*1 this distin- decisions of Court 24; and with all other judicial to which proceedings administrative from guishing the cases attention; our with have called plaintiffs jurisdiction where the hold Court lacks this in charac- sought legislative or administrative review court lacked hold that the lower those which ter; with had not exhausted his plaintiff because the jurisdiction hold and with those which remedies; administrative order meaning an of taxes is not within assessment of the Judicial Code.20 §
Affirmed. part no in the consideration Stone took Mr. Justice cases. decision these STATE TAX HARVEY,
COLGATE v. COMMISSIONER. 16, 1935. Argued 15, December 1935. Decided
No. 8. October Line, 210; Coast 211 U. S. g., v. Atlantic Keller Prentis 20 See,e. parte 428; Ex Co., Williams, 277 261 U. S. Electric Potomac 267, 271-2. *4 Dimock, George
Mr. Edward L. Hunt J. with whom Mr. brief, was on the for appellant. *6 Edgerton, with Page Seymour P. Guy M.
Messrs. Jones, Attorney General of Ver- C. whom Mr. Lawrence brief, for mont, appellee. on the was *10 opinion, delivered the Sutherland Justice Mr. Court. Tax Act Franchise Income and Vermont seq. 872 et (the pertinent 1933, § Vermont, Laws
Public *11 margin1), imposes in the copied are of which provisions 1“ Chapter 39. hereby imposed tax is Bate; Exemptions; Amount. —A “Sec. levied, collected be state, tax shall which
upon every resident of respect annually, to: paid with deducting exemp- defined, after net income as herein “I. His cent; and per chapter, the rate of two provided in this at tions “ ownership by him on account of received II. To income agreement or other bond, note, any stock, or use of or interest in cent; words per but the four bearing security at the rate of interest ‘ of or ownership or use him by income received on account bearing bond, note, agreement or other interest any stock, interest in ’ exempt be following which shall security items not include the shall chapter: from under this taxation money state, loaned within this “(a) on account of Interest received per evidenced exceeding per five cent annum a interest not at rate of deed, mortgage or a bond for a by note, on real estate promissory a thereof, purchase price, any part including representing the or credits by state, transferred, a of sold or evidenced real estate within this bearing note, mortgage bond for a deed a rate of promissory or annum; exceeding per per interest five cent corporations subject “(e) of those Dividends on stocks are corporate chapter 40, if a under but franchise tax is not to taxation corporation, by por- net such then measured the entire income of a paid by corporation shall be tion of the dividends such taxable under portion proportion taxable chapter, and such shall be that of this corporation as the income earned from business dividend the state of Vermont bears to the entire income of the done without corporation; wholly
“(f) In income taxed in section is derived case the this ownership any stock, bond, other from or note or inter- interest bearing from security, shall be deducted such income the est there following exemptions:
individual income taxes as follows: First, with respect from salaries, net income wages, derived etc., denominated the court class A income, below at the rate 2%; second, with to income on respect received account of the or use of or interest ownership any bearing interest B security, income, 4%, denominated class at the rate income however, (a) such interest excluding, re- single personal exemption a four of a individual “1. In case dollars; hundred family, or In case of head a a married individual
“2. wife, personal exemption eight husband hundred living with dollars; a husband or wife shall income other but if either receive ownership in any stock, of or than that derived from interest bearing security, then bond, personal note or other interest such wife, living exemption together, not be allowed. A husband and shall eight personal exemption but one hundred shall receive dollars they against aggregate income; separate in case make their net exemption eight may returns, personal hundred dollars taken *12 by either' divided between them. . . . or
“ Chapter 40. “ privilege exercising Bate. —For the of 887. its in Sec. franchise corporate organized capacity, every in or this state a domestic cor- poration, privilege doing for every and of business in this state foreign corporation, chapter under annually hable to tax this shall pay by to this state a franchise tax be measured net to its income computed provided in the manner hereinafter at be the rate of upon per two cent the basis of its net income as herein computed, preceding year. for next fiscal or calendar “ business Sec. Basis on within state. —If the busi- entire corporation state, ness of the be transacted within the the tax im- upon posed corporation shall be based the entire net income such of year. for such fiscal or calendar If the entire business of the cor- poration gross be not transacted within the state and its income both state, derived from business done within and without determination of net income its shall based the business done purpose computing within the state and for the of such net income adopt regulations commissioner shall such recommendations and fairly for justly the allocation of income as will and net reflect the portion net income of that of the business done within the state.” a the state at money of loaned within account on