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9. The Power of Taxation is Inherent in the Legislature of a Sovereign State

The power of taxation, being essential to the existence of a sovereign state, is inherent in sovereignty and does not depend upon any grant of power in the constitution, and accordingly each state of the Union possesses as a necessary attribute the power to levy taxes without any limit except as imposed by the constitution itself. The provisions of the state constitutions which relate to the power of taxation do not operate as grants of the power of taxation to the state governments but constitute limitations upon a power which would otherwise be without limit.1

Upon the customary division of governmental power into three classes, namely legislative, executive and judicial, the power of taxation is legislative and falls to the legislature without special assignment. That such an allocation of the power of taxation is universally recognized in the United States is a consequence of the struggles between King and Parliament over the right to levy taxes which were contemporaneous with the settlement of the American Colonies, and it finds expression in more extreme form in the provision found in both the state and the federal constitution that bills for raising revenue shall originate in the more numerous branch of the legislature. The power of determining what money shall be raised by taxation and what shall be the subjects of the taxes by which such money shall be raised is exclusively legislative and has no limit except as imposed by express constitutional provisions. Neither the executive nor the judicial branches of the government may exercise the power of taxation.*

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1 McCulloch v. Maryland, 4 Wheat. 428 (1819); Nathan v. Louisiana, 8 How. 82 (1848); Lane County v. Oregon, 7 Wall. 71, 76 (1868); Humphrey v. Peques, 16 Wall. 244, 249 (1872); Board of Liquidation v. McComb, 92 U. S. 531, 535 (1875); Transportation Co. v. Wheeling, 99 U. S. 273, 281 (1878); Hoge v. Railroad Co., 99 U. S. 348; United States v. Snyder, 149 U. S. 210, 214 (1893); New Jersey Central R. R. Co. v. Jersey City, 209 U. S. 473 (1908); MacLeod v. United States, 229 U. S. 416 (1913).

2 Talbot v. Janson, 3 Dall. 133, 163 (1795); Ware v. Hylton, 3 Dall. 199, 232 (1796); Meriwether v. Garrett, 102 U. S. 472, 515 (1880); Spencer v. Merchant 125 U. S. 345, 355 (1888).

3 Infra § 57.

4 Rees v. Watertown, 19 Wall. 107 (1873); Reine v. Levee Commissioners, 19 Wall. 655 (1873); United States v. Macon County, 99 U. S. 582 (1878); Meriwether v. Garrett, 102 U. S. 472 (1880).

Both the executive and judicial branches of the government have however many duties to perform in connection with taxation. The governor recommends the sum to be raised by taxation in his annual budget and he may veto revenue bills in the same manner as any other legislation. The actual assessment of property is entirely performed by administrative officials. The judiciary by appropriate proceedings enforces the collection of taxes, and on the other hand protects the taxpayer from any unconstitutional or otherwise unlawful exercise of the taxing power and may even be given authority to revise the valuation placed upon property by administrative officials.

10. Delegation of the Power of Taxation

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The power of taxation for state purposes, which is granted to the legislature by the constitution, cannot be delegated by the legislature to any other officer, board or tribunal. The legislature cannot invest any other body with the power to decide upon the amount to be raised by taxation, the property or the acts, privileges or occupations to be taxed, or the rate of taxation to be imposed. It is for this reason that statutes are of doubtful constitutionality which attempt to give an administrative officer an unrestrained discretion in adjusting the amount of the tax in cases in which the measure established by statute is inapplicable.1

A statute delegating to administrative officials the duty of listing and valuing the property subject to the tax and assessing the tax is however undoubtedly constitutional. So also there is no abdication of the legislative function if the legislature enacts a specific rule for fixing the rate of a tax, and the rate may be mathematically deduced by administrative officials from facts and events occurring each year. A statute is also valid which authorizes an executive officer to suspend certain provisions of the tax laws upon a contingency and to declare when such contingency has occurred. The power of collecting taxes may also be constitutionally delegated and it is for this reason that stat

1 The legislature cannot delegate the power of making laws. Opinion of the Justices, 160 Mass. 586 (1894); Wyeth v. Cambridge Board of Health, 200 Mass. 474, 481 (1909); Boston v. Chelsea, 212 Mass. 127 (1912).

2 Michigan Central R. R. Co. v. Powers, 201 U. S. 245 (1906). 3 Field v. Clark, 143 U. S. 649 (1892).

utes authorizing the purchaser of a tax lien to enforce the lien are constitutional.*

The rule that the power of taxation is incapable of delegation is subject to one universally recognized exception, namely, that the legislature may grant to municipal corporations the power of taxation for municipal purposes to be exercised by them through the voters of the municipality directly or through municipal councils elected by the people. The power of the legislature to authorize municipal corporations to levy taxes for the purpose of providing the necessary revenue to defray the expenses of their municipal government and to pay for the construction of public improvements within their respective limits has been exercised for so long a time that its existence is not open to dispute. It is however generally considered that the legislature cannot delegate the power of taxation, even for local purposes, to any board of officers not elected directly by the people. This rule however has no application to special assessments, which may constitutionally be imposed by appointive officers."

A municipal corporation has no inherent power to levy taxes and can exercise only those powers to tax which have been granted to it by the legislature; but it has been held that the grant of a charter to a municipal corporation with the usual powers and duties incident to such bodies by necessary inference carries with it the power of taxation, since otherwise it would be impossible for the municipality to exercise its powers and perform its duties. In any event a grant of power to a municipal corporation to borrow money or otherwise incur financial obligations necessarily carries with it the power to levy taxes to meet the obligations thus incurred."

