it appears that the state or local assessors have adopted a rule or system of taxation which necessarily operates so as to create an arbitrary discrimination against certain persons or certain property based on no rational grounds, the federal constitution is violated as clearly as if the discrimination had been authorized by statute. Thus when the assessors habitually assess the property of one class at its full value and property of the same character at less than its full value, or assess property of one person at its income-producing value and other property of the same character belonging to others at its sale value there is a violation of the constitutional rights of the victims of such discrimination.

33. Double Taxation

The phrase "double taxation" has two meanings, one narrow and the other broad. In the narrow sense no taxation is double unless the same property is twice subjected to the same tax by authority of the same state while other like property is taxed but once. Such taxation is undoubtedly unconstitutional. In its broad sense the phrase "double taxation" is much more inclusive and extends to all cases in which the burden of two or more pecuniary impositions, whether property taxes or excises and whether imposed by authority of the same or of different jurisdictions, falls upon the same property within the same taxing period. Examples of double taxation in the broad sense include an excise upon a certain use of property and a property tax upon the same property;1 a tax upon the same property by two different states, in each of which it has a situs sufficient to justify a tax; a tax upon a debt and a tax upon the property of the debtor applicable to the payment of the debt, especially when such property is mortgaged or pledged for the payment of the debt; a tax upon depositors in a bank for their deposits

3

€ Cummings v. Merchants' National Bank, 101 U. S. 153 (1879); Albany County v. Stanley, 105 U. S. 305 (1881); New York v. Barker, 179 U. S. 279 (1900); Raymond v. Chicago Traction Co., 207 U. S. 20 (1907).

7 Wells Fargo & Co. v. Johnson, 239 U. S. 234 (1915).

1 St. Louis Southwestern R. R. Co. v. Arkansas, 235 U. S. 350 (1914); Commonwealth v. New England Slate & Tile Co., 13 Allen 391 (1866); Opinion of the Justices, 195 Mass. 607, 611 (1908).

2 Great Barrington v. Berkshire County Commissioners, 16 Pick 572 (1835); Dwight v. Boston, 12 Allen 316 (1866). See as to inheritance taxes, infra § 47. 3 Williams v. Brookline, 194 Mass. 44 (1907).

4 Knight v. Boston, 159 Mass. 551 (1893).

and a tax upon the bank for the property in which the deposits are invested; and a tax upon a corporation for its franchise or its property and a tax upon the capital stock of the corporation whether assessed upon the corporation or upon the individual shareholders."

It is well settled that a tax which is double only in the broad sense is not on that account in violation of the Fourteenth Amendment or the corresponding provisions of the constitution of the state. Nevertheless the existence of double taxation

5 Commonwealth v. People's Five Cents Savings Bank, 5 Allen 428 (1862); Suffolk Savings Bank Petitioner, 149 Mass. 1 (1889).

