Court Opinion

ID: 6258417
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:53:18.571203+00
Date Added: 2024-06-11T08:59:38.198124
License: Public Domain

Dissenting Opinion by
Mr. Justice Cohen :
Johnstown has imposed a $10 tax for the year 1962 on each person engaged in occupations within Johns-town for the privilege of engaging in his occupation as long as his gross earnings therefrom total $600. In *322other words, it is the amount of earnings from the exercise of the privilege in Johnstown which constitutes the dividing.
Has Johnstown in imposing no tax upon persons who earn less than $600 from pursuit of their Johns-town occupations infringed the Pennsylvania Constitution’s requirement that taxes be uniform upon the same class of subjects? In Kelley v. Kalodner, 320 Pa. 180, 181 A. 598 (1935), the court invalidated a state income tax. There it specifically was held that to the extent a tax was imposed on income from rents, dividends, interest, etc. (unearned income), the tax was directly upon the income and was a property tax and that a property tax was definitely subject to the rule of uniformity. The court there found a lack of uniformity in the imposition of different rates of tax depending upon the amount of income and, possibly, in the exemption from tax of the first $1,000 (for single persons) or $1500 (for married persons) of income for all persons. I say “possibly” because it was indicated that the particular exemption was reasonable and in light of the current state of the law of uniformity, whereby reasonable classification is permitted, I am not sure that a flat rate tax with exemptions is not valid even under the principles of Kelley v. Kalodner.
In any event, are the principles of Kelley v. Kalodner controlling here? In that case the tax was on income earned and unearned. The court there felt that no reasonable basis existed for classifying income according to amount and taxing the different amounts at different rates. Here, the tax is on the privilege of engaging in an occupation. Is it so obviously unreasonable to state that the privilege may be taxed only if its exercise produces a return above a certain amount, that the receipt of less than such amount indicates that exercise of the privilege provides either an insufficient basis for taxation or is too “de minimis” to require en*323gaging in all the administrative and enforcement activity otherwise required? In short, may we classify in this case without violating the Constitution?
Classification, if reasonable, is permissible. Jones and Laughlin Tax Assessment Case, 405 Pa. 421, 175 A. 2d 856 (1961). See Coe v. Duffield, 185 Pa. Superior Ct. 532, 138 A. 2d 303 (1958). In viewing the privilege tax imposed here, I see no more unreasonable a classification than in classifying those who inherit into lineals and collaterals (see Act of June 15, 1961, P. L. 373, §§403, 404) or in classifying insurance companies between foreign and domestic. The Germania Life Insurance Co. of New York v. Commonwealth of Pennsylvania, 85 Pa. 513 (1877). Here the legislative arm of the city has determined that there is not sufficient nexus between the small earner and the city to make the determination that he is exercising the privilege of engaging in an occupation in Johnstown. 'Many instances would develop in which the amount earned by occasional workers would be less than the tax on the privilege of working. Can we now say that the legislative determination not to collect the tax from those who earn less than the amount necessary to make them actually engaging in an occupation unconstitutional?
The flaw in the majority opinion is in its immediate jump from concluding that the uniformity clause applies to privilege as well as property taxes thus concluding that the tax levied here lacks uniformity. Even assuming the former, we do not, ipso facto, determine the latter. The subject of taxation must be analyzed; and, here, unlike in Kelley v. Kalodner, the income is not the subject of tax. It is, rather a device of classification and, I believe, a reasonable one under the circumstances. Nothing presented by appellee here indicates otherwise.
In Turco Paint & Varnish Company v. Kalodner, 320 Pa. 421, 184 A. 37 (1936), our Court determined *324that the corporate net income tax which applied a flat rate of tax to federally determined corporation net income, even though the corporation net income had all sorts of exemptions built into it, did not create lack of uniformity. Nor did the exclusion from the corporate net income tax of building and loans, banks, insurance companies, etc., violate the uniformity clause. In Commonwealth v. Warner Bros. Theatres, Inc., 345 Pa. 270, 27 A. 2d 62 (1942), we held that the fact that the federal definition of net income, both as to what is to be included and what may be deducted therefrom, does not impinge upon our uniformity clause. Both the Corporate Net Income Tax and the Capital Stock Tax imposed by the Commonwealth and paid by Pennsylvania corporations are filled with deductions and exemptions. I cannot subscribe to a system of jurisprudence that permits exemptions from taxation to corporations and at the same time denies similar treatment to individuals.
I dissent.