Court Opinion

ID: 5589938
Source: CourtListenerOpinion
Date Created: 2022-01-11 02:06:33.556921+00
Date Added: 2024-06-11T08:36:24.493544
License: Public Domain

Gilbert, J.,
dissenting.  The State income-tax law of Georgia of 1929 (Ga. Laws 1929, p. 92), as shown by its caption, provided for “levying and collecting a tax on net income.” In section 1 of the act it is provided: “ On the net income of every person, firm, or corporation residing or doing business in this State, except insurance companies which pay to the State a tax upon premium income, after making such deductions as are allowed by the laws of the United States in the system by them adopted for determining net incomes and such increases and deductions as are hereinafter provided for in determining a proper taxable income, there shall be levied and collected by the State of Georgia an income tax similar to that of the United States, but at the rate and according to the scale hereinafter set forth; the same to be returned, calculated, ascertained, and paid according to the system and rules hereinafter set forth.” The next section in substance provides that where any person, firm, or corporation makes an income-tax return to the United States, it shall be his duty to make “a like return to the State of Georgia.” “Such duplicate return shall furnish the same information as is contained in his return to the United States, shall be made on a blank form to be furnished by the tax-commissioner, and shall ascertain the taxable net in*104come in the same way as in the return to the United States; but before ascertaining the net income taxable by the State, the following changes shall be made.” Then follow specified changes, such as additions and deductions. The act, in §§ 3, 4, and 6, expressly recognizes changes that may be made in the duplicate of the return to the United States. Therefore the changes named herein in subdivisions 1 and 2 of section 2 are hot the only changes that could be made. For instance, there are items of taxable income under the Federal statutes that can not be legally taxed by the State of Georgia. It is only necessary to illustrate by reference one item. This State can not tax shares in national banks under existing State law. For a well-considered decision on this question see State Revenue Com. v. Hawkins, 48 Ga. App. 414 (172 S. E. 845).
Whatever, therefore, may be the net taxable income under the Georgia act of 1929, after making the deductions therein expressly allowed, there must be a further deduction from the net taxable return made to the Federal government of any income received by way of dividends on shares of stock in national banks. How many instances of this kind exist it is not necessary to ascertain. Certainly the General Assembly of Georgia knew that there would be other items included in the return made to the Federal government that must be deducted in ascertaining the net taxable income to be reported to the tax-commissioner of Georgia. As correctly stated by counsel for the State, there is a distinction between "net income” and '"taxable net income,” and, as stated by counsel, "'net income’ is the income which remains after the expense of earning it has been paid; and that 'taxable net income’ is the net income which remains after all deductions and exemptions allowed by the law have been taken from the net income.” The taxpayer was bound to pay income taxes to two governments, State and Federal. The Federal income-tax law allows a deduction from gross income of all State taxes, but does not allow a deduction of income taxes paid the Federal government. In other words, the United States allows a deduction of taxes paid, not to itself, but to another government. A State income tax similar to that of the United States would be one which allows a deduction of taxes paid, not to the State, but to another government. In other words, a similar income tax levied by the State of Georgia would allow a deduction of Federal taxes paid on income derived from business done in Georgia, but *105not taxes paid to tbe State of Georgia. This is the reasonable and practical construction of the phrase a tax “similar” to that of the United States. Whether the act, under either construction, is mathematically impossible to enforce or administer, I am unable and not required to answer.
The Georgia income-tax act of 1929 in one instance, referring to the character of tax, uses the word “similar.” The tax is “similar” to that of the United States. In the other instance, referring to the tax returns it uses the word “like” — that is, the return is “like” that made to the United States. The two words, “similar” and “like” mean practically the same. The word “similar” is defined in 58 O. J. 733, § 1: “The word is derived from the Latin word 'similar/ meaning 'liked The dictionary definitions of the word are said to be unsatisfactory, since the word has in use, and according to the lexicographers, two distinct meanings, both of which have been recognized by the courts. ' However, the term has been generally defined as Like; having a resemblance; resembling; homogenous; uniform.” So that in discussing the two words we may refer to them as substantially one word. Webster defines the word “like” as “having the same, or nearly the same, appearance, qualities, or characteristics; resembling; similar to.” City of Lincoln Center v. Linker, 7 Kan. App. 282 (53 Pac. 787, 788). And to the same effect see Houghton v. Field, 56 Mass. (2 Cush.) 141, 145; Huff v. Commonwealth, 55 Va. (14 Grat.) 648, 650; United States v. Wallace, 116 U. S. 398 (6 Sup. Ct. 408, 29 L. ed. 675); Ivey v. State, 112 Ga. 175 (37 S. E. 398); Welborne v. State, 114 Ga. 793, 804 (40 S. E. 857).