6 Tennessee v. Whitworth, 117 U. S. 129, 136 (1886); Salem Iron Factory v. Danvers, 10 Mass. 514 (1813).

In

7 Property may be taxed at the same time in two states, in each of which it has a taxing situs. Thus in Coe v. Errol, 116 U. S. 517 (1886) it was said (at page 524) that the fact that certain logs were lawfully taxed in Maine could have no bearing upon the question whether they might also be lawfully taxable in New Hampshire. In Bemis v. Aldermen of Boston, 14 Allen 366 (1867) it was held that the interest of an inhabitant of Massachusetts as a partner in the property of a firm carrying on business in Missouri was taxable in Massachusetts although the property of the firm was taxed in Missouri. In Brooks v. West Springfield, 193 Mass. 90 (1906) it was held that a bond owned by a resident of Massachusetts might be taxed at its full value, though secured by mortgage of real estate outside the state and there taxed. In Fidelity etc. Trust Co. v. Louisville, 245 U. S. 54 (1917) it was held that a bank deposit might be taxed both in the state in which the bank was situated and in the state in which the depositor lived. In Cream of Wheat Co. v. Grand Forks, 253 U. S. 325 (1920) it was held that a state might tax the intangible personal property of a resident or of a domestic corporation, although the property was lawfully taxed in other states in which it was situated. Commercial National Bank v. Chambers, 182 U. S. 556 (1901) it was held that a state might tax the shares of a national bank without dedu tion for real estate belonging to the bank and situated in other states. In Kidd v. Alabama, 188 U. S. 730 (1903); Wright v. Louisville etc. R. R. Co., 195 U. S. 219 (1904); Dwight v. Boston, 12 Allen 316 (1866) it was held that a state might tax the shares of stock in foreign corporations belonging to residents of the state without deduction for property of the corporations located and taxed in other states. In Bellows Falls Power Co. v. Commonwealth, 222 Mass. 51 (1915) it was held that a state might tax stock of a foreign corporation owned by a resident of the state, although the stock was also taxed in the state in which the corporation was organized. In American Glue Co. v. Commonwealth, 195 Mass. 528 (1907) it was held that a state might tax the franchise of a domestic corporation without deduction for real estate and personal property located in another state and there taxed. In Blackstone v. Miller, 188 U. S. 189 (1903) and Welch v. Treasurer & Receiver General, 223 Mass. 87 (1916) it was held that the same property might be subjected to an inheritance tax both in the state in which the decedent last dwelt and in the state in which the property was situated. In Hunt v. Perry, 165 Mass. 287 (1896) it was held that a state might tax the interest of a resident beneficiary of a trust fund, although the trust fund itself was taxed to the trustee in the state in which he lived. See also, Maguire v. Tax Commissioner, 230 Mass. 503 (1918), affirmed, Maguire v. Trefry, 253 U. S. 12 (1920). Property may be reached indirectly by taxation more than once under the laws of the same

even in its broad sense is not without its effect upon rights under the law. Thus the fact that property is reached by taxation in some other way is a sufficient justification for exempting it from a general property tax under a constitution requiring proportional taxation; and in construing a tax law of doubtful meaning it will be presumed that the legislature did not intend to authorize the imposition of double taxation, even in its broad

sense."

34. What may be Subjected to a Property Tax

No state can constitutionally tax as property that which is not property; but there is nothing in the nature of things or in the limitations of the federal constitution which restrains a state from taxing at its real value intangible property. A promise to pay by a solvent debtor is as certainly property as a building or a steamboat, and is as fully liable to taxation. It matters not in what this intangible property consists, whether privileges, corporate franchises, contracts or obligations. It is enough that it is property which though intangible exists, which has value, produces income and passes current in the markets of the world.1 Even a membership in a stock exchange or board of trade, if it has value, is taxable as property. An unliquidated claim for damages against a solvent debtor is not taxable as property if

state. A state may impose an excise upon a certain act and at the same

time impose a property tax upon the property used in the per

formance of the act. Owensboro National Bank v. Owensboro, 173 U. S. 664 (1899); Ohio Tax Cases, 232 U. S. 576 (1914); St. Louis Southwestern R. R. Co. v. Arkansas, 235 U. S. 350 (1914). A statute is not unconstitutional which levies an excise on the business of issuing annuity contracts while the annuitant is taxed on the annuity as income. Mutual Benefit Life Insurance Co. v. Commonwealth, 227 Mass. 63 (1917). A debt may be taxed to the creditor, although the property of the debtor applicable to the payment of the debt is also taxed. Williams v. Brookline, 194 Mass. 44 (1907). The stockholders of a corporation may be taxed on their shares, and the corporation be taxed on its property or franchise by the same state. Bank of Commerce v. Tennessee, 161 U. S. 134 (1896); Rogers v. Hennepin County, 240 U. S. 184 (1916); Salem Iron Factory, v. Danvers, 10 Mass. 514 (1813); Tremont Bank v. Boston, 1 Cush. 142 (1848); A. J. Tower Co. v. Commonwealth, 223 Mass. 371 (1916). The corporation may be taxed upon its capital stock and the shareholders on their shares by the same state. Farrington v. Tennessee, 95 U. S. 679 (1877); New Orleans v. Houston, 119 U. S. 265 (1886).

8 Infra § 53.

9 Salem Iron Factory v. Danvers, 10 Mass. 514 (1813).

1 Adams Express Co. v. Ohio State Auditor. 166 U. S. 185, 219 (1897).

2 Rogers v. Hennepin County, 240 U. S. 184, 189 (1916).

the whole claim is disputed; if, however, the debtor concedes that he owes part of the sum claimed, the claim is taxable to the extent that it is conceded to be due. Water power for mill purposes is not a distinct subject of taxation, and cannot be taxed independently of the land to which it belongs."

