Court Opinion

ID: 8198597
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:22:13.452749+00
Date Added: 2024-06-11T16:40:50.644506
License: Public Domain

Fairchild, J.
{dissenting). It is stated in the decision: “It is suggested that the retrospective operation of the Fox Film Corp. Case will result in the enforcement against the plaintiff of unconscionable penalties, but the record does not sustain this contention.” But it is conceded that the exaction of an additional amount because of the failure to pay taxes when due “is usually denominated a penalty. 3 Cooley, Taxation (4th ed.), § 1274.” The taxpayer, in good faith, paid the tax in 1926 and 1927. He was also willing to pay this tax in subsequent years, but was prevented by the an*425nounced position taken by the proper officers. The reason for the officers' mistake in this respect is set forth in the opinion of the court. My dissent is based on the proposition that the six per cent interest added to the tax is a penalty. That this is so must appear from an analysis of the relation between the taxpayer and the government. A tax is not contractual in its nature. It is wholly dependent upon statutory authority, and the several steps for the collection thereof are determined by specific provisions enacted by the legislature. The assessment of the tax, though it may definitely establish a demand due the state, does not constitute a contract either express or implied. The levy of a tax is a positive act of the government binding upon the taxpayer, but to the making and enforcing of the collection, the personal consent of the taxpayer is not required. In tax laws, penalties are imposed for mere delinquencies in order to hasten payment. They are imposed as a punishment for neglect to pay. There would be no interest charge but for the provision that upon failure to pay there shall be added six per cent. Originally, the rate fixed by this particular section under consideration was ten per cent. It was reduced in 1927 to six per cent. The reduction of severity of the penalty does not change its nature. The statute calls for, and the judgment results in, the imposition of penalties for nonpayment of taxes. As this is true," upon the analogy of the criminal cases cited in the opinion, plaintiff is within the exception recognized. At all times the interest addition has been a penalty, not a consideration for the forbearance of money, nor is it a part of the tax. 3 Cooley, Taxation, supra.
A serious question would arise were the state to attempt to give or loan its credit, because of the provisions of our state constitution, whereas the imposition of penalties for failure to pay taxes when due, or the permitting of a discount to induce prompt payment, may be properly justified.
*426As the percentage added is a penalty, and there exists a rule against retrospective penalties, it ought to be consistently complied with. This would prevent, in this instance, the imposition of those penalties upon the taxpayer, and require a modification of the judgment. If the penalties are so involved in the matter of the reassessment that there can be no separation of them from the tax proper, then the judgment should be reversed.