The State of Massachusetts had a law providing for taxation of the property of a non-resident within the jurisdiction of Massachusetts at the time of his death, provided the property was subject to “a tax of like character,” to wit, that imposed by the State or country of the taxpayer’s residence. The question arose as to the proper construction of the phrase “like character.” Chief Justice Rugg wrote the unanimous opinion of the Supreme Judicial Court of Massachusetts, holding that the word “like” does not necessarily mean the same in all particulars, and does not imply identity, but only similarity. In the opinion the distinguished Chief Justice, quoting and citing authorities from other courts, said: “ Our statute should be interpreted in the light of the evil *106at which it was aimed and the purpose intended to be accomplished. The words ‘like exemption’ in our statute are satisfied by the terms of the New York statute. Said Chief Justice Shaw in Houghton v. Field, 2 Cush. 141, 145: “Like” does not necessarily mean the same in all particulars, but rather the .contrary.’ ‘Like’ in this connection does not imply identity, but only similarity. It does not import coextensiveness in every detail, but only a resemblance in its salient features. See also Hopkins v. Benson, 31 Me. 399; United States v. Wallace, 116 U. S. 398, 400, 6 Sup. Ct. 408, 39 L. ed. 675. ‘Exemption’ as applied to taxation signifies an immunity or freedom from that pecuniary burden. The New York statute covers the same general subject of taxation on successions as does our act. It is of ‘like character.’ It defines the classes of property to which it applies. It omits the particular kind of property here involved. That is as much an exemption in a broad sense as would be a comprehensive general phrase with certain denominated exceptions. The resulting freedom from taxation would be accomplished in one way as well as in the other. Although the New York law and our own are not exactly commensurate and coterminous in every respect as to property of a non-resident not made subject to the succession tax, yet as New York would not impose a succession tax on property exactly like that here in question and in New York in the same sense as this is in Massachusetts, if it belonged to a deceased resident of Massachusetts, we are of the opinion that the descriptive words of our statute ‘like exemption’ are satisfied. To the same effect is the well-reasoned opinion in Kansas v. Davis, 88 Kan. 849, 139 Pac. 1197, Ann. Cas. 1914B, 688.” Bliss v. Bliss, 221 Mass. 201 (109 N. E. 148, L. R. A. 1916A, 889). See also Bisetti v. Roberts, 25 N. M. 365 (183 Pac. 403); Munford v. Keet, 154 Mo. 46 (55 S. W. 273). Authorities cited herein from other jurisdictions of course are not controlling. Likewise some decisions cited contra are not controlling. Moreover, some of them are based upon statutes not identical with the Georgia statute, and are not followed because neither exactly in point nor satisfying in reason.
In the income-tax act of 1939 the words “duplicate return” are used, as well as the term “like return.” They occur in section 3 as follows: “it shall be his [the taxpayer’s] duty to make at the same time a like return to the State of Georgia, . . for the pur*107pose of a State tax on income. Such duplicate return shall furnish the same information as is contained"in the return to the United States, shall be made on a blank form to be furnished by the tax-commissioner, and shall ascertain the taxable net income in the same way as in the return to the United States; but before ascertaining the net income taxed by the State, the following changes' shall be made.” Then follow provisions which may result in the payment of an amount to the State different from that paid to the United States. Clearly this indicates that the words “duplicate return,” used in immediate connection with the words “like return,” can not have the effect of changing the meaning of the words '“like return” and the words “similar tax.” The reasonable interpretation of that provision is that the taxpayer must make a “duplicate return” to the tax-commissioner of Georgia, furnishing the same information that was furnished by his return to the United States. From that duplicate return the tax-commissioner of Georgia, thus knowing the facts, may make such deductions or changes as are proper under the Georgia income-tax act. The Georgia tax act of 1929 can not mean that under any and all conditions, or under any and all facts, the Georgia taxpayer’s liability must be absolutely one third of what he paid the United States government. That construction would be wholly inconsistent with the terms of the act. A non-resident corporation doing a business in another State must pay a Federal tax on its entire net income, but it does not pay one third of that amount to the State of Georgia. The Georgia act expressly acknowledges that fact, and provides for a tax confined to “the business done in this State.” § 3.
