Court Opinion

ID: 3516323
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:27:37.816862+00
Date Added: 2024-06-11T13:45:10.559028
License: Public Domain

I cannot agree with the view reached by my brethren as to the second count of the declaration in this case, but I hardly think it worth while to set out my reasons at length, and shall be content to say that it has never been, and is not now, the policy of our laws to tax the shares of stock of any corporation in the hands of a shareholder, and this, too, whether the corporation be foreign or domestic, whether domiciled here or in another state.The Simmons case, 70 Miss. 485, 12 So. 477; Bank v. Oxford,70 Miss. 513, 12 So. 203; and the Carrier case, 89 Miss. 277, 42 So. 347, and Robertson v. Miss. Valley Co., 120 Miss. 159, 81 So. 799 — when read carefully, are reasonably convincing that shares of stock in the hands of the stockholder are not taxable under the laws of this state.
The broad and just principle seems to have been laid down, especially in the Simmons case, that unless the legislature expressly taxes the shares in the hands of the shareholder, then they are not taxable, because to tax the shares in the hands of the shareholder would be to twice tax the capital stock or the property already taxed, which is unfair and unjust; and while the legislature has the power to double tax, it must clearly express its purpose to do so, otherwise the courts will seek a reason to defeat the double taxation. The shares of stock being merely the evidence of the ownership of the capital stock or the property of the corporation, it would be taxing the corporation twice if the shares are taxed as well as the capital stock or the corporate property.
No one doubts the authority of the state to double-tax corporations, and it has been held that taxing shares in a foreign corporation held by a citizen in another state would not be double taxation in the strict sense, because the taxation of the corporate property in the foreign *Page 721 
state would not be taxation in the same jurisdiction where the share is taxed in the hands of the shareholder. But the point I contend for is that it never has been and is not now the policy of our state to tax both the share in the hands of the shareholder and the capital stock or the property of the corporation, because to do so would be to tax the same property twice; it being presumed that the capital stock or the property is taxed where located or domiciled.
I do not think the legislature of this state has intended to tax the shares in the hands of the shareholder, because there is no statute for that express purpose, and since the rule in the Simmons case has been the guide in this state for several decades, and the legislature is presumed to have known it, it is my opinion the statutes relied upon by the majority opinion as authority for taxing the shares in the hands of the shareholders are not sufficient, and do not plainly and expressly authorize the taxation of shares in the hands of a shareholder, of either a foreign or domestic corporation.
If the legislature has expressly imposed the tax on the shares of stock, as now held by the majority opinion, and the tax is enforced, no revenue would be thereby obtained by the state; and, on the other hand, the securities in foreign corporations, held by citizens in this state, would be driven from our state, either by the holder disposing of his stock because it would be unprofitable to keep it, or he would move himself out of the state.
For illustration: If a citizen owns stock in a foreign corporation, for instance, a railroad corporation, and he is required to pay ad valorem taxes on the shares of stock, he would find it unprofitable to hold the stock, because the average tax levy in the municipalities of our state is six per cent., and the average dividends that the holder would receive upon his stock would be about six per cent.; therefore the investment would be wholly unprofitable and the stock would be disposed of. Foreign securities would thereby become undesirable. Consequently in a *Page 722 
very short time there would be no holder of shares in a foreign corporation left in the state, for the reason that the shareholder would either leave the state with his property or else sell the shares of stock to persons in some other state.
It would therefore result that the state would get no revenue from this character of tax, and the citizen who desired to invest his money in the stock of a foreign corporation, draw his dividends, and spend them in this state, would move to some other state so that he might be free to invest his capital in such profitable dividend-paying investments. In no event could the state profit by such a tax, even though the holder of shares in a foreign corporation should once render them for assessment.
Therefore, I am unwilling to charge the legislature with the intent to impose such taxation. They have not done so by any express statute, and the majority opinion must rely upon different statutes, pieced together, with the help of the state tax commission, all of which is added together, to impose the taxation. I think the majority is not warranted, by the statutes now in force, in holding that this character of property is assessable for ad valorem taxation. There is a plausible argument to support the views of the majority on this question, but I cannot bring myself to believe the legislature intended to impose the tax on shares in the hands of the shareholder, as the majority opinion maintains. A study of the authorities cited, by those who are interested enough to do so, will, in my judgment, result in forcing the conclusion that the law has always been against the principle of taxing property twice, or I may say, generally speaking, double taxation. And I shall follow the rule against such unjust taxation until the legislature legislates expressly to the contrary.
SMITH, C.J., concurs in above dissent. *Page 723