60. Argument for Appellant. the acquisition of it a right or a privilege; but it is a question of the situs of the income. The doctrine that movable property follows the person for purposes of taxation has given way to the doctrine that where property has a situs, there it is taxable. Bristol v. Washington County, 177 U. S. 133. The reason for regarding the situs of intangible property as the domicile of the person depends not on the meaning of property, but on the meaning of situs. That property is said to be taxable only at its situs is because where property is taxable- that is, wherever a sovereign can enforce a tax against it-there it has a situs. In determining whether income has a situs for purposes of taxation in a given State, we should begin, not by saying: "Where is its situs?" that we may determine whether it is taxable, but rather: "Can it be reached by taxation?" to determine whether it has a situs there. If it can be reached by taxation by a State-if the State can enforce a tax against it by due process of law-then it has a situs for taxation in that State. See State Tax on Foreign-Held Bonds, supra; Fidelity & Columbia Trust Co. v. Louisville, 245 U. S. 54; Kirtland v. Hotchkiss, 100 J. S. 491; Tappan v. Merchants' National Bank, 19 Wall. 490; Metropolitan Life Ins. Co. v. New Orleans, 205 U. S. 395; Liverpool &c. Ins. Co. v. Orleans Assessors, 221 U. S. 346, 355; Blackstone v. Miller, 188 U. S. 189; New Orleans v. Stempel, 175 U. S. 309; Board of Assessors v. Comptoir National, 191 U. S. 388; Rogers v. Hennepin County, 240 U. S. 184, 191. A person receives income in one of three ways: It is (1) the product of property, or the money realized by the sale of such product, (2) the profit gained in the purchase and sale of property, or (3) the compensation for personal service. In each of these cases the State has power to enforce its taxes equally against residents and against non-residents. Argument for Appellant. 252 U.S. The New York law does not deny to citizens of any State any of the privileges or immunities of citizens of the several States. Citizens of other States, as citizens, and only as such, are protected by Art. IV, § 2, cl. 1. So, if there is no discrimination against them as citizens, the provision is not violated. Distinctions are drawn、 between residents and non-residents, but this is regardless of citizenship-non-resident citizens of New York are treated like all other non-residents, and citizens of other sovereigns who are resident in New York are treated exactly like resident citizens. The term "reside" in the Fourteenth Amendment probably means to "be domiciled"; or to "maintain a voting residence." It does not mean to "have a place of abode," especially if one has several places of abode. The terms resident and citizen are not normally synonymous and are not rendered exclusively so by the use in the Fourteenth Amendment of the word "resident" in one of its many meanings. La Tourette v. McMaster, 248 U. S. 465, 470. It is settled that where residence is a proper basis for classification, the adoption of such basis is not violative of Art. IV, § 2, cl. 1. Travellers' Ins. Co. v. Connecticut, 185 U. S. 364; Frost v. Brisbin, 19 Wend. 11; Chemung Canal Bank v. Lowery, 93 U. S. 72, 76; Field v. Barber Asphalt Paving Co., 194 U. S. 618; Central Loan & Trust Co. v. Campbell Commission Co., 173 U. S. 84; Blake v. McClung, 172 U. S. 239, 256, 257. Classification in taxation is a proper exercise of legislative power. Pacific Express Co. v. Seibert, 142 U. S. 339, 351; Barrett v. Indiana, 229 U. S. 26, 29–30; Giozza v. Tiernan, 148 U. S. 657, 662. This classification may discriminate between classes in rates of taxation, Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283; Michigan Central R. R. Co. v. Powers, 201 U. S. 245; or in exemptions from taxation, 60. Argument for Appellant. Beers v. Glynn, 211 U. S. 477; Bell's Gap R. R. Co. v. Pennsylvania, 134 U. S. 232, 237; Citizens' Telephone Co. v. Fuller, 229 U. S. 322, 329. A taxing statute is not invalid because of simple inequality between classes. International Harvester Co. v. Missouri, 234 U. S. 199, 210. It would seem that the only restriction on the power of classification is that there must be real differences between the situations of the different classes. Northwestern Mutual Life Ins. Co. v. Wisconsin, 247 U. S. 132, 138. What constitutes a real difference depends upon the purpose and extent of the legislation and all the circumstances of the subjects and objects thereof. Tanner v. Little, 240 U. S. 369, 382, 383. The classification of residents and non-residents by the New York law is reasonable. La Tourette v. McMaster, supra; Northwestern Mutual Life Ins. Co. v. Wisconsin, supra. Travellers' Ins. Co. v. Connecticut, supra, is directly in point. If the power to levy