The question here does not involve any charge of bad faith, either in failing to make a return or in making an incorrect return. The taxpayer duly made full and accurate return, stating the amount of Federal income tax paid, which was duly allowed by the Georgia tax-commissioner. It is not intended by this to suggest that the action of the commissioner in allowing the deduction amounts to a judgment having the force and effect of res adjudieata. “ Statutes levying taxes should be construed most strongly against the government and in favor of the citizen. Eevenue statutes are in no just sense remedial laws, and are not, therefore, to be liberally construed.” Mayor &c. of Savannah, v. Hartridge, 8 Ga. 23 (6, 7); Standard Oil Co. v. Swanson, 121 Ga. 412, 414 *108(49 S. E. 262); Case-Fowler Lumber Co. v. Winslett, 168 Ga. 808 (supra); McIntyre v. Harrison, 172 Ga. 65, 75 (157 S. E. 499); Norman v. Southwestern R. Co., 42 Ga. App. 812, 815 (157 S. E. 531). On the other hand, in all cases where the power of the State government to tax is brought in question, doubt should be resolved in favor of the government. Constitution of Georgia, Civil Code (1910), § 6462. “Subject to the rule that tax-exemption clauses are to be strictly construed, tax laws are to be liberally construed in favor of the taxpayer, and are not to be extended by implication.” 1 Honnold’s Supreme Court Law, 591, where will be found citation of numerous Supreme Court decisions. On page 593 it is stated: “It is an old familiar rule of the English courts, applicable to all forms of taxation, . . that the sovereign is bound to express its intention to tax in clear and unambiguous language.” Citing authorities. See Cooley on Taxation, 146. Where the construction of a statute is doubtful, the general rule is that courts will attach great weight to the contemporaneous construction given to the act by the department of State empowered and designated to supervise its operation. Blount v. Munroe, 60 Ga. 61; Howell v. State, 71 Ga. 224, 229 (51 Am. R. 259); United States v. Alabama Great Southern R. Co., 142 U. S. 615 (12 Sup. Ct. 306, 35 L. ed. 1134). See also Solomon v. Cartersville, 41 Ga. 157; Epping v. Columbus, 117 Ga. 263 (43 S. E. 803); United States v. Johnston, 124 U. S. 236, 253 (8 Sup. Ct. 446, 31 L. ed. 389); Swendig v. Washington Power Co., 265 U. S. 322 (44 Sup. Ct. 496, 63 L. ed. 1036); Fawcus Machine Co. v. United States, 282 U. S. 375 (51 Sup. Ct. 144, 75 L. ed. 397); 25 R. C. L. 1043, 1045. “‘The practical interpretation of an ambiguous or doubtful statute that has been acted upon by officers charged with its administration will not be disturbed except for weighty reasons. Logan v. Davis, 233 U. S. 613 [34 Sup. Ct. 685, 58 L. ed. 1121]; Maryland Casualty Co. v. U. S., 251 U. S. 342 [40 Sup. Ct. 155]; Swendig v. Washington Co., 265 U. S. 322 [supra].” Brewster v. Gage, 280 U. S. 327 (50 Sup. Ct. 115).
The tax-commissioner and the Executive Department construed the act to mean the same as I now construe it; in other words, that the taxpayer was allowed, under the act, to deduct his Federal income-tax payments, but not his State tax. The tax-commissioner not only so construed it, but provided in printed regulations that *109such was the law. On the blanks furnished to taxpayers for making their returns the same information was given, and space provided for the taxpayer to insert his deductions for Federal tax payments. That construction was never questioned, so far as I am aware and so far as the record and briefs in the present case indicate, until this case arose. I repeat that the above is a fair, reasonable, practical construction of the income-tax act of 1929.
What is said above is sufficient to lead us to the conclusion that the 1929 income-tax law of Georgia was intended to and did allow a deduction from the gross income of the taxpayer of whatever he paid during the year as an income tax to the United States, but not a deduction of the amount paid as a State income tax. O.ther reasons merely add weight to the foregoing. They are, however, important and may properly be stated. The Georgia income-tax act of 1929, as is well known, was passed during an emergency that needed immediate attention. The General Assembly, instead of working out and adopting an act complete within its own terms, merely adopted a tax “similar” to the Federal income-tax law. It was not intended as a permanent act, and in fact it was repealed at the extraordinary session of 1931. It is now no longer in force.