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The grant of the power of taxation to a municipal corporation by the legislature of a state does not form such a contract between the state and the municipality as is within the protection of the provision of the constitution of the United States which

League v. Texas, 184 U. S. 156 (1902).

5 United States v. New Orleans, 98 U. S. 381 (1878); Stoutenburgh v. Hennick, 129 U. S. 141 (1889); Bradley v. Richmond, 227 U. S. 477 (1913). 6 Soliah v. Heskin, 222 U. S. 522 (1912).

7 Duffy v. Treasurer & Receiver General, 234 Mass. 42, 47 (1919).

8 United States v. New Orleans, 98 U. S. 381 (1878).

9 Loan Association v. Topeka, 20 Wall. 655 (1874); United States v. New Orleans, 98 U. S. 381 (1878); Ralls County Court v. United States, 105 U. S. 733 (1881); Quincy v. Jackson, 113 U. S. 332 (1885); Lowell v. Boston, 111 Mass. 454 (1873).

prohibits a state from impairing the obligation of contracts. The conferring of such right of taxation is an exercise by the legislature of a public and governmental power. It is the imparting to the municipality of a portion of the power of the state, which can lawfully be imparted to a governmental subdivision of the state. But from the very character of the power it cannot be imparted in perpetuity, and is always subject to revocation, modification and control by the legislative authority of the state."

In Massachusetts the power of the legislature to withdraw the power of taxation from the cities and towns of the state is limited by the fact that the existence of towns is expressly recognized in the constitution; and the legislature has consequently no power to abolish or to materially impair the town system of government as practised in this commonwealth continuously from a long time before the Declaration of Independence until the present time." As a system of town government in which the towns had no power of levying taxes would be a mere shadow of the system recognized by our constitution, the power of the legislature to deprive the towns of the power of taxation altogether is open to serious question; but the exemption of one class of property from local taxation is not unconstitutional when a large field of taxation is still left to the municipalities.12

11. Construction of Tax Laws

It is a familiar canon in the interpretation of the tax laws that they are not to be extended by construction.1 The liability of property to taxation depends upon the provisions of statutes and no tax can be sustained as within the spirit of a statute if it is not covered by its words.2 Tax laws are not to be stretched beyond

10 Williamson v. New Jersey, 130 U. S. 189 (1889).

11 Commonwealth v. Plaisted, 148 Mass. 375, 384 (1889); Opinion of the Justices, 229 Mass. 601, 607 (1918).

12 Duffy. v. Treasurer & Receiver General, 234 Mass. 42, 51 (1919).

1 Gould v. Gould, 245 U. S. 151 (1918); Sewall v. Jones, 9 Pick. 412 (1830); City National Bank v. Charles Baker Co., 180 Mass. 40 (1901); Martin L. Hall Co. v. Commonwealth, 215 Mass. 326, 329 (1913); Attorney General v. Clark, 222 Mass. 291, 294 (1915); Tyler v. Treasurer & Receiver General, 226 Mass. 306, 309 (1917); Hill v. Treasurer & Receiver General, 229 Mass. 474 (1918); Osgood v. Tax Commissioner, 235 Mass. 88, 90 (1920); Eaton, Crane & Pike Co. v. Commonwealth, 237 Mass. 523 (1921).

2 City National Bank v. Charles Baker Co., 180 Mass. 40 (1901); Hill v. Treasurer & Receiver General, 229 Mass. 474 (1918); Osgood v. Tax Commissioner, 235 Mass. 88, 90 (1920).

their reasonable meaning, but rather in case of doubt are to be construed with some strictness. Nevertheless the tax laws, like all other laws, must be construed with a reference to the reasons and principles of the common law and with a just regard to the subject matter to which they apply. The general policy of the law is that all property not specifically exempted shall be subject to taxation, and when it is contended that under the law a certain class of property is not subject to taxation, the policy of the law should be considered in construing the statute in controversy. But these considerations do not authorize the court to give a forced and unnatural meaning to the language of the statute. With the greatest vigilance which can be exercised, some property will find crevices in the law through which it will escape taxation. But when such crevices are discovered, it is the province of the legislature, and not of the court, to stop them.*

In the case of a controversy over the interpretation of a statute granting an exemption under certain conditions to property which is ordinarily taxable, the situation is different from a controversy over the inclusion of property within the terms of a statute imposing a tax. An exemption from taxation is an extraordinary grace of the sovereign power and is to be strictly construed. The grant of exemption must be made to appear plainly either by the express words or necessary intendment of the statute."

In construing tax laws words should be interpreted in their popular meaning rather than in any technical sense. Tax laws are enacted for practical ends. They must be administered in large part by the plain citizens who are elected assessors from time to time in the various municipalities. They should be construed and interpreted so far as possible so as to be susceptible of easy comprehension and not likely to become pitfalls for the

unwary.

In determining the meaning of a doubtful statute the prac

3 Swett v. Boston, 18 Pick, 123 (1836); Smith v. Northampton Bank, 4 Cush, 12 (1839).

* Swett v. Boston, 18 Pick. 123 (1836).

5 Redemptorist Fathers v. Boston, 129 Mass. 178 (1880); Third Congregational Society v. Springfield, 147 Mass. 396 (1888); Milford v. Worcester County Commissioners, 213 Mass. 162 (1912); Boston Lodge of Elks v. Boston, 217 Mass. 176 (1914); Sullivan v. Ashfield, 227 Mass. 24 (1917); Wheelwright v. Tax Commissioner, 235 Mass. 584 (1920).

6 Hemenway v. Milton, 217 Mass. 230 (1914).

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