Double taxation is not forbidden by the Fourteenth Amendment. P.
251 U. S.
A state may use its taxing power to carry out a policy
respecting corporations. Id.
It may discriminate between local corporations and individuals
by making the former liable to be taxed on shares held in other
local corporations, themselves fully taxed, and to be sued for the
back taxes, while leaving individuals free from such liabilities.
211 S.W. 662 affirmed.
Page 251 U. S. 533
The case is stated in the opinion.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a suit by the State of Arkansas against the plaintiff in
error, a corporation of the state, to recover back taxes alleged to
be due upon a proper valuation of its capital stock. The
corporation owned stock in two other corporations of the state,
each of which paid full taxes, and it contended that it was
entitled to omit the value of such stock from the valuation of its
own. This omission is the matter in dispute. The corporation
defends on the ground that individuals are not taxed for such stock
or subject to suit for back taxes, and that the taxation is double,
setting up the Fourteenth Amendment. The case was heard on demurrer
to the answer and agreed facts, and the statute levying the tax was
sustained by the supreme court of the state.
The objection to the taxation as double may be laid on one side.
That is a matter of state law alone. The Fourteenth Amendment no
more forbids double taxation that it does doubling the amount of a
tax; short of confiscation or proceedings unconstitutional on other
grounds. Davidson v. New Orleans, 96 U. S.
, 96 U. S. 106
Tennessee v. Whitworth, 117 U. S. 129
117 U. S.
-137; St. Louis Southwestern Ry. Co. v.
Arkansas, 235 U. S. 350
235 U. S.
-368. We are of opinion that it also is within the
power of a state, so far as the Constitution of the United States
is concerned, to tax its own corporations in respect of the stock
held by them
Page 251 U. S. 534
in other domestic corporations, although unincorporated
stockholders are exempt. A state may have a policy in taxation.
Quong Wing v. Kirkendall, 223 U. S.
, 223 U. S. 63
the State of Arkansas wished to discourage but not to forbid the
holding of stock in one corporation by another and sought to attain
the result by this tax, or if it simply saw fit to make
corporations pay for the privilege, there would be nothing in the
Constitution to hinder. A discrimination between corporations and
individuals with regard to a tax like this cannot be pronounced
arbitrary, although we may not know the precise ground of policy
that led the state to insert the distinction in the law.
The same is true with regard to confining the recovery of back
taxes to those due from corporations. It is to be presumed, until
the contrary appears, that there were reasons for more strenuous
efforts to collect admitted dues from corporations than in other
cases, and we cannot pronounce it an unlawful policy on the part of
the state. See New York v. Barker, 179 U.
, 179 U. S. 283
We have nothing to do with the supposed limitations upon the power
of the state legislature in the constitution of the state. Those
must be taken to be disposed of by the decisions of the state
court. As this case properly comes here by writ of error, an
application for a writ of certiorari that was presented as a
precaution will be denied.
MR. JUSTICE McKENNA, MR. JUSTICE DAY, MR. JUSTICE VAN DEVANTER,
and MR. JUSTICE McREYNOLDS, dissent.