In all interpretations of statutes.it is the duty of the courts to look diligently for the intention of the General Assembly. I think the interpretation here made is in accordance with the intention of the General Assembly. Able counsel for the State insist that the act is clear and unambiguous, and that the present State Revenue Commission is so clearly right in its interpretation that there is no room for construction. I call attention to the fact that the State tax-commissioner, who was then entrusted and empowered to enforce the act, took the contrary view. Thus the same tax department, within two years, the personnel having changed, construed the same provision of the act to have opposite meanings. It is worthy of note that the act of 1929 provided a “Board of Income Tax Review.” It does not appear that the tax-commissioner deemed it worth while to submit the question to review. The case was before the Court of Appeals on writ of error from the superior' court. It appears that both the superior court and the Court of Appeals rendered judgments adverse to the view of the State Revenue Commission; and that the commission filed a motion for rehearing, which was granted. This court rendered a decision which *110was likewise adverse to the commission, and on motion of the State granted a rehearing. The fact that this court construed the act in accordance with the construction of the tax-commissioner who accepted the return, and afterward, on motion, granted a rehearing, certainly evidences doubt on the minds of some of the Justices. When the original decision was rendered by this court five Justices concurred in the conclusion that the Georgia income-tax act of 1929 on the point involved was ambiguous and should be construed against the contention of the present State Revenue Commission. One Justice dissented, stating: “The act of 1929 is indefinite, and would be void except for its reference to the Federal act.” The income-tax laws, from their inception, have been complicated and involved in ambiguities and doubts and differences of opinion. From 1913 until the present time few taxpayers have been able to make out their own returns. It has been necessary to resort to some one having experience, or experts. The tax is one of mystery, confusion, and error. The government employs an army of agents to search out errors, and in turn their errors are constantly being made manifest. Even then the experts, the Treasury Department, and the Income-tax Department of the United States have made so many errors in favor of the government that a yearly refund to the taxpayers for overpayments has averaged nearly one hundred million dollars.
In Helvering v. New York Trust Co., decided by the Supreme Court of the United States, May 28, 1934, that court said: “The rule that where the statute contains no ambiguity it must be taken literally a,nd given effect according to its language is a- sound one, not to be put aside to avoid hardships that may sometimes result from giving effect to the legislative purpose. Commr. of Immigration v. Gottlieb, 265 U. S. 310, 313 [44 Sup. Ct. 528]; Bate Refrigerating Co. v. Sulzberger, 157 U. S. 1, 37 [15 Sup. Ct. 508, 39 L. ed. 601]. But the expounding of a statutory provision strictly according to the letter, without regard to other parts of the act and legislative history, would often defeat the object intended to be accomplished. Speaking through Chief Justice Taney in Brown v. Duchesne, 19 How. 183 [15 L. ed. 595], this court said (p. 194) : ‘It is well settled that, in interpreting a statute, the court will not look merely to a particular clause in which general words may be used, but will take in connection with it the whole statute (or *111statutes on the same subject) and the objects and policy of the law, as indicated by its various provisions, and give to it such a construction as will carry into execution the will of the legislature, as thus ascertained, according to its true intent and meaning.’ Quite recently in Ozawa v. United States, 260 U. S. 178 [43 Sup. Ct. 65], we said (p. 194) : It is the duty of this court to give effect to the intent of Congress. Primarily this intent is ascertained by giving the words their natural significance; but if this leads to an unreasonable result, plainly at variance with the policy of the legislation as a whole, we must examine the matter further. We may then look to the reason of the enactment, and inquire into its antecedent history, and give it effect in accordance with its design and purpose, sacrificing, if necessary, the literal meaning in order that the purpose may not fail.’ And in Barrett v. Van Pelt, 268 U. S. 85, 90 [45 Sup. Ct. 437], we applied the rule laid down in The People v. Utica Ins. Co., 15 Johns. 358, 381 [8 Am. D. 243], that thing which is within the intention of the makers of a statute is as much within the statute as if it were within the letter; and a thing which is within the letter of the statute is not within the statute unless it be within the intention of the makers.’” Again, the court said: “Generally, questions as to the meaning intended do not arise until the language used is compared with the facts or transactions in respect of which the intent and purpose are to be ascertained.”
