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in a given taxing district must be assessed at the same rate.2 In other words, a tax is proportional within the meaning of the constitution only when it bears the same ratio to the whole sum raised by taxation as the taxpayer's taxable estate bears to the whole taxable estate within the taxing district. Exact proportion is of course impossible, but the aim of any statute must be equality, and a statute which tends directly and necessarily to produce disproportion is therefore unconstitutional.*

In course of time the increasing complexities of the industrial life of the community made the inflexible rule of proportionality produce extremely disproportionate and unequal taxation, and various measures of relief were suggested; but the supreme judicial court consistently held that any scheme of taxation which aimed at equality through means which were not proportional was not valid under the constitution." The only relief possible was through amendments to the constitution. Attempts have frequently been made to strike out the word "proportional" from the constitution, but as yet have been unsuccessful. In 1919 an amendment was proposed and agreed to by the legislature which authorized the levy of taxes at different rates upon different classes of personal property, with a limita

Allen 298 (1866); Connecticut Insurance Co. v. Commonwealth, 133 Mass. 161 (1882); Gleason v. McKay, 134 Mass. 419, 424 (1883); Northampton v. Hampshire County Commissioners, 145 Mass. 108 (1887); Tremont & Suffolk Mills v. Lowell, 163 Mass. 283, 285 (1895); Opinion of the Justices, 195 Mass. 607 (1908).

2 For this reason it has been held that statutes are unconstitutional which provide that all reservoirs and dams used to maintain a supply of water for mill purposes shall be assessed at a valuation not exceeding that of land of like quality in the immediate vicinity, Cheshire v. Berkshire County Commissioners, 118 Mass. 386 (1875); which provide a uniform tax of three mills on the dollar on money, debts, bonds and stocks, Opinion of the Justices, 195 Mass. 607 (1908); which provide for the taxation of all personal property in the commonwealth at a uniform rate while real estate remains taxable at the local rate, Opinion of the Justices, 208 Mass. 616 (1911); or which provide for the taxation of certain classes of property by an assessment at a certain number of times its net income, Opinion of the Justices, 220 Mass. 613, 622 (1915). On the other hand a statute providing that taxes on national bank shares owned by non-residents of the state should be turned over to the commonwealth and that the assessors should omit their value in determining the valuation on which the rate of taxation is based is constitutional, Providence Institution for Savings v. Boston, 101 Mass. 575 (1869).

3 Opinion of the Justices, 220 Mass. 613, 621 (1915).

4 Cheshire v. Berkshire County Commissioners, 118 Mass. 386 (1875).

5 For a full discussion of the evils of the proportional system of taxation

and the efforts to find a remedy see infra pages 428 to 432 inc.

6 Opinion of the Justices, 220 Mass. 613, 621 (1915).

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tion that the tax upon the same class of property should be uniform throughout the commonwealth; but the amendment was defeated in the following year. In the meantime the greater part if not the whole of the needed relief was secured by the adoption of the Forty-first Amendment' which gave the legislature almost unlimited discretion as to the taxation of wild or forest lands, and the Forty-fourth Amendment which authorized the levy of a tax upon incomes which might be at different rates upon income derived from different classes of property, but was required to be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property. By authorizing the taxation of certain classes of property upon its income while other classes of property are taxed upon their capital value without the requirement of any relationship between the burden borne by the different classes of property thus taxed, the Forty-fourth Amendment has to a considerable extent abrogated the requirement of proportionality, but only to the extent expressly stated by the amendment. The power to levy an income tax cannot be employed either openly or covertly as an instrument to narrow or circumvent the requirement for proportional taxes upon all property other than in

comes.9

It is not necessary in order to meet the requirement that taxes shall be proportional that the rate shall be identical in all the municipal corporations throughout the state; uniformity in each city, town or other taxing district is all that is required.1o As the constitution expressly requires the taxation of all persons and property within the state, an exception in favor of persons not entitled to vote cannot be implied.11

53. Power of the Legislature to Grant Exemptions

Since the requirement of proportionality in taxation is construed to require the taxation of all property within the taxing district which is held in such a way that it ought to be available to its owner to increase his ability or enlarge his duty to assist in defraying the expenses of the government, the legislature

See infra, G. L. c. 61.

See infra, G. L. c. 62.

9 Duffy v. Treasurer & Receiver General, 234 Mass. 42, 53 (1919).
10 Providence Institution for Savings v. Boston, 101 Mass. 575 (1869).
11 Wheeler v. Wall, 6 Allen 558 (1863).

has no power to grant an exemption except in cases in which it can be demonstrated that the exemption will not result in the disproportionate taxation of other property. A statute aimed at encouraging a particular industry by relieving it in whole or in part from taxation, or exempting a certain class of property from taxation merely as a matter of public policy, is not constitutional in this commonwealth.1

While the courts of the commonwealth have not hesitated to enforce the requirement of equality and proportion in taxation in such litigated cases as have come before them and to promulgate it when their opinion has been asked upon the constitutionality of proposed legislation, it must be admitted that certain exemption laws have been or are even now in force which are inconsistent with the doctrines of the court but which if obeyed by the assessors increased the burden upon owners of other property in such a trifling degree that no one took it upon himself to question the constitutionality of the exemption. From 1790, a year after the first manufacturing corporation received its charter, until well into the following century, there were numerous statutes granting exemptions to manufacturing corporations. In 1806 the machinery of all salt works was exempted, and this exemption continued in force for twenty years. Although the requirement of proportion was carefully explained by the supreme judicial court in 1815,2 machinery in cotton and woolen manufactories was exempted from taxation in 1818, and such machinery and sheep as well continued to be exempt for ten years. In 1821 young domestic animals were exempted, and this exemption is still in force. In 1872 cities and towns were authorized to exempt from taxation for a period of ten years property used exclusively in the manufacture of beet sugar. In 1878 land upon which certain kinds of trees

