Court Opinion

ID: 3571263
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:24:10.46907+00
Date Added: 2024-06-11T07:40:57.241619
License: Public Domain

It is my belief that the Legislature plainly intended by Secs. 76-1220 and 76-1221 that the entire net income of natural persons resident of this state shall be taxed regardless of where their income is produced, less the deductions and exemptions provided by the Act, and that the net income of natural persons non-resident of this state is to be taxed upon their net income insofar as and to the extent that such income is derived from property owned or business, trade, profession or occupation carried on in this state, and on net income derived also from sales wherever made, of products, goods, wares and merchandise, manufactured or which originated in this state.
It is my belief also that it was the intent to tax the net income of domestic corporations in the same manner and by the same standard as the net income of natural persons resident of this state, and to tax the net income of foreign corporations in the same manner and computed by the same formula as the net income of natural persons non-resident of this state. I think it would be reasonable to interpret the provisions of Sec. 76-1201 as imposing the income tax upon the entire net income of domestic corporations wherever produced, and that when the Legislature came to write Sec. 76-1229 they had in mind primarily foreign corporations when they defined the "entire net income" of such corporations to be that net income derived from business done or property located in this state. That they included domestic corporations in this section is true, but this was an unnecessary inclusion since Sec. 76-1201 had already imposed a tax levy upon the net income of domestic corporations without reservations.
Not so in 76-1201 as to foreign corporations because in subparagraph (c) of that section dealing with the net income of foreign corporations they employed language indicating an intent to limit net income of foreign corporations to net income derived from "transaction of business in, into or from this state" or from "any property within this state * * * as hereinafter provided," which would accommodate itself to the provisions of Sec. 76-1229, 76-1230 and 76-1231 and thus bring foreign corporations and non-resident natural persons into the same category for the purpose of income taxation.
Scrutinizing 76-1201 we find no such qualifying phrase "as hereinafter provided" attached to the mandate as to domestic corporations.
The result is that in view of 76-1201 we find the Legislature in Secs. 76-1229 and 76-1231 supplying the amplifying provisions promised in 76-1201 as to foreign corporations and also bungling into including domestic corporations within the operation of such provisions. *Page 71 
As to foreign corporations the limitations upon where and how the income was produced may have been prompted by considerations of constitutionality of the enactment.
As to domestic corporations and resident natural persons, the taxing power seems to be more far reaching without hazard of offending the Constitution.
Therefore, by including domestic corporations in 76-1229 and 76-1231 the Legislature perhaps did a useless thing. But also it was inert, since, if by Sec. 76-1201 they had already, as to domestic corporations, levied a tax upon net income of such corporations without qualification or limitation, and without any qualifying phrase such as is contained in subparagraph (c) pertaining to foreign corporations. Having in 76-1201 levied a tax on the entire net income of domestic corporations, the repetition in 76-1229 and 76-1231 of a levy of a tax upon the same portion of the entire net income as is levied upon the income of foreign corporations does not diminish the levy made on domestic corporations in Sec. 76-1201.
In other words, a tax having been levied upon the entire net income of domestic corporations in Sec. 76-1201, nothing was taken away by again levying a tax upon a part of such net income.
It is an interesting bit of legislative history that Sec. 29 of Senate Bill No. 137 which became Ch. 85 of Laws 1933 contained the language "Every domestic corporation organized under the laws of this state and every foreign corporation doing business in this State shall pay a tax for each taxable year upon its entire net income derived from business done or property located in this State," etc.
For some reason the words "organized under the laws of this state and every foreign corporation" do not appear in the enrolled and engrossed bill. It may have been the idea of a cautious draftsman of the Act to show in Secs. 76-1229 and 76-1231 that foreign corporations were not submitted to any greater burdens than domestic corporations, and that in fact looking further to 76-1201 it would be found that domestic corporations have another additional burden.
The view I entertain (though perhaps not my argument) has the support of the rule of statutory construction that statutes imposing taxes ought to be construed with fairness, if not liberality, in order to carry out the intention of the Legislature and further the important public interests which such statutes subserve. Southern Pac. R. Co. v. State, 34 N.M. 479,284 P. 117. This view also has the support of the tax department construction and of the office of the Attorney General and of the trial court.
In view, however, that all of my associates have arrived at a different conclusion, I may be wrong in my interpretation. I therefore yield to the judgment of my associates *Page 72 
and the foregoing is written for such value as it may have to the taxing authorities to the end that if it seems desirable, this vague statute may be amended.