ceived exceeding per evidenced annum, not interest rate of 5% ,a or deed bear- note, mortgage, bond promissory a (b) on stocks of interest; dividends rate of a like ing of taxation under subject §§ corporations taxed derived from wholly If the income the statute. securities, there is allowed in the case interest-bearing individual, $400, and, a personal exemption single a or of a married family a head of a individual case wife, exemption or a personal with living husband however, husband or wife shall If, either receive $800. than that derived from securities, other such any income A is not exemption allowed. distinct personal then exemption allowed of net the case larger personal and salaries, (§ etc. wages, 880) namely, from derived income — $2,000 and single individual, of a in the in the case $1,000 a family or married living individual of a head case wife. with husband Vermont, married living is a resident of
Appellant year During question, taxable he his wife. with B income; A and class but both class his class received large, was absorbed although allowable de- income, A there was no’ net income from ductions, so subject nothing consequently taxation. source, larger sum, B amounted to a part income class His notes, on mortgages, etc., rep- interest which consisted outside the State Vermont loaned at money resenting annum, another from part tax- exceeding per 5% corporations other than received dividends able *13 these a corporations. Upon two sums tax was Vermont of him at the rate Under the against stat- assessed 4%. exemption personal allowed no whatever. he was ute statute under the federal Constitu- The validity grounds properly challenged. attack, of so tion was stated, to be are as follows: necessary (1) far as The act upon dividends earned a tax imposes outside the State of
419 from the tax exempting while dividends earned Vermont, thereby denying petitioner equal state, within the of in violation the Fourteenth the laws of protection Amendment; (2) act, in clause, violation of same in favor of loaned within the money discriminates against money loaned outside the act state; (3) arbitrarily appellant exemption $800 denies while giv- ing persons it to other whose situation differed from his they had from only no income there- business, and by appellant equal protection denies laws guar- by anteed the Fourteenth Amendment; and in each particulars abridges these three act the privileges and as a immunities citizen of the United appellant States in contravention of the same amendment.2
The court
denied the
below
contentions of appellant
validity
and sustained the
the act in every particular.
First. Does the aof tax upon dividends earned outside which tax state, dividends earned exempt, within the state are constitute, under the Four- teenth an Amendment, allowable classification? The basis the classification rests in the consideration a 2%, 887 and 888 §§ measured net income, is upon every imposed corporation for privilege of exer- 2 point is The further made that respect discrimination upon regulation and interest dividends loans a com interstate merce therefore void under the commerce clause of the federal But only reject Constitution. we mention this latter claim it as merit, clearly without since a tax income is not an interference simply with interstate commerce because the income derived from state; and, moreover, another source within if there be tend ency purely with such interfere commerce it is collateral and inci Louisiana, dental. Nathan v. 73, 82; Williams 8 How. Fears, v. 276; Diamond Co. 270, Glue v. United States U. Co., S. Glue States, 611, 616; Anderson United v. 616; Engel 604, U. S. 171 U. S. 138; O’Malley, Moore v. 128, N. Y. Cotton Exchange, 270 U. S.
420 business doing the state in franchise its
cising corporation the business of If entire therein. the fixed tax is the amount of the state, the within transacted entire If busi- the income. net entire regard with to the with is calculated net income transacted, not so ness be state, within done business of the part that to respect net reflect such justly fairly so as to be allocated corporations shares upon Dividends income. income from the exempted tax are subjected to are this tangible all tax, franchise In addition to the tax. 2% subjected to the state is within lying corporate property aim of the classification, The evident a tax. property and not equality inequality; therefore, produce is to fact, in aim will become effective and, obviously, extent, the administration of a or less greater legislation. tax which the laid dividends theory upon upon is leaving business while from out-of-state dividends
realized untaxed, from domestic business is that realized 2% has especially property added, with the tax franchise tax, indirectly burden imposing tax effect measurably directly to that equivalent imposed latter tendency plan of the Thus, former. is upon And is, effect, thing. the same taxing twice what avoid impose state to double or even power conceding which is calculated to avoid taxation, legislation multiple certainly result cannot be condemned that undesirable question Thus settled favor arbitrary. far, by prior decisions of court. validity this Alabama, Indiana, Darnell 730; U. S. Kidd v. Connecticut, Insurance Traveller’s Co. v. 390, 398; 254 U. 364; Comptroller, 122, Watson v. State S. 185 U. S. Comm’n, 286 U. State Tax S. 124-125; Lawrence v. True, may it well be assumed similar franchise imposed upon taxes are the outside corpora and property states; assumption other but the immaterial tions *15 to the issue here It is enough that such involved. taxes imposed by are not the State of Vermont. It was so in Alabama, decided Kidd where Mr. v. Justice supra, Holmes, for speaking court, 732): (p. the said “ The State of Alabama is not bound make laws to its in If harmonize with those of other States. principle property by laws, is untaxed its then for the of purpose its laws the is not taxed all.” And property at Bacon see Comm’rs, 126 22, 25-26; v. Board Tax Mich. 85 N. W. 307. the tax
