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283; Michigan Central R. v. Powers, 201 U. S. 245; Alderman v. Wells, 85 S. C. 507, 67 S. E. 781, 27 L. R. A. (N. S.) 864; Ludlow-Sayre Wire Co. v. Wollbrinck, 275 Mo. 339, 205 S. W. 196; State ex rel. Bolens v. Frear, 148 Wis. 456, 134 N. W. 673, 135 N. W. 164, Ann. Cas. 1913A, 1147, L. R. A. 1915B, 569; Standard Lumber Co. v. Pierce, 112 Ore. 314, 228 Pac. 812. The legislative declaration will not be set aside by the courts unless it is clear that the declaration is obviously false or a palpable attempt at dissimulation: State ex rel. Short v. Hinkle, 116 Wash. 1, 198 Pac. 535; State ex rel. Case v. Howell, 85 Wash. 294, 147 Pac. 1159, Ann. Cas. 1916A, 1231; Hovey v. Foster, 118 Ind. 502, 21 N. E. 39; Block v. Hirsh, 256 U. S. 135, 16 A. L. R. 165; Radice v. New York, 264 U. S, 292; Lemon v. Rumsey, 180 W. Va. 242, 150 S. E. 725; Macallen Co. v. Massachusetts, 279 U. S. 620, 65 A. L. R. 866; Aberdeen Savings & Loan Assn. v. Chase, 157 Wash. 351, 289 Pac. 536, 290 Pac. 697, 71 A. L. R. 232. Income property is not property for the purposes of taxation: Stony Brook R. R. Corp. v. Boston & Maine R. R. Co., 260 Mass. 379, 157 N. E. 607, 53 A. L. R. 700; Trefry v. Putnam, 227 Mass. 522, 116 N. E. 904, L. R. A. 1917F, 806. In re Opinion of Justices, 77 N. H. 611, 93 Atl. 311; Glasgow v. Rouse, 43 Mo. 479; Alderman v. Wells, supra; State ex rel. Moon Co. v. Wisconsin Tax Commission, 166 Wis. 287, 163 N. W. 639, 165 N. W. 470; Waring v. Mayor of Savannah, 60 Ga. 93; Stanley v. Gates, 179 Ark. 886, 19 S. W. (2d) 1000; Featherstone v. Norman, 170 Ga. 370, 153 S. E. 58; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 South. 4, 25 A. L. R. 748; State ex rel. Knox v. Gulf, M. & N. R. Co., 138 Miss. 70, 104 South. 689; Ludlow-Saylor Wire Co. v. Wollbrinck, supra; Crescent Manufacturing Co. v. Tax Commission, 129 S. C. 480, 124 S. E. 761; State ex rel. Bolens v. Frear, supra; Diefendorf v. Gallet, 51 Ida. 619, 10 P. (2d) 309; Standard Lumber Co. v. Pierce, supra. Classification for taxation is not reviewable by the conrts unless palpably arbitrary: Magoun v. Illinois Trust & Savings Bank, supra; Bell’s Gap R. R. Co. v. Pennsylvania, supra; Keeney v. New York, 222 U. S. 525; Citizens Tel. Co. v. Fuller, 229 U. S. 322; Stebbins v. Riley, 268 U. S. 137, 44 A. L. R. 1454; Ohio Oil Co. v. Conway, 281 U. S. 146; Jackson v. Commissioners, 283 U. S. 527, 73 A. L. R. 1464. Courts have uniformly sustained graduated income taxes under constitutional provisions requiring uniformity of taxation as to class: Standard Lumber Co. v. Pierce, supra; State v. Pinder, 30 Del. 416, 108 Atl. 43; Ludlow-Sayre Wire Co. v. Wollbrinck, supra; State ex rel. Knox v. Gulf, M. & N. R. Co., supra; Featherstone v. Norman, supra.
Harvey W. McCormack and R. W. Maxwell, amici curiae,
contended that this income tax is an excise tax.
A. Emerson Cross, amicus curiae, and Charles W. Hall, amicus curiae,
as attorney for Washington State Grange, contended that the judgment should be reversed.
Preston, Thorgrimson & Turner and Lundm, Barto & Devin, for respondents McKale’s, Inc., et al., contended,
inter alia, that the graduated feature of the act is violative of the provision of the fourteenth amendment to the state constitution requiring taxation of each class of property to be uniform: Aberdeen Savings & Loan Association v. Chase, 157 Wash. 351, 289 Pac. 536, 290 Pac. 697, 71 A. L. R. 232; Bank of Fairfield v. Spokane County, 173 Wash. 145, 22 P. (2d) 646; MacCallen Co. v. Massachusetts, 279 U. S. 620, 65 A. L. R. 866; Northwestern Mutual Life Insurance Co. v. Lewis & Clarke County, 28 Mont. 484, 72 Pac. 982, 98 Am. St. 572; Cruse v. Fischl, 55 Mont. 258, 175 Pac. 878; Eliasberg Bros. Mercantile Co. v. Grimes, 204 Ala. 492, 86 South. 56, 11 A. L. R. 300; In re Opinion of Justices, 220 Mass. 613, 108 N. E. 570. The constitutions of other states differentiate this case from the cases in those states: In re Opinion of Justices, 226 Mass. 583, 165 N. E. 900; State ex rel. Moon Co. v. Wisconsin Tax Commission, 166 Wis. 287, 163 N. W. 639, 165 N. W. 470; Alderman v. Wells, 85 S. C. 507, 67 S. E. 781, 27 L. R. A. (N.S.) 864; Featherstone v. Norman, 170 Ga. 370, 153 S. E. 58; Stanley v. Gates, 179 Ark. 886, 19 S. W. (2d) 1000; Sims v. Ahrens, 167 Ark. 557, 271 S. W. 720; Hixon v. School District, 60 S. W. (2d) (Ark.) 1027; State ex rel. Knox v. Gulf, M. & N. R. Co. (dissenting opinion), 138 Miss. 70, 104 South. 689; Diefendorf v. Gallet, 51 Ida. 619, 10 P. (2d) 309; State v. Pinder, 30 Del. 416, 108 Atl. 43; Ludlow-Sayre Wire Co. v. Wollbrinck, 275 Mo. 339, 205 S. W. 196; Bacon v. Ransom, 56 S. W. (2d) (Mo.) 786. The taxation of property at a progressive rate is violative of the uniformity clause of our constitution: In re Opinion of Justices, 266 Mass. 583, 165 N. E. 900; In re Opinion of Justices, 82 N. H. 561, 138 Atl. 284; In re Opinion of Justices, 84 N. H. 559, 149 Atl. 321; Bachrach v. Nelson, 349 Ill. 579, 182 N. E. 909; Evans v. McCabe, 164 Tenn. 672, 62 S. W. (2d) 159; Raydure v. Bd. of Supervisors, 183 Ky. 84, 209 S. W. 19; In re Cope’s Estate, 191 Pa. 1, 43 Atl. 79, 45 L. R. A. 316, 71 Am. St. 749; Black v. State, 113 Wis. 205, 89 N. W. 522, 90 Am. St. 853; State ex rel. Schwartz, v. Ferris, 53 Ohio 314, 41 N. E. 579, 30 L. R. A. 218; Cummings v. National Bank, 101 U. S. 153; Aberdeen Sav ings & Loan Association v. Chase (dissenting opinion), 157 Wash. 351, 289 Pac. 536, 290 Pac. 697, 71 A. L. R. 232; State ex rel. Nettleton v. Case, 39 Wash. 177, 81 Pac. 554, 1 L. R. A. (N. S.) 152, 109 Am. St. 874; State ex rel. Lindsey v. Derbyshire, 79 Wash. 227, 140 Pac. 540; State v. Gorman, 40 Minn. 232, 41 N. W. 948, 2 L. R. A. 701; Fatjo v. Pfister, 117 Cal. 83, 48 Pac. 1012; Cook County v. Fairbank, 222 Ill. 578, 78 N. E. 895; Hauser v. Miller, 37 Mont. 22, 94 Pac. 197; Malin v. LaMoure Co., 27 N. D. 140, 145 N. W. 582, 50 L. R. A. (N. S.) 997, Ann. Cas. 1916C, 207; Chapman v. Ada County, 48 Ida. 632, 284 Pac. 259; Berryman v. Bowers, 31 Ariz. 56, 250 Pac. 361. A tax upon the income from government bonds is a tax on the bonds themselves: McCulloch v. State, 17 U. S. 316; Weston v. Charleston, 27 U. S. 449; Miller v. Milwaukee, 272 U. S. 713; Northwestern Mutual Life Insurance Co. v. Wisconsin, 275 U. S. 136; MacCallen Co. v. Massachusetts, supra; Willcuts v. Bunn, 282 U. S. 216; Indian Motorcycle Co. v. U. S., 283 U. S. 570. An initiative measure has no greater strength or dignity than attaches to any other legislation: State ex rel. v. Richardson, 48 Ore. 309, 85 Pac. 225, 8 L. R. A. (N. S.) 362; Turnidge v. Thompson, 89 Ore. 637, 175 Pac. 281; Galvin v. Board of Supervisors, 195 Cal. 686, 235 Pac. 450; Wallace v. Zinman, 200 Cal. 585, 254 Pac. 946, 62 L. R. A. 1341; State ex rel. Lashley v. Becker, 235 S. W. (Mo.) 1017; People v. Provost, 55 Colo. 199, 134 Pac. 129; State ex rel. Berry v. Superior Court, 92 Wash. 16, 159 Pac. 92. The invalid part of the act is inseparable from the remainder: Dorchy v. Kansas, 264 U. S. 286; Williams v. Standard Oil Co., 278 U. S. 235; Hill v. Wallace, 259 U. S. 44.
