Court Opinion

ID: 3268762
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:37:11.317863+00
Date Added: 2024-06-11T14:00:07.143678
License: Public Domain

On January 19, 1925, this court held that "the State is without power to impose an income tax." Sims v. Ahrens, 167 Ark. 557,271 S.W. 720.
Three and a half months thereafter, on May 4, 1925, on rehearing in the same case, this court, by a three to two vote, held that, while the statute under consideration, by which a tax on gross income was levied, was invalid, the state might, under our constitution, levy a tax on net income, with "proper" deductions. Since that time there has been no change in our constitution affecting the power of the General Assembly to levy an income tax; nor has this court up to this time said a tax might be levied against anything other than net income.
The appellant does not argue, and the majority do not hold, that the Legislature has power under the constitution to tax any income except net income, but, say the majority, the amount paid by the citizen to the federal government as income tax may be treated by the state, for taxing purposes, as a part of his net income.
It is freely conceded, as it must be, that the amount paid out for federal income tax, being an absolutely necessary expense of carrying on business, is not, for practical purposes a part of net income. But, argues appellant, and so hold the majority, a taxpayer may have a net income of one amount for ordinary and practical purposes and yet have a much larger net income for purposes of calculating income tax thereon. In my humble judgment, merely to state this declaration of the majority is to show the obvious fallacy of their holding. The implications in this holding are so fraught with future danger to the taxpayer that I am impelled to record my dissent from any such a paradoxical theory.
When we deal with constitutional protection to the taxpayer's pocketbook, language ought to be considered and construed according to its common, everyday meaning. This court, by its former decisions, has assured those who invest in Arkansas enterprises that, under our *Page 491 
constitution, Arkansas may levy a tax against only their net incomes; but I fear that much of that assurance is being whittled away when we hold that the Legislature may arbitrarily say that, for the purpose of computing, income tax, the taxpayer's net income is much larger than it actually is.
A great jurist once truly said that the power to tax is the power to destroy. When considering the exercise of this potentially destructive function of government, courts ought not, without the most cogent reasons, disturb assurances, as to constitutional limits on the taxing power, previously given to those who furnishing the capital to build the enterprises and industries of a state.