Appellant urges by franchise measured the that corporation’s income is at the rate of while the tax on' 2%, at 4%; dividends is the rate concludes that this directly results in a burden on putting dividends taxed great twice as as the franchise imposed indirectly by that it that, tax. But obvious since the tax is imposed is 4% only upon such net part corporate income as passes to in dividends, the shareholders the form the 2% tax is measured the entire income of corpora net tion, is this conclusion erroneous. do Corporations not, general rule, pay at least a their as out entire net income Something in is dividends. reserved future contin gencies; may well result that a tax of measured 2% by the entire net income of corporation will roughly amount approximate imposed a tax on that part 4% dividends. paid the net income out as There is nothing- equality requires clause Constitution which the two be mathematically equivalent. sums shall Illinois, 292 In 535, Concordia Fire Ins. Co. v. Klein Board U. Supervisors, S. court this sustained an shares from exempting corporate act taxa tion where total property the corporation 75% taxable in state and taxes thereon paid. was were plainly It was a reasonable do was this effort to said other were justice way to all view of the assessments made.
It record us that say before impossible than presented is a here was greater disproportion there Klein disproportion or conclude that the case, arbitrary wholly as great stamp so the classification corporation Moreover, thing, as a capricious. general subject will also a to the franchise tax pay 2% state, within the with effect of still property located altogether if not narrowing, extinguishing, further difference. equality in
This said that absolute frequently court has' required taxation cannot obtained and is under *16 to is This, course, not Fourteenth Amendment. of the from the inequality degree some of say that, because inequality must gross must things permitted, nature of be permis- what is boundary also The between be allowed. the forbidden constitutional require- sible what is and of incapable fixed and ment been precisely has never variety In the which cases great exact delimitation. of recon- arisen, may seem to be difficult have decisions investigation generally will cause cilement; apparent but weight when due ma- disappear given conflicts to to distinguish cases. If terial circumstances general operation legis- intent and evident fair burden with a adjust to reasonable lation are requirement constitutional is sat- equality, degree under now consideration think provision We isfied. Tax Cases, State Railroad 92 this test. U. S. meets Cf. Bank, Merchants’ National Tappan v. 19 Wall. 575, 612; Pennsylvania, Bank 167 Merchants’ v. U. 490, 504; S. 461, 464. beyond the admissibility of It is settled further
Second. clause of equal protection that the Fourteenth inquiry Amendment not states from preclude resorting does Royster purposes legislation. for the classification to “ Virginia, 412, And U. S. 415. Co. v. Guano classify for purposes taxation is of the power range flexibility . .” Louisville Gas Co. v. . wide “ But classification must be Coleman, 32, 277 U. S. 37. ground must rest some reasonable, arbitrary, upon fair and substantial relation having difference all cir object similarly so that legislation, persons Royster alike. Guano Co. v. shall be treated cumstanced " 85; Corp. Day, 71, v. U. S. Virginia, supra; Air-Way Wisconsin, 270 240. The classi Schlesinger 230, v. constitutional in order to avoid the fication, prohibition, differences, and real pertinent be founded upon must irrelevant and artificial The distinguished from ones. cases as the one present such is—does applied test be genuine and without reason arbitrarily impose the statute from one which it group taxpayers a burden ex upon both of them occupying another substan empts group, matter of the subject relation toward tially the same “ enough difference is not . . Mere .” legislation? Coleman, supra; Corpora Frost v. Gas Co. Louisville Commission, 278 U. S. tion whether the income depends here question exempted reasonably income and the taxation
taxed to different classes. As the Court assigned Supreme can in all pointed out, has such cases must itself of Vermont *17 classification has been but only made, not that a appear ground. reasonable based on some State v. is one that it in Atl. 973. The decision that 64-66; Hoyt, Vt. the effect invalid a statute of which was to held case state goods sales manufactured in the upon a impose goods leaving sales manufactured in other while state, It was held that the free from taxation. classifica states on difference any goods, not be based the be could tion none; they nor on the fact that was were made there cause just no states, for that and proper bore rela in different purely but was classification, arbitrary; nor on the tion to of the manufacturers, of residence for the difference the the view of the clearly court that And was reason. same of another state products the against a like discrimination objections. to the same open would have been creating the to the statute us these principles Let apply statute the face Upon in question. now exemption having no sub- a difference is based classification object which, fair relation stantial or act— is concerned, to secure simply question far as this so other public pur- itself no suggests The statute revenue. by lan- The exemption. be which will served pose exemption “(a) Interest on received guage creating this a money state, loaned within at rate account five cent annum . . .” exceeding per per interest not afforded test statute is complete naked and The be loaned within the What money shall state. that whether it is to be money, invested is to be done with indeed, whether it is to be in the state or elsewhere — matters noth- purpose having useful any devoted to —are of the tax or the the imposition exemption do ing to with If that provided had on therefrom. statute interest money loaned when property so invested account tax, within the state be free from the having shall situs might presented. as to classification be question a different wealth of In that the actual would event addition, and as a consequence, oppor- increased, through tunity to obtain additional revenue taxation exempting But this we provision, repeat, would result. qualification any neither nor contains this other. Its all-inclusive and will be positive fully terms are satis- that appears money fied whenever has been loaned Supreme within the state. Court Vermont has a qualification read into statute loans shall to be within the state if only be deemed made their pro- Obviously be invested in the ceeds state. this court can- provision, not so read would be amend We and not to construe it. are unable to find in the pro- purpose vision which can be public subserved *18 from dependent the taxation of income loans making the place circumstance as to merely upon the adventitious loan. making anything aside from however, that, suggested, It is loaned the state generally money within statute, in the in the nothing But there therein. is invested be will aught for result; that this will indicate to record for no warrant there is judicially, know can this court All can not result. we it will or will that either saying Vermont, in may so loaned be invested money is that say in example, in some other state —for be invested may or York —or not be may New a situs having property will there all. If be circumstances at invested from money income derived any exemption justify from taxing the income while the state within loaned legislature point it for the to outside, loaned im- To exemption accordingly. limit the out and them into the situation present circumstances such port Travis Yale Compare speculation. indulge pure to Co., & 252 U. S. Mfg. Towne exists, interest public that some unnamed
To assume discrimination, help does sustain the which will assumption only can rest upon here; because matter nothing appearing concrete or to explicit surmise, with intent to legislative indicate a relate the or support be else purpose anything any public exemption loans favored are effected fact mere yond quite In the classification is principle, the state. within with this court Louisville that dealt arbitrary as If Coleman, supra, pp. 38-39. the exemption Co. v. Gas time upon the when the loan depend made to had been locality instead where it was made, was a tax upon all income loans as, example, made — Mondays capri arbitrary on made those except —the scarcely would of the classification nature cious minute inspection field doubted, although *19 on mind, bent sus- might an anxious persuade possibilities that at all to the view some taining events, the tax further loan would Monday a made way far-fetched on a which revenue, other than that some of public purpose, the of would not. day loan on another week made for exemption may It is have its an said local be con- hardly aim the advancement of interests can century a Constitution which for a has demned under Considering suggestion known a tariff. protective answer to it is that while the categorically, pertinent in- may, for the benefit of national general government terests, duties which impost against exact discriminate for interests, state, one even the advancement foreign interests, permitted its own is not to exact taxes discrimi- from a for nating against goods brought See, sister state. Missouri, example, 275; Welton v. 91 U. S. cf. Burnet v. Brooks, 288 378, 401, seq. et
But, assuming State Vermont is benefited exemption, complete answer is that appellant States; is a citizen the United and, quite apart from equal protection of the laws clause, the suggestion is effectively overcome, met the fallacy of other to sustain attempts validity exemption here clearly demonstrated, under review by reference to the and immunities clause of privileges the Fourteenth “ Amendment. For all the great purposes which the government formed,” Federal was this court said, has “ we are one people, with one common country.” Nevada, 35, Crandall v. 6 Wall. 48-49. As citizens United States we are members of a single great com- munity of all the consisting states united and not of dis- tinct communities consisting severally. states No citizen of United States is an alien in any state of the ,and Union; very status of national con- citizenship equality rights *20 of the citizens thereof, are jurisdiction to the subject and No reside. they State wherein and of the States United abridge which shall any or law shall make enforce State of United of citizens the or immunities privileges the . . .” States; is made citizenship of our
Thus, character the dual the United citizen say, That is to a of apparent. plainly a citizen and at the same time ipso is States facto Fourteenth And while the resides. in which he state it has citizenship, a national not Amendment does create “ and citizenship paramount that “ making effect of the ” ” dependent upon of derivative and instead dominant “ reviewing In the Chief Jus- citizenship.3 subject,” state Cases, 245 in the Law said Selective tice White Draft “ we have considered it 377, hitherto 366, 388-389, from the of view the point of argued, it has been as prior it to the of adoption as stood Constitution But to avoid all misapprehen- Amendment. Fourteenth attention briefly direct sion we [the Fourteenth] purpose pointing out, for the has Amendment been how completely done in past, frequently broadened under the Government scope national Constitu- of the United causing citizenship by States to tion be being dominant and instead paramount subordinate 79, 81, Hall, 15,282, 26 Fed. Cas. Case No. 3 In United States “ citizenship in the original By constitution Judge said: Woods By this citizenship in a state. consequence of was a States United citizenship in a state and things is reversed. . . . this order clause citizenship in the United States.” is result a as it therefore, operating does derivative, no Constitution,
all leaves by conferred powers if their want made, for the contentions possible support manifest.” clearly made merit were otherwise so may thought latitude The result that whatever Article, a under Fourth respect power exist of state abridge Fourteenth cannot, state under the Amendment, States, citizen of the United he of a albeit privileges of the state which under- is at the same time resident This out Mr. takes do Justice pointed so. Brad- Case, 1 ley Slaughter in the Woods 28: House ‘ ’ “ The immunities origi- secured privileges nal only such as each gave constitution were to its own Each was prohibited citizens. from discriminating- and against favor of its own citizens citizens states. other
“But the fourteenth amendment prohibits any state abridging privileges immunities of citizens States, whether its own the United citizens or *21 merely requires It not equality others. of privileges but privileges the it that demands immunities of all citi- absolutely shall be unabridged; zens unimpaired.” by same distinction made The this court in Bradwell State, 16 130, 138, where, v. Wall. speaking of the privi- provision immunities leges and the Fourth Article, it was said: “ protection designed by The that clause, as has been has no held, application repeatedly to a citizen of the laws are complained State whose of. If the plaintiff was a of the State Illinois, citizen that provision of the her gave protection no Constitution against its courts 4 its legislation.” a not mean state power does has This unlimited by to law privileges of its own abridge only the It citizens. means that in such elsewhere than the language must look to we case privileges the of the Fourth clause Article and immunities of the Constitution for infirmity of statute, the if any. constitutional have But the court added that with to respect the Fourteenth “ Amendment there are certain privileges and immunities belong which to citizen of the United such; States as otherwise it would be nonsense the Fourteenth Amend- prohibit ment to a State from abridging them, ... We agree . . that privileges . there are and immunities be- longing States, to citizens of the United in that relation and that it is character, these and alone which these a State is forbidden to abridge.” governments United States and of each of the several states are distinct from one another. The rights of a citizen under may one different from he quite be which has those under To he an allegiance; turn, other. each owes and, he is entitled each protection respect rights such fall within its United jurisdiction. States v. Cruik- shank, 92 549. 542, U. S. Fourteenth Amendment, therefore,
Under one simple inquiry privilege whether claimed is of national arises virtue If the citizenship. which character, no abridge of that state can it. privilege made by has been courts comprehensively No attempt enumerate the privileges define or and immunities Fourteenth Amendment thus protects.5 which however, those Among privileges,, undoubtedly right is the freely from one State to another. pass Crandall v. Nevada, Fears, Williams v. 179 U. supra; 270, S. obviously, is as immune from privilege,
And abridge from departs citizen ment as it is abridgement he state which seeks to enter. from the results essential character of national This cit Kemmler, 136 436, 448; Cf. In re izenship. Duncan Quarles Missouri, U. In re 382; S. Butler, *22 5 however, see examples, For v. 4 Coryell, 371, Wash. C. C. Corfield 16 Cases, 380, 381; 36, 79-80; Wall. Slaughter-House Twining v. 78, 97; Ward v. 418, 211 U. S. 12 Maryland, 430; Wall. Jersey, New 239, 248, 252; McClung, 172 U. S. Blake v. States v. Wheeler, United 168, 281; v. 8 Wall. 180. Virginia, S.U. Paul Cruikshank, at 532, 536; 158 U. S. United States supra, v. p.
In the Crandall while the court case, gravely- at least tax capitation imposed by whether the State doubted leaving of Nevada the state upon persons railroad stagecoach the commerce it was (p. 43), violated clause held that distinctly rights did affect of cit government izens under federal so as invalidate the act the tax. The doubt as the first has imposing point in against resolved later cases power been (Helson Randolph Kentucky, 245, state and 279 U. S. 251); ruling point but the on the second has been never in the definitely approved Slaughter doubted and was Cases, 79, in right House Wall. and the described enumerated placed among*the partially Crandall case “ owe their privileges and immunities which existence to the Federal its National government, character, Con its or its laws.” The in stitution, opinions both cases were delivered the same eminent justice; and it is not with out significance that while the first opinion was delivered of the Fourteenth adoption before Amendment, second one was delivered afterwards and with direct ref erence to the privileges immunities clause of that amendment. The that we have fact since decided, hold, should now Nevada act in violation of was way in no clause, commerce detracts from the view privileges it also violated immunities clause ; the same demonstrates that act of simply but state leg more than one may islation contravene provision Constitution. federal of a citizen of the right United States to engage in
business, to transact lawful any business, or to make a money any loan of state lawful other than that the citizen a privilege resides is equally attributable A citizenship. to his national state law prohibiting the of these rights exercise another would, *23 under the therefore, invalid Fourteenth Amendment. by The state of a imposition one discriminating upon a in citizen resident another state trading for in terri the former tory of has been held invalid. Mary Ward v. land, 12 Wall. of And, conversely, a tax course, of that description if likewise void one state imposed resident citizen of trading the United States for or in doing territory business another And of state. such a tax is not justified taxing will because state thereby its help domestic business. of Ar- purpose clause the Fourth pertinent require equality
ticle was to to of treat- each state accord respect priv- ment citizens of other states to the It has al- ileges citizenship. state and immunities of ways One and effect of purpose been so interpreted. clause of the Fourteenth and immunities
privileges was light interpretation, read in the this Amendment, that article so as also to safe- left bridge gap against legislation States guard citizens the United denying equality the effect of having states own their their privileges the exercise of respect treatment A provision in other states. which citizenship of national pro- the shield of national completed and thus extended discriminating and the citizen hostile between tection as a mere du- lightly cannot be dismissed legislation state value, or no or an almost- subordinate as or of plication, Constitution. clause forgotten to numerous cases in which has made been
Reference claims or under rejected ignored specific this has court none of them clause; but since and immunities privileges remotely resembling the even legislation relates to collection cita- challenged, their here law Vermont unless, as result, it seems to be useful tion is without efforts to give unsuccessful numerous these thought, its meaning fall outside show applications clause has become a dead itself the clause show tend course, inadmissible; is, a conclusion Such letter. case, Bradwell to the referring said, already have we a citi- belong immunities which are privileges there *24 be such; it would otherwise United States of the zen Some from them. abridging a state prohibit nonsense to already have immunities we and privileges of these in cited enumerated the cases are out; others pointed under note here another, which may we add these illustrations
To has The business of insurance pertinent. peculiarly issuing companies Insurance to vast proportions. grown and the activities every state; in are found policies lines into state .and extend overflow companies larger com- But insurance is not country. every part in to take out a policy of a citizen right and the merce; resides, in another where he state, insuring property one the commerce clause. Na- under protected be cannot found in must be appropriate, when protection, tional be Amendment. It well cannot doubted that Fourteenth and States, residing having prop- the United a citizen of Vermont, privilege exercises a national citizen- erty in takes in and out another state a he negotiates when ship in or takes out another that insuring property, policy ,a There may very cogent his life. be insuring policy state company, in terms of resting strength reasons, otherwise, making it desirable that he and policy, that legis- And it well cannot doubted do so. should denying privilege taxing lation one state, in another occurs while leaving when it transaction free from taxation when it takes wholly the transaction abridge former would state, privilege in the place to say thereby be no answer It would citizenship. her com- local insurance building up former state was Nor is wealth of the state. to the adding panies other may citizen resort to say that answer to ,any afford which will Amendment of the Fourteenth clauses right citizen of the United protection. States one state to contract another be a may resident clause, the due of law liberty safeguarded process time, less, the same none the a privilege protected at ,and Fourteenth immunities clause of the privileges In invoke or both. may such case he either Amendment. Louisiana, recognized Allgeyer to be This seems evidently thought where the court 578, 589-592, just circumstances not unlike those suggested that under ” ” “ “ were liberty privilege interchange- the words able terms. from what has been said that when a citizen
It follows in Vermont into residing goes States New the United foreign territory, he not enter but passes does Hampshire, of the same national into another field do- one field *25 or contracts or trades, buys sells, nego- When he main. or takes line, money, when he loans tiates across the state in so he Hampshire doing in New out insurance —whether of na- rights in or not —he exercises Vermont remains can the law of neither state which citizenship tional conflict the supreme into with coming without abridge Constitution. of the federal authority resi- if a says that citizen here statute, applied,
The as another or money at less'in in loan dent Vermont hisi 5% if he loan income; but tax pay upon must a state, he shall no whatever rate, in at the same tax money Vermont asserted tax income here power The imposed. heav- in final to tax so is, power Vermont analysis, It altogether. ily preclude as loans outside state the discriminatory is to doubt that reasonably open not aof citizen of the imposed abridges privilege here tax loan and make money his contracts with United States any of the United States. respect part thereto dividends, already upheld, The tax on discussed from Although rests in a different situation. dividends in- from state taxed, investments are those outside are, already ap are exempt, they in terms as vestments effect treated alike —the one in substance and pears, the income of individual a falling directly upon tax falling but no less indirectly and the other stockholders, in the form of a tax which is income, definitely upon a tax as franchise imposed upon corporation first ultimately by income, measured but the burden by the is the same is borne stockholders. effect the tax though imposed generally upon corporate were without or discrimination. Travel exception dividends Connecticut, 185 369 et Insurance lers’ Co. v. The same be true of the on income from seq. would tax if it had of all wher loans, imposed respect been loans if ever made or there had been some form of tax equalizing which would have the burden compensated upon cast made in But such is not the In loans other case. states. from come loans made outside the state taxed directly, made while income loans within the state not taxed directly way indirect equalize or so as to the burden. Parham, 8 123, 140, Wall. dealt with a sales Woodruff all whether aby made citizen of imposed upon sales, imposed state where the tax was or citizen of another were state; goods and whether the sold product the law or some other court enacting state. This did the tax discrimi upheld ground against products nate of other states or affect the of their privileges immunities but the court citizens; clearly if it had stated that done so it would be an in *26 of the fringement provisions the Constitution relating subjects. to those The of that principle case is applicable here and has the effect of tax in sustaining the respect and condemning dividends the tax in respect loans. Compare Co., Travis Yale & Mfg. Towne supra.
Third. The far so as it statute, to applies appellant, if provides that the income taxed be derived wholly of or in ownership interest interest-bearing securities, there shall $800. be allowed an If in- exemption the sources, from other ex- come derived enumerated an “ $2,000 against aggregate is allowed the net emption income.” legislation provided
It manifest that if that is had the the taxpayer where shall have income from both these both general exemp- sources he not be entitled to shall no provision would have been to constitu- tions, open objection. legislation permit tional might properly Such him, contingency, exemp- in to select which of might he will other take; or, properly tions on hand, specify of the two shall be accorded exemptions In him. in effect, though terms, not it is latter alter- native which the In terms, statute the statute adopts. if provides taxpayer receive income other any than that derived from securities, interest-bearing personal exemption applicable to latter class income not be shall allowed. But the right $2,000 exemp- A tion allowed of class! respect income remains unaf- who taxpayer fected. receives both of in- classes while thus smaller come, compelled forego the exemp- tion, larger one; accorded the impossible rea- sonably to find in this situation anything arbitrary or It is true that capricious. during taxable year in question appellant no had net income because his gross from salaries, income derived etc., amounting to about $70,000, entirely was by absorbed allowable deductions; was an particular but this incident of the year question might again. never happen He failed obtain the advantage exemption because of any hostile statutory intent or hostile enforcement of tax, but of the because collateral circumstance, peculiar, perhaps, himto alone and to the taxable year question, that his gross entire income was absorbed deductions, allowed statute as matter of grace as is the exemption so that itself, nothing remained from which the amount exemption part of it could be subtracted. *27 in be decided must equal protection question
The general by than rather classification respect of the particular or in instances of the tax incidence chance inequalities “And taxpayers. particular respect with discrimination, but occasion- result not from hostile system of a that is application in the incidentally ally classification, are not sufficient to arbitrary in its not Bugbee, 525, 250 U. S. v. law.” Maxwell defeat the “ be the same rule will general The seldom operation trade lead to inequal- If accidents of every one. for in- accepted must consequences ity hardship, or government instead of in law government herent Co., 87, 294 U. S. 102. Cf. Standard Oil edict.” Fox v. 140, 145; Banton, 264 Gant v. Oklahoma Packard v. Minnesota, S. 102; Storaasli 283 U. 289 U. S. City, 57, 62. namely, right general classification — upon from a one class income exemption
a partial taxpayer whether the receipt depend will with respect another class to which a different income of not to us to be applies open seem to the exemption —does arbitrary capricious, simply because, that it is objection general rule its taxation, like other administration instances of inequality. incidental involve may taxing conclude that act is valid respect We which we points third have discussed, first but respect second. invalid
Reversed and remanded further not proceedings inconsistent with the foregoing opinion. Stone, dissenting.
Me. Justice from exemption, tax, in- think that I net loaned within state at more money from come exemption of income dividends 5%, than like *28 equal not state, earned the deny within does corporations or cit- infringe any privilege immunity or protection States, judgment and that the should izens United entirety. Unless the constitutional be affirmed its ground that validity of the is to turn exemptions the same taxing laws enacted avoid eco- approve we encourage interest those twice, disapprove nomic but it seem their funds at would residents to invest home, have to upholding which led that considerations not admit condemning other. exemption one would Texas, 217 127. v. U. S. Southwestern Oil Co. See exemptions not that the effect of both It is denied 1. from or income a on sources burden derived place tois they the state which do not made without investments or investments like sources on income derived place that no for ground saying it. But affords within made equal The clause does protection either is invalid. A state may taxation. inequalities forbid not selection, taxed is but objects to be which select involves the a exemption, imposition the converse is on As on not placed some others. tax burden held, inequalities has resulting from repeatedly this Court or one class for taxation singling particular out of for choice, reason even regardless or exemption, reason, pronounced no are to be is discernible if there clear indication that pur is no where there invalid a or discrimination oppressive hostile effect or pose or classes. American Sugar particular persons against Louisiana, 179 U. S. Board 89; v. Educa Refining Co. 553; Glynn, 211 203 U. S. Beers v. U. S. Illinois, v. tion Texas, v. supra; Wing Oil Co. Quong 477; Southwestern Kirkendall, 59; S. Citizens Telephone 223 U. Co. v. v. Heisler Thomas Co., Fuller, 322; Colliery 229 U. S. Comm’n, State Tax 245; Lawrence v. U. S. Illinois, Insurance 292 U. Fire Co. v. S. Concordia 276; sought by significance the classification is of end only insofar passing upon constitutionality the tax as it serves to that the is not invidi- show discrimination If it fairly ous. be assumed appears may aim, it can- purpose promoting permissible public not be condemned because one class must a tax which pay another one not. Where the interest is served public does may business untaxed and another in order taxed, left Loui- promote one, Sugar Refining American Co. v. siana, supra; Colliery Co., supra; Heisler v. Thomas Aero Mayflower Commission, Transit 295 U. S. Georgia Co. v. *29 or 285, other, to restrict or suppress Magnano Co. v. Hamilton, 292 U. 40; Co., S. Fox v. Standard Oil 294 S.U. 87; Quong Wing Kirkendall, v. supra; Singer Sewing Ma- Brickell, chine 304; Co. v. U. S. Alaska Fish Co. v. Smith, 255 U. 48. But it not necessary go S. is to so 44, far to support the present exemption. There nois serious contention that its or purpose suppress effect is to the lend- ing money without or injure appellant his fellow residents of may prefer Vermont who to invest their elsewhere. Nor can it funds be that the exemp- said tion was not granted in furtherance of a permissible state objective policy, which the legislative was rather than an invidious against discrimination appellant and others sim- ilarly situated.
It to be seems conceded if that the statute had placed upon the tax gatherers the burden of ascertaining whether money loaned within the state is invested property there, and had limited the exemption to money so loaned and invested, the tax would be sustained because of the benefit which would result from the increase of wealth in the state enlarged and the opportunity to obtain addi- tional revenue. The attack is thus narrowed to the single objection exempted that there are loans, of which, some although made within state, are or may be withdrawn and used elsewhere. It is assumed money that thus loaned state, be of possible can no benefit to withdrawn occur may and it declared since is that such transactions will exemption cannot determine whether Court therefore and that it have beneficent effect invalid. of its
But than the increase there are benefits other liberty a state is at to stimulate taxable wealth which on have been sustained exemptions its taxing policy, foster some form of domes they ground broader Roberts, 171 658; Mag York S. tic New v. U. industry. Co., Hamilton, Oil Fox v. Standard supra; nano Co. v. Georgia Transit Co. v. Commis supra; Aero Mