Court Opinion

ID: 9684907
Source: CourtListenerOpinion
Date Created: 2023-08-24 14:18:39.306725+00
Date Added: 2024-06-11T18:18:01.118916
License: Public Domain

Spencer, Boslaugh, and Smith, JJ.,
dissenting.
We agree that the Nebraska intangible tax upon shares of stock is a property tax upon the owners of the shares and not a tax upon the corporation; that sections 77-706, R. S. Supp., 1963, and 77-722, R. R. S. 1943, provide for the valuation of shares of stock upon the basis of book value, less certain deductions; and that the 1952, 1954, 1960, and 1964 amendments to Article VIII, section 1, of the Constitution of Nebraska, do not affect the determination of these cases. We are unable to agree that section 77-722, R. R. S. 1943, is a valid legislative enactment.
The 1920 amendment to Article VIII, section 1, of the Constitution, authorized taxes uniform as to class to be “levied by valuation” upon intangible property. Valuation should mean actual value or some part thereof. The tax which has been imposed is upon the “actual value” of the shares. § 77-703, R. R. S. 1943. However, both sections 77-706, R. S. Supp., 1963, and 77-722, R. R. S. 1943, provide for a method of valuation by book value. Book value usually has little relation to actual value as is well demonstrated by the record in this case. Where the authority to tax is restricted to a levy by valuation, we believe that it is beyond the power of the Legislature to prescribe artificial methods of valuation.
Sections 77-706, R. S. Supp,, 1963, and 77-722, R. R. S. 1943, classify shares of stock for the purpose of valuation according to whether the corporation issuing the stock was a domestic, domesticated, or foreign corporation. Both sections permit the deduction of the actual *105value of the property of the corporation in this state. Section 77-706, R. S. Supp., 1963, permits shareholders of domestic and domesticated corporations to deduct the value of all property outside the state; bonds or other obligations issued by the United States of America, its agencies or instrumentalities, or by the state or any municipal or political subdivision; and the value of shares of stock in other domestic or domesticated corporations. As pointed out in the majority opinion, this results in a zero value for the shares of stock in most domestic or domesticated corporations. The stockholders of foreign corporations are not permitted to make these deductions in computing the value of their shares.
So far as the individual shareholder is concerned, we are unable to perceive the real or substantial difference in situation or circumstances between an investment in the shares of a domestic corporation, or particularly the shares of a domesticated corporation, and the shares of a foreign corporation, which will justify a substantial value for taxation upon the shares of stock in the foreign corporation and a zero value for the other shares.
The justification urged for the discrimination against stockholders of a foreign corporation seems to be based upon a theory that the property of domestic and domesticated corporations is located within the state and taxed to the corporations. The assumption that most of the property of domesticated corporations is located within the state and taxed directly to them is not borne out by the record in this case and is unwarranted.
The classification of the stock of domestic and domesticated corporations separate from that of foreign corporations is supposed to alleviate double taxation. Double taxation of corporation property in this state is eliminated by the deduction of the value of all corporation property within the state. The deduction of the value of corporation property outside of the state, which is allowed to the stockholders of domestic and domesticated corporations, is totally unrelated to the double *106taxation of corporation property by this state.
In a series of cases, commencing at about the time of the decision in Bute v. Hamilton County, 113 Neb. 230, 202 N. W. 616, and continuing up to this time, this court has insisted that the shares of stock in banking corporations be valued upon the same basis as shares of stock in domestic corporations. It seems to us that the principles involved in those cases are applicable here.