Newman% E. Clark, M. F. Mathewson and J. T. Trul-linger, for respondents Culliton et al., contended,
inter alia, that a tax on income is a property tax: Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429, 158 U. S. 601; In re Opinions of Justices, 220 Mass. 613, 108 N. E. 570; Eaton, Crane & Pike Co. v. Commonwealth, 237 Mass. 523, 130 N. E. 99; State v. Pinder, 30 Del. 416, 108 Atl. 43; Eliasberg Bros. Mercantile Co. v. Grimes, 204 Ala. 492, 86 South. 56, 11 A. L. R. 300; Lilienthal Mercantile Co. v. Breslin, 204 Ala. 502, 86 South. 69; Bachrach v. Nelson, 349 Ill. 579, 182 N. E. 909; In re Opinion of Justices, 81 N. H. 552, 120 Atl. 629.
George Donworth, Charles T. Donworth, Allen, Froude, Hilen & Askren, McMicken, Ramsey, Rupp & Schweppe, and Peters, Evans & McLaren, amici curiae,
contended that the judgment should be affirmed.
Reported in 25 P. (2d) 81.

Opinion:
Holcomb, J
Alleging that the state income tax law (initiative No. 69, chap. 5, Laws of 1933, p. 49 [Rem. 1933 Sup., § 11200-1 et seq.}) was unconstitutional, respondents instituted two actions, which were consolidated for trial and appeal, against the members of the state tax commission to secure a permanent injunction restraining defendants from enforcing the act mentioned. The trial court was of the view that the challenged act offended against the uniformity requirement of the fourteenth amendment to the state constitution, and was therefore void. The demurrers to the complaints were overruled, and a decree was entered permanently restraining the enforcement of the act, from which decree comes this appeal.
The fourteenth amendment to the state constitution reads:
"The power of taxation shall never be suspended, surrendered or contracted away. All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only. The word 'property' as used herein shall mean and include everything, whether tangible or intangible, subject to ownership. All real estate shall constitute one class: Provided, That the Legislature may tax mines and mineral resources and lands devoted to reforestation by either a yield tax or an ad valorem tax at such rate as it may fix, or by both. Such property as the Legislature may by general laws provide shall be exempt from taxation. Property of the United States and of the state, counties, school districts and other municipal corporations, and credits secured by property actually taxed in this state, not exceeding in value the value of such property, shall be exempt from taxation. The Legislature shall have power, by appropriate legislation, to exempt personal property to the amount of three hundred dollars ($300) for each head of a family liable to assessment and taxation under the provisions of the laws of this state of which the individual is the actual bona fide owner. ' '
The income tax law provides:
' ' Section 1. Existing methods of taxation, primarily based on property holdings, are inadequate, inequitable and economically unsound. Present conditions point the need of a new subject matter for taxation, which should be based on the ability to pay. Earnings for a given period are a fair measure of such ability.
"The people of the state of Washington, therefore, exercising herein their supreme power and fundamental right, declare their purpose hereby to tax all annual incomes within the state as such, and not as property.
"There shall be assessed, levied, collected and paid annually, a tax on all net income as hereinafter provided, by every person residing within the state of Washington or by his personal representative in case of death; and by every non-resident of the state, upon such income as is derived from property located or business transacted within the state, except as hereinafter exempted. . . . " Rem. 1933 Sup., §11200-1.
The system of graduated rates adopted by the income tax law imposes upon the taxpayer a rate of taxation that progresses and becomes larger with the increase in the amount of his taxable income.
Respondents insist that, under the constitutional definition, "The word 'property' as used herein shall mean and include everything, whether tangible or intangible, subject to ownership," a tax on income derived from property is a tax on the property from which the income is derived, therefore the method of classification adopted by the income tax law is violative of the requirements of the state constitution that "all taxes shall be uniform upon the same class of property. ' '
Unless the income tax constitutes a tax on property, the uniformity clause of the state constitution is not violated. If income taxes
" . . . are to be deemed a property tax, constitutional limitations applicable to property taxes must be applied. . If they are excise taxes, such limitations are not applicable." 4 Cooley, Taxation. (4th ed.), §1743.
The fact that the income tax law was passed as an initiative measure is of no controlling importance, nor can it be likened to an amendment to the constitution. The constitution provides the means, methods and processes for its own amendment.
Amendment 14, which replaced art. 7 of our constitution, was adopted by the people by the proper method in 1930. The income tax law was passed by the people in 1932. All laws on any subject whatever, enacted by either the people or the legislature, must be governed by the provisions of the constitution in force at that time. "The people in their legislative capacity are not, however, superior to the written and fixed con stitution. " State ex rel. Berry v. Superior Court, 92 Wash. 16, 159 Pac. 92.
The pertinent portion of amendment 14 of our constitution is:
"All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only. The word 'property' as used herein shall mean and include everything, whether tangible or intangible, subject to ownership."
The initiative act in question is clearly one for public revenue.
It would certainly defy the ingenuity of the most profound lexicographer to formulate a more comprehensive definition of "property." It is "everything, whether tangible or intangible, subject to ownership." Income is either property under our fourteenth amendment, or no one owns it. If that is true, any one can use our incomes who has the power to seize or obtain them by foul means. There being no other classifications in our constitution but real and personal property and intangible property, incomes necessarily fall within the category of intangible property. No more positive, precise and compelling language could have been used than was used in those words of our fourteenth amendment. It needs no technical construction to tell what those words mean. The overwhelming weight of judicial authority is that "income" is property and a tax upon income is a tax upon property.
None of the decisions from other states have any bearing upon the law before us, because of our peculiarly forceful constitutional definition and the difference in their constitutional authorization or restriction.
In State ex rel. Bolens v. Frear, 148 Wis. 456, 134 N. W. 673, Ann. Cas. 1913A 1147, L. R. A. 1915B 569, an income tax act enacted in 1911 was apparently set out in full by tbe court and is almost identical with our own income tax act. There are some unimportant differences not necessary to mention. The constitution of Wisconsin had been amended in 1908. It previously had provided that:
"The rule of taxation shall be uniform, and taxes shall be levied upon such property as the legislature shall prescribe,"
which provision was amended by the addition of the following words:
"Taxes may also be imposed on incomes, privileges, and occupations, which taxes may be graduated and progressive and reasonable exemptions may be provided."
Previous to the adoption of this amendment, the supreme court of Wisconsin had held an income tax law unconstitutional. In passing upon the income tax act of 1911, the supreme court of that state, among other things, said:
"Words could hardly be plainer to express that idea than the words used. Prom them it clearly appears that taxation of property and taxation of incomes are recognized as two separate and distinct things in the state constitution; both may be levied, and lawfully levied, because the constitution says so. . . . the people of Wisconsin have said that 'property' means one thing, and 'income' means another; in other words, that income taxation is not property taxation, as the words are used in the constitution of Wisconsin."
How different from the situation here. We have no constitutional provision authorizing taxation of income as one thing and property as another. We have only the constitutional provision that property ' ' shall mean and include everything, whether tangible or intangible, subject to ownership." Until we have such a constitutional amendment, the hands of the people, as well as the legislature, in enacting laws, are tied.
It has been definitely decided in this state that an income tax is a property tax, which should set the question at rest here. Aberdeen Savings & Loan Assn. v. Chase, 157 Wash. 351, 289 Pac. 536, 71 A. L. R. 232. Even though some of us dissented from the majority decision, the dissenting opinions show that the case was thoroughly considered, and the opinion of the majority should govern. In future cases, even a dissenting justice should be bound by the decision of the majority until and unless authoritatively overruled or reversed by some higher tribunal, such as the supreme court of the United States.
It is asserted that a state income tax is an excise tax. That is not correct. The cases cited to sustain the assertions all involved corporate franchise tax laws and the like.
