Section 453, cl. 13, of the Code of 1886, and section 3911, cl.
14, of the Code of 1896 of Alabama, taxing stocks of railroads
incorporated in other states held by citizens of Alabama, are not
unconstitutional under the Fourteenth Amendment because no similar
tax is imposed on the stock of domestic railroads or of foreign
railroads doing business in Alabama, the property of the former
class of railroads being untaxed, and that of the latter two
classes being taxed, by the state.
The case is stated in the opinion of the Court.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is an action for taxes brought by the State of Alabama
against the executrix of the will of a citizen of Alabama. It
appears on the record that the property in dispute is stock in
Page 188 U. S. 731
railroads incorporated in other states than Alabama, and that
the objection was taken seasonably by plea and by requests for
instructions to the jury that the tax was unconstitutional under
the Fourteenth Amendment, because no similar tax was levied on the
stock of domestic railroads or of foreign railroads doing business
in that state. Demurrers to the pleas were sustained, there was a
verdict for the plaintiff, and judgment, which latter was affirmed
by the supreme court of the state without discussion, on the
authority of its decision at an earlier stage,
State v.
Kidd, 125 Ala. 413, and the case is brought here by writ of
error.
The statutes levying the tax in question are the Code of 1886,
section 453, cl. 13, and the Code of 1896, section 3911, cl. 14.
They are general clauses which need not be set forth, as their
effect is not disputed under the construction given to them by the
supreme court of the state. The exemption by the Code of 1886 of
stock in domestic railroads, and in others that list substantially
all their property for taxation,
Sturges v. Carter,
114 U. S. 511,
114 U. S. 522,
is not denied, and while it is denied by the defendant in error
that there is a similar exemption by the Code of 1896, for the
purposes of decision, we shall assume, without examination, that it
is granted.
State v. Kidd, 125 Ala. 413, 422. On this
assumption, the argument for the plaintiff in error is that if
foreign stock is treated for purposes of taxation as present by
fiction in the domicil, it must be treated as present also for
purposes of protection; that the tax is a tax on values, and that
net values of similar articles must be treated alike. It is said
that you cannot look further back.
If the argument went further and denied the right to tax on
fiction at all, and therefore denied the right to tax foreign
stocks, it would seem to us to have more logical force, although we
are far from implying that it would be unanswerable, or that it can
be regarded as open. Very likely such taxes can be justified
without the help of fiction.
Sturges v. Carter,
114 U. S. 511;
Dwight v. Boston, 12 Allen, 316;
Dyer v. Osborne,
11 R.I. 321. But the argument does not go to that extent, and,
limited as it is, the proposition that the plaintiff in error is
denied the equal protection of the laws for the reason which we
have stated
Page 188 U. S. 732
strikes us as wholly without force. We see nothing to prevent a
state from taxing stock in some domestic corporations and leaving
stock in others untaxed on the ground that it taxes the property
and franchises of the latter to an amount that imposes indirectly a
proportional burden on the stock. When we come to corporations
formed and having their property and business elsewhere, the state
must tax the stock held within the state if it is to tax anything,
and we now are assuming the right to tax stock in foreign
corporations to be conceded. If it does tax that stock, it may take
into account that the property and franchise of the corporation are
untaxed, on the same ground that it might do the same thing with a
domestic corporation. There is no rule that the state cannot look
behind the present net values of different stocks.
See American
Refining Co. v. Louisiana, 179 U. S. 89.
We say that the state, in taxing stock, may take into account
the fact that the property and franchises of the corporation are
untaxed, whereas in other cases they are taxed, and we say untaxed
because they are not taxed by the state in question. The real
grievance in a case like the present is that, more than probably,
they are taxed elsewhere. But with that the State of Alabama is not
concerned. No doubt it would be a great advantage to the country
and to the individual states if principles of taxation could be
agreed upon which did not conflict with each other, and a common
scheme could be adopted by which taxation of substantially the same
property in two jurisdictions could be avoided. But the
Constitution of the United States does not go so far.
Coe v.
Errol, 116 U. S. 517,
116 U. S. 524;
Knowlton v. Moore, 178 U. S. 41;
Dyer v. Osborne, 11 R.I. 321, 327; Cooley, Taxation, 2d
ed. 22
n. One aspect of the problem was touched in the case
of
Blackstone v. Miller at the present term,
188 U.
S. 189. The State of Alabama is not bound to make its
laws harmonize in principle with those of other states. If property
is untaxed by its laws, then for the purpose of its laws, the
property is not taxed at all.
It is said that the state may not tax a man because by fiction
his property is within the jurisdiction, and then discriminate
against him upon the fact that it is without. The state does
Page 188 U. S. 733
nothing of the kind. It adheres throughout to the fiction, if it
be one, that the stock, the property of the plaintiff in error, is
within the jurisdiction. There is no inconsistency in the state's
recognizing at the same time that the property of the corporation,
that which gives the plaintiff's stock its value, is taxed or
untaxed, as the case may be. There is no inconsistency in
recognizing that it is untaxed because it cannot be reached. Shares
of stock may be within a state, and the property of the corporation
outside it.
We need not repeat the commonplaces as to the large latitude
allowed to the states for classification upon any reasonable basis.
Pacific Express Co. v. Seibert, 142 U.
S. 339,
142 U. S.
351-352;
Gulf, Colorado & Santa Fe Railway Co.
v. Ellis, 165 U. S. 150,
165 U. S. 155;
Nicol v. Ames, 173 U. S. 509,
173 U. S. 521;
Atchison, Topeka & Santa Fe Railway Co. v. Matthews,
174 U. S. 96;
American Sugar Refining Co. v. Louisiana, 179 U. S.
89. What is reasonable is a question of practical
details, into which fiction cannot enter.
Practically, the law before us, in the broad aspect in which
alone we are asked to consider it, seems to us to work out
substantial justice and equality if we leave on one side the
probable taxation by other states, which does not affect the State
of Alabama's rights.
Judgment affirmed.
JUSTICES HARLAN and WHITE dissented.
Kidd v. Alabama, No. 157. This case was to abide the
result of the foregoing.
Judgment affirmed.