a tax exists, the rate fixed will not render it unconstitutional. Tanner v. Little, supra. The power to exempt certain things to the exclusion of others follows the same rules as the power to tax certain things, to the exclusion of others-it is only another way of stating the same proposition. And if the rate is immaterial in determining constitutionality as to taxation, so the rate of exemption is immaterial. The different methods of collection provided by the statute for the tax on income received by way of compensation for personal services by residents and by nonresidents, does not deprive any person of the equal protection of laws. St. John v. New York, 201 U. S. 633, 637. There are many decided cases in which different methods of procedure against residents and against non-residents have been upheld. Tappan v. Merchants' National Bank, supra, 505; District of Columbia v. Brooke, 214 U. S. 138; Central Loan & Trust Co. v. Campbell Commission Co., Argument for Appellee. 252 U. S. supra, 84, 97, 98. Many statutes taxing corporate shares and requiring the corporation to withhold at the source against non-residents but not against residents have been upheld. Travellers' Ins. Co. v. Connecticut, supra; Merchants' & Manufacturers' Bank v. Pennsylvania, 167 U. S. 461, 463. The law does not deny due process of law; violate the commerce clause; or impair the obligation of contracts. Mr. Louis H. Porter and Mr. Archibald Cox for appellee: The appellee's factory and principal place of business is in Connecticut. It is authorized to do business in New York and owns property there, but it is a citizen and resident of Connecticut; and the statute, of course, applies equally to an individual in its position. It employs sundry persons, including citizens and residents of Connecticut and New Jersey, to work for it, and has contracted to pay them definite salaries for their services. These salaries are paid in different ways, in some instances by checks mailed from the office in Connecticut to the employees outside the State of New York, if that is material. And they are in accordance with contracts of employment entered into before the enactment of the law. The statute seeks to impose on the appellee a personal liability as the means of compelling it to obey. The invalidity of the provisions for withholding the tax from the salaries seems to be directly established by New York, Lake Erie & Western R. R. Co. v. Pennsylvania, 153 U. S. 628. A corporation, by securing authority to transact business within a State, does not thereby bring within the jurisdiction of that State transactions and properties wholly outside. It is not a matter of convenient collection, but a matter of jurisdiction. Distinguishing: Hatch v. Reardon, 204 U. S. 152; Merchants' & Manufacturers' Bank v. Pennsylvania, 167 U. S. 461; Travellers' Ins. Co. 60. Argument for Appellee. v. Connecticut, 185 U. S. 364; Brushaber v. Union Pacific R. R. Co., 240 U. S. 1; Citizens National Bank v. Kentucky, 217 U. S. 443. To determine the constitutionality of this tax, it is accordingly necessary to ascertain, not colloquially but from a jurisdictional standpoint, what is taxed, and whether that is within the jurisdiction of the State of New York. The tax is a subjective tax imposing personal liability upon the person receiving the "net income" which merely measures the burden imposed on the taxpayer in personam. Brady v. Anderson, 240 Fed. Rep. 665; State ex rel. Sallie F. Moon Co. v. Wisconsin Tax Commission, 166 Wisconsin, 287; Income Tax Cases, 148 Wisconsin, 456. The liability is measured with reference to the net balance. And that net, from the year's experience, is used only as a measure of the general financial condition of the individual and his personal liability to pay from any resources he can control. Even the amount of the tax varies according to the person of the recipient, and is not based upon the property or amount thereof. Thus, if the amount of income is twenty thousand dollars, it is taxed at one rate when received by one person, at another rate when received by two persons, and it is free from tax when received by twenty persons. This tax is not even measured strictly by the amount of income which a person receives. It is measured with a view to securing equality of sacrifice among taxpayers. Income Tax Cases, 148 Wisconsin, 456. And that the tax is personal is confirmed by the provisions for its collection, none of which sound in rem and all of which impose personal liability. That a tax with respect to "net incomes" is a personal tax, from the point of view of jurisdiction similar to a poll tax, is well indicated in Maguire v. Tax Commissioner, 230 Massachusetts, 503. Individual income as such, dissociated from the person of the owner, has no existence and is a purely fanciful conception. |