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1 Cheshire v. Berkshire County Commissioners, 118 Mass. 386 (1875); Opinion of the Justices, 195 Mass. 607 (1908). The limitation upon the power of the legislature to grant exemptions depends entirely upon the specific provision of the Massachusetts constitution. There is nothing in the Fourteenth Amendment to the federal constitution which prevents each state from adjusting its system of taxation as it sees fit as long as there is no mere arbitrary discrimination. Bell's Gap R. R. Co. v. Pennsylvania, 134 U. S. 232 (1889). 2 Portland Bank v. Apthorp, 12 Mass. 252 (1815).

3 These exemptions were abolished by St. 1828, c. 143.

4 St. 1821, c. 107, § 2.

5 G. L. c. 59 § 5 cl. 21, infra.

St. 1872, c. 327. This statute expired by its own limitation in 1882.

had been planted was given a limited exemption,' and this exemption remained in force until the adoption of a special system for the taxation of forest lands under the Forty-first Amendment." Since 1894 domestic fowls of a limited value have been exempt from taxation." There are doubtless other instances in which exemptions have been granted and enjoyed which cannot be reconciled with the constitution as interpreted by the courts.

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The exemptions which the legislature may constitutionally grant fall into four classes: (1) Property of persons who by reason of age, infirmity or poverty are unable to contribute fully toward the public charges. (2) Property of insignificant value and of such a character that it may be supposed to be owned by everyone alike. It is for this reason that wearing apparel, and a reasonable amount of household furniture and tools may be constitutionally exempted." (3) Property devoted to a public or semi-public use. It would serve no useful purpose to tax property devoted to a public or semi-public use, even if owned by private parties, for the additional burden thereby caused would have to be eventually borne by the public. It is for this reason that the property of the state and of cities and towns and of public service corporations and of charitable and educational institutions may be exempted." (4) Property taxed directly or indirectly in some other way. The requirement of proportionality does not go so far as to forbid the exemption from direct taxation of property which bears its just burden of taxation through some other form of tax. Thus the legislature is not bound to tax a corporation for its property and the stockholders for their shares; 12 and if a reasonable excise tax is lawfully imposed upon a corporation, according to the amount of its property or business, it is in the power of the legislature, for the purpose of avoiding double taxation, to exempt its

7 St. 1878, c. 131.

8 G. L. c. 59 § 5 cl. 26; c. 61, infra page 425.

9 St. 1894, c. 220 now G. L. c. 59 § 5 cl. 21, infra page 211.

10 Day v. Lawrence, 167 Mass. 371 (1897); Opinion of the Justices, 195 Mass. 607 (1908).

11 Opinion of the Justices, 195 Mass. 607 (1908). The exemption of religious institutions is hard to justify on strictly legal grounds, although the court in 195 Mass. 608 based it upon the constitutional provisions recognizing the importance of the public worship of God. This exemption however, like the laws requiring the observance of Sunday, stands on too firm an historical basis to be shaken.

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

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property held and used in the business for which the excise tax is paid, and to exempt the stockholders, as the owners of the beneficial interest in this property, from liability to a property tax upon it.13 Bonds, notes and other credits may be exempted when the credits are secured by the mortgage or pledge of taxable property, and, it would seem to follow, whenever the debtor has taxable property available for payment.1 The constitutionality of an exemption granted for the purpose of avoiding double taxation is not affected by the fact that one of the taxes is imposed by authority of another state.15 Probably the legislature could go as far as to exempt property merely because it was taxed in some other form by authority of another jurisdiction, as stock in a foreign corporation owned by residents of this commonwealth when the property of the corporation was taxed in other states in which it was located.16 Even if there is a right to exempt this class of property wholly from taxation, a partial exemption conditional upon the property exempted contributing an arbitrary and disproportional percentage of its value is not constitutional.1

17

If an exemption is one which the legislature may constitutionally grant, there is no requirement that it be granted with uniformity, and the legislature may establish such exceptions from an exemption law as it sees fit, provided they rest upon some conceivably rational basis and are not wholly arbitrary and discriminatory.18

54. Excises under the Constitution of Massachusetts

Duties and excises are divided naturally into two classes, namely those laid on the importation of foreign goods and those laid on domestic goods, privileges or transactions. Duties of the former class were introduced into England in the time of James I, but those of the latter did not appear in that country until 1643. Numerous statutes imposing duties and excises of both classes were enacted in Massachusetts during the colonial

13 Commonwealth v. People's Five Cents Savings Bank, 5 Allen 428, 437 (1862); Opinion of the Justices, 195 Mass. 607, 611 (1908).

14 Williams v. Brookline, 194 Mass. 44. 46 (1907).

15 Opinion of the Justices, 195 Mass. 607, 615 (1908).

16 See Opinion of the Justices, 220 Mass. 613. 625 (1915).

17 Opinion of the Justices, 220 Mass. 613, 626 (1915).

18 Massachusetts General Hospital v. Belmont, 233 Mass. 190 (1919); Mass.

(1921)

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