Court Opinion

ID: 5269103
Source: CourtListenerOpinion
Date Created: 2022-01-06 19:08:26.990485+00
Date Added: 2024-06-11T08:28:12.303819
License: Public Domain

H. T. Kellogg, Acting P. J.
(concurring in part):
The majority opinion concedes that net income, which in the year 1918 measured the tax imposed upon certain corporations by article 9-A of the Tax Law, was then ascertainable solely by reference to Federal statutes defining such income for Federal income tax purposes. This conclusion was necessarily compelled by a provision of section 209 of the Tax Law which then ordained that the tax upon any corporation covered by the article should be computed “ upon the basis of its net income for its fiscal or the calendar year next preceding, as hereinafter provided, which income is presumably the same as the income upon which such corporation is required to pay a tax to the United States.” (Tax Law, § 209, as amd. by Laws of 1918, chap. 276.) In the year 1919 the section was amended so that the quoted provision was made to read: “ Upon the basis of its entire net income for its fiscal or the calendar year next preceding, as hereinafter provided, which entire net income is presumably the same as the entire net income upon which such corporation is required to pay a tax to the United States.” (Tax Law, § 209, as amd. by Laws of 1919, chap. 628.) It will be observed that the sole change consisted in the introduction into the quoted provision of the word “ entire,” so that in one place “ net income ” appeared as “ entire net income,” and in another “ income ” appeared as “ entire net income.” According to the majority opinion this amendment eliminated the Federal definitions and made net income, for the purposes of article 9-A, otherwise determinable. How it can be thought that such a complete metamorphosis of our Tax Law was thus accomplished is not comprehensible to me. Net income is found by making certain deductions from gross income. It consists of all that is left when the process of subtraction is complete. Of necessity “ entire net income ” can be nothing greater and is nothing less. The use of the word “ entire ” certainly neither enlarges the factor of gross income nor diminishes the factor of deductions to be made. These factors control the problem, and that which does not affect them cannot affect its result. In my judgment “ entire net income ” and “ net income ” *539are synonymous. Therefore, I think that the introduction of the word “ entire ” in nowise altered the meaning of section 209 and left “ net income ” to be determined by the same standards as before.
The majority opinion also lays stress upon a so-called definition newly introduced into the Tax Law by an amendment of the year 1919. That definition reads: “ The term ‘ entire net income5 means the total net income before any deductions have been made for taxes paid or to be paid to the government of the United States on either profits or net income or for any losses sustained by the corporation in other fiscal or calendar years whether deducted by the government of the United States or not.” (Laws of 1919, chap. 628.) This so-called definition proclaims that certain taxes and certain losses shall not be deducted. It does not tell what shall be deducted nor what constitutes gross income from which deductions shall be made. As a definition, therefore, it is reduced to the following: “ The term ‘ entire net income ’ means the total net income.” In other words, the Legislature has made the startling pronouncement that in its judgment the word “ entire ” is synonymous with the word “ total.” It had not occurred to me that any one regarded it as meaning anything else. That the so-called definition is not in fact a definition seems to me apparent. It is clear that the writer of the majority opinion, Mr. Justice Van Kirk, himself senses its entire inadequacy and futility. He at first says: “ It cannot now be said that there is not a definition of net income in the statute.” He then says: “ It is said that this ‘ definition ’ in the State act is no definition, that it does not in terms specify what items shall make up the gross income and what items shall be deducted to determine the net income.” How could it be effective as a definition, let me ask, if it defined neither the elements entering in to form the minuend nor those to form the subtrahend of this problem in subtraction? The opinion continues: “ There is no necessity that ‘ net income ’ should be so specifically defined and limited. A statute contains definitions of terms only when terms used are intended to have a special or an unusual meaning, and when necessary to make the meaning and intent clear.” This apology for the absence of a statutory definition of “ net income ” does not harmonize with the previous assertion that the statute now defines it.
If “ entire net income ” means the same as “ net income,” and if the so-called definition is meaningless, it may be asked: What was the legislative purpose in making the amendments? The question may best be answered by other questions. Why, if the Legislature by the amendment intended to eliminate the use of the Federal definitions, did it re-enact in section 209 the old provision *540that State net income “ is presumably the same as the entire net income upon which such corporation is required to pay a tax to the United States? ” Why did it provide in the so-called new definition that net income was such income before deductions had been made for certain taxes and certain losses in other fiscal years “ whether deducted by the government of the United States or not? ” Except for the provisions of a Federal statute neither the taxes nor the losses in question would be deducted from gross income to determine net income. To my way of thinking the references made necessarily compel the conclusion that, with the exceptions specified, the Federal standards determining net income are made to continue as State standards for determining such income. It seems to me that the majority opinion reflects an effort to make the law what it ought to be rather than to interpret the law as it was written by the Legislature, and that the- holding proposed will have the effect of effacing from the statute sentence after sentence of legislative pronouncements which are in complete antagonism therewith. In my judgment it is better to refrain from imparting vigor to the meaningless words of the amendments rather than by so doing to run counter to positive and pregnant provisions of the statute which are retained notwithstanding the amendments. For these reasons I think it should be held that the Federal definitions of “net income ” still control and that the relator is entitled to complain that its tax has been measured otherwise than by the net income which it has received.
Determination annulled, with fifty dollars costs and disbursements, and matter remitted to the State Tax Commission to revise and fix the taxes for the two years in accordance with the opinion of Van Kirk, J.