Great reliance is placed by appellants upon a recent decision by the Idaho supreme court in Diefendorf v. Gallet, 51 Idaho 619, 10 P. (2d) 307, sustaining an income tax statute of that state, which decision also contains an exhaustive discussion of the authorities upon the question of income taxes. That decision involved the interpretation of three sections of the constitution of Idaho and of the income tax statute which declared that income should not be taxed as property.
One of the peculiar constitutional provisions of Idaho is art. 7, sec. 3, prescribing that, "The word 'property' as herein used shall be defined and classified by law." Another constitutional provision is that, "All taxes shall be uniform upon the same class of subjects within the territorial limits," and providing for the allowance of exemptions. That court held, as would we, under a similar constitutional provision, that the lawmaking power was absolutely free to de fine property to be taxed. Our constitution is to tbe contrary.
Our attention has also been called to a decision by the Montana supreme court, O'Connell v. State Board of Equalization, 25 P. (2d) (Mont.) 114, in which that court held, by a majority of three to two, that an income tax law enacted in Montana was valid. Stress was laid in that case upon the fact that the law was copied from the Idaho act, which had theretofore been construed by the supreme court of that state, and it necessarily followed that the law and the judicial interpretation were adopted in the Montana statute. With due respect to the majority of that court, it seems obvious to us, as pointed out in the dissenting opinions, that the majority lost sight of the unique provisions of the Idaho constitution as stated by that court itself. Had we the same "unique" constitutional provision as has Idaho, we should probably follow the decision of that court upon the validity of the income tax law before us.
After the decision by this court in the Aberdeen Savings & Loan Assn, case, supra, deciding that income was property for the purposes of taxation, the people adopted the fourteenth amendment, supra, which made it a part of the fundamental law of the state.
It is also argued that, under the recent decision of this court in Pacific Tel. & Tel. Co. v. Seattle, 172 Wash. 649, 21 P. (2d) 721, holding valid certain fees exacted from the utility company in that case, these are excise taxes. That decision was correct solely because such exactions are excise taxes. Such taxes were long ago defined as
"Taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations and upon corporate privileges." Cooley on Constitutional Limitations (7th ed.), 680. (Quoted in dissenting opinion in Aberdeen Sewings & Loan Assn. v. Chase, supra.)
The taxes here in question can in no sense be said to be for licenses to pursue certain occupations, or upon corporate or business privileges, or for the manufacture, sale or consumption of commodities within the state.
Our fourteenth amendment prescribes that all taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax, etc. It needs no argument to demonstrate that the income taxes here levied are wholly lacking in uniformity.
It is sought to sustain the graduated features of the income tax by analogy to a graduated inheritance tax.
The inheritance tax is really not a tax at all. It is an impost laid but one time, and not annually, as is a tax. The right of devisees, or in cases of inheritance, the right of heirs at law, to take, is not a natural right. It exists only because the state grants the right. After having granted the right, the state may impose as a condition upon the exercise of the right that the state shall receive a certain percentage or proportion thereof. This percentage or proportion may be graduated and may be as large as the state may see fit to impose. This court has so held in two cases: State v. Clark, 30 Wash. 439, 71 Pac. 20, and In re Ellis' Estate, 169 Wash. 581, 14 P. (2d) 37. There is no similitude between incomes and the portion of an estate passing to one upon the death of another. No well considered decision has ever so held.
We do not lose sight of the well established principle in this state, of which the author of this has always been a pronounced advocate, that every intendment should be brought to bear in favor of the validity of a statute or enactment and if any reasonable doubt ap pears it should be resolved in favor of the validity of the law, as we have many times held. State ex rel. Hamilton v. Martin, 173 Wash. 249, 23 P. (2d) 1. Nor do we disregard the deplorable financial condition of the state and its taxing divisions and the necessity of raising additional revenues. As to such conditions, it is better that we suffer the inconvenience of the present loss of such revenues than that we disregard the emphatic restrictions of the constitution for the sake of temporary relief. It may be possible to frame an income tax law which will assess all incomes uniformly and comply with our constitution, which, of course, is not now before us and we need not consider it.
It is perfectly obvious that, when the proponents of initiative No. 69 framed the act, they lost sight of our constitutional definition in the fourteenth amendment. The declaration in the law of a purpose to tax all annual incomes as such and not as "property," cannot override the constitution. It is also clear that the people when legislating, the legislature, and the courts, are and should be bound by the limitations, restrict-tions, definitions and prohibitions of the constitution. It is the fundamental law of the state.
For the reasons herein stated, the decree of the trial court is affirmed.
Maiu, J., concurs.