There is always a great volume of litigation in the Federal courts concerning the proper construction of the income-tax law. How, then, can it be said that the act is plain and unambiguous and means exactly contrary to what every tribunal has held it to mean from the first until the present consideration on rehearing? But it is insisted that the act provides, in section 2, subparagraph 2, viz.: “If neither of the changes indicated by subparagraphs 1 and 2 is made, the net income taxable by the State of Georgia shall be the same as that taxable by the United States, and the tax payable thereon to the State of Georgia shall be one third of that payable to the United States. But in case the net taxable income be changed as the result of complying with subparagraphs 1 and 2 above, the tax payable to the State shall be increased or reduced so as to be one third of what would have been payable to the United States under their laws upon such increased or reduced taxable net in*112come.” This, however, is not the entire act. Other portions can not be ignored. The first section declares that the tax shall be “similar” to the Federal tax; also the third, fourth, and sixth sections acknowledge changes. The law with regard to taxing Federal instrumentalities forces other changes. The section just quoted must be construed in harmony with all of the law. Thus construed, it can not be held that the changes mentioned in section 2, par. 2, are exhaustive, and that otherwise the act of 1929 is identical with the Federal tax law. The contention that under the Georgia act of 1929, as construed by the present State Revenue Commission, that is, that the law allows a deduction of the amount paid on Georgia income tax, and, with that change and the possible changes in section 2, subparagraphs 1 and 2, the Georgia tax would be one third of what would have been payable to the United States, overlooks one important fact. The Federal government deducts from the income of the taxpayer all taxes paid other than those paid to the United States. In other words, it deducts for State, county, municipal, school, and other taxes, not only in the State of the residence of the defendant, but such taxes paid in any and all of the States. Thus it will be seen that under such a construction the State may be bound morally, if not legally, to return an overpayment of taxes to many citizens. The State could not in good conscience call upon all taxpayers who made returns under the act of 1929 for a revision, unless the State is willing to refund overpayments as well as to collect underpayments.
Under the act of 1929 the first income taxes payable to the State were returned in 1930. Of course, as to this payment, there could not have been any Georgia income-tax payment for the year previous; therefore there was no such tax payment to be deducted in 1930, but there were doubtless, in many instances, other State taxes payable. The State having successfully maintained its contention, as ruled by the majority, it should stand willing to revise the returns and allow all taxes, except Federal taxes, to be deducted before arriving at the amount due to the State. The construction of the Revenue Commission is contrary to that of all of the above ivho have officially construed the act. In the brief filed in the Court of Appeals by the State Revenue Commission after the grant of a rehearing, it is suggested: “If the court is doubtful about the proper construction of the act of 1929, or is doubtful about the *113force and effect of the Norman regulation, the questions involved might be certified to the Supreme Court.” Moreover, in the brief of the State Law Department, filed on the motion for rehearing granted by this court, appears the following: '“Whatever may have been previously said upon this point, we wish to now definitely and finally take the position that State income taxes are deductible under the State income-tax act of 1929.” It is a reasonable inference from this statement that the State Law Department itself has at some time or times been doubtful as to the proper construction of the Georgia act of 1929 with reference to deduction of payments for State income taxes. Counsel now states that the act is so plain and so free from ambiguity that there is no room for construction.
Counsel for the State Kevenue Commission argue at great length and cite authorities to support the contention that “ where an act is plain, unambiguous, and positive, and is not capable of two constructions, the court is not authorized to construe the act according to the supposed intention of the legislature.” That proposition is in no way denied. The question is not herein involved. From first to last the view has been taken, by every tribunal to which the issue has been submitted, that the language of the act is not plain, not unambiguous; but that if it is, the plain meaning is the opposite of that now for the first time contended for by the State Kevenue commission. In the brief of the commission on rehearing the language used in the original opinion is criticized as follows : “Movant respectfully says that this court is not concerned with the reasonableness or unreasonableness or with the practicability or impracticability of the statute, when the words . . when . . the law is plain, clear, and unambiguous,” etc. In this also there is an entire failure to perceive the point at issue. Counsel assume that the statute is '“plain, clear, and unambiguous,” and treat that issue as settled. Nevertheless the commission’s motion for a rehearing devotes more than a page of argument for the purpose of showing that the act ‘“offers no insuperable obstacle to the calculation of the tax;” that the operation is “entirely practical . . easy of computation; . . also entirely practical and capable of calculation to a mathematical certainty.” The original opinion made no reference to the mathematical feature of the question, and referred to the construction as reasonable and practical only as *114throwing light on the meaning of a statute which has met with controversy throughout a very lengthy litigation. The above-stated facts seem amply sufficient to show that there is room for doubt as to the proper meaning of the act.
The above discussion applies to both the first and second questions.