Court Opinion

ID: 9418605
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:33:37.788159+00
Date Added: 2024-06-11T17:22:06.970205
License: Public Domain

Mr. Justice Holmes,
dissenting.
This is a suit, to recover the amount of a tax alleged to have been illegally, imposed. The plaintiff is a Spanish corporation licensed to do business in the Philippine Islands and having an office in Manila. In .1922 from time to time it bought goods and put them into its Philippine warehouses. It notified its head office in Barcelona, Spain, of the value of the goods and that office thereupon insured them under open policies issued by a company of London. From time to time also the Philippine branch shipped the goods abroad for sale and secured insurance upon the shipments in the same manner, the premiums being charged to it in both cases. By § 192 of the Philippine Insurance Act, No. 2427, as amended by Act No. 2430, where 'owners of 'property obtain insurance directly with foreign companies, the owners are required to report each case to the Collector of Internal Revenue and to ‘ pay the tax of one per centum on premium paid, in the manner required by law of insurance companies/ The defendant Collector collected this, tax on the above mentioned premiums from the plaintiff against its protest. The plaintiff bases its suit upon the contentions that the statute is contrary to the Act of Congress of August 29, 1916, c. 416, § 3, (the Jones Act); 39 Stat. 545,-546, 547, as depriving it of its property without due process of law, and also as departing from the requirement in the same section that the rules of taxation shall be uniform. The Supreme Court of the Philippines upheld the tax. A writ of certiorari was granted by this Court. 271 U. S. 655.
*100- The plaintiff’s reliance is upon Allgeyer v. Louisiana, 165 U. S. 578, in which it was held that a fine could hot be imposed by the State for sending a notice similar to the present to an insurance company out of the State.. But it seems to me that the. tax was justified and that this case is distinguished from that of Allgeyer and from St. Louis Cotton Compress Co. v. Arkansas, 260 U. S. 346, by the difference between a penalty and a tax. It is true, as indicated in the last cited case, .that every exaction of money for an act is a discouragement to the extent of the payment , required, .but that which in its immediacy is a discouragement may be part of an. encouragement when seen in its organic connection with the whole. Taxes are what we pay for civilized society, including the chance to insure. A penalty on the other hand is intended altogether to prevent the thing punished. It' readily may be seen that á State may tax things that under the Constitution as interpreted it can* not prevent. The constitutional right asserted in Allgeyer v. Louisiana to earn one’s livelihood by any lawful calling certainly is consistent, as we all know, with the calling being taxed.
Sometimes there may be a difficulty in deciding whether an’ imposition is a tax or a penalty, but generally the intent to prohibit when it exists is plainly expressed. Sometimes even when it .is called a tax the requirement is shown to be a penalty by its excess in amount over the tax in similar cases, as in St. Louis Cotton Compress Co. v. Arkansas. But in the present instance there is no-room for doubt. The charge not only is called a tax but is the same in amount as that, imposed where the right to impose it is not denied.
The Government has the insured within its jurisdiction, I can see no ground for denying its right to use its power to tax unless it can be shown that it has conferred no benefit of a kind that would justify the tax, as is held with-regard to property outside of a State belonging to one within it. Frick v. Pennsylvania, 268 U. S. 473, 489. *101But here an act was done in the Islands that was intended by the plaintiff to be and was an essential step towards the insurance, and, if that is not enough, the Government of the Islands was protecting the property at the very moment in respect of which it levied the tax. Precisely this question was met and disposed of in Equitable Life Assurance Co. v. Pennsylvania, 238 U. S. 143, 147.
The result of upholding the Government’s action i& just. When it taxes domestic insurance it reasonably may endeavor not to let the foreign insurance escape. If it does not discriminate against the latter, it naturally does not want to discriminate against its own. •
The suggestion that the rule of taxation is not uniform may be disposed of in a few words. The uniformity required is uniformity in substance, not in form. The insurance is taxed uniformly, and although in the case of domestic insurance the tax is laid upon the Company whereas here it is laid upon the insured, it must be presumed that in the former case the Company passes the tax on to the insured as an element in the premium charged.
For these reasons Mr. Justice Brandéis and I are. of the opinion that the judgment of the Supreme Court of the Islands should be affirmed.