35. What may be Subjected to an Excise

The power of a state to levy an excise upon privileges enjoyed, occupations carried on or acts performed within its jurisdiction is without limit except so far as limits are imposed by the constitution of the state or of the United States. There is no fundamental requirement that only those privileges, occupations or acts can be taxed which the legislature of the state may constitutionally regulate or prohibit;1 and conversely the sovereign power of taxation of a state extends to privileges which it has not granted and to acts which it has not authorized."

A state may at the same time tax and prohibit the performance of an act. There is nothing unconstitutional in the taxation of an act which is prohibited by law, and in such case the payment of the tax is no justification for the performance of the act.3

36. Procedural Rights - Assessment and Valuation The Fourteenth Amendment not only protects every person within the jurisdiction of a state from the enforcement of the tax laws of a state in such a manner as to deny him the equal protection of the law by means of arbitrary discrimination against his property, but also makes it necessary that the state provide an orderly procedure in the levy of taxes by which the taxpayer may have a reasonable opportunity to protect whatever substantive rights the constitution affords him before the tax is conclusively established against him.

In the case of a tax on property levied in proportion to its value there must be a formal act of assessment, consisting of a description of the property to be assessed, its inclusion in the 3 Lowell v. Street Commissioners of Boston, 106 Mass. 540 (1871); Powers v. Worcester, 210 Mass. 471 (1912).

4 Deane v. Hathaway, 136 Mass. 129 (1883).

5 Infra page 191.

1 See however the rule under the Massachusetts Constitution infra § 55.

2 Flint v. Stone Tracy Co., 220 U. S. 107. 158 (1911).

3 Hodge v. Muscatine County, 196 U. S. 276 (1905).

tax list and the determination of its value, and the assessment must be made a matter of record, so that the owner of the property may have means of ascertaining definitely the fact that it has been assessed and the amount of the assessment.1 The assessment may be upon the property itself instead of the owner,2 so that the owner is not deprived of any constitutional right if he is not correctly named or not named at all in the assessment. An owner of property has no constitutional right to insist that all the statutory requirements of assessment are complied with and a statute is not unconstitutional which provides that no error or omission in the assessment proceedings shall invalidate the tax unless it appears that the person assessed has been prejudiced and that his taxes have thereby been unfairly or unequally assessed.*

In the case of an excise no formal act of assessment is necessary unless the amount of the excise depends upon the value of the property used in connection with the act which is taxed; and the legislature may levy a direct tax on property which has a value definitely ascertainable by computation or the examination of records without any formal valuation by assessors or other administrative officers." When property has no definitely ascertainable value, its valuation is a quasi judicial act; but statutes have been held constitutional which establish a minimum figure for the valuation of land; and a formula for

1 Illinois Central R. R. Co. v. Kentucky, 218 U. S. 551 (1910). The assessment may however be entered on the back of the envelope in which the papers concerning the assessment are filed, instead of in a book, if the envelope is a public record. Illinois Central R. R. Co. v. Kentucky, 218 U. S. 551 (1910). An owner is not deprived of his constitutional rights if his land is assessed by a description which is not technically correct, if it is sufficient to apprise the owner that the land assessed is his. Ontario Land Co. v. Yordy, 212 U. S. 152 (1909).

2 Witherspoon v. Duncan, 4 Wall. 210 (1866); Castillo v. McConnico, 168 U. S. 674 (1898); Ballard v. Hunter, 204 U. S. 241 (1907); Ontario Land Co. v. Yordy, 212 U. S. 152 (1909).

3 Castillo v. McConnico, 168 U. S. 674 (1898); Ontario Land Co. v. Yordy, 212 U. S. 152 (1909).

4 Winona etc. Land Co. v. Minnesota, 159 U. S. 526 (1895).

5 Thus no formal valuation is required in the case of a tax on the interest of obligations, King v. United States, 99 U. S. 229 (1878); United States v. Erie R. R. Co., 107 U. S. 1 (1882), or on the undistributed earnings of corporations Dollar Savings Bank v. United States, 19 Wall. 227 (1873); United States v. Philadelphia etc. R. R. Co., 123 U. S. 113 (1887), or on bonds of corporations when taxable at par, Bell's Gap R. R. Co. v. Pennsylvania, 134 U. S. 232 (1890); Jennings v. Coal Ridge Imp. etc. Co., 147 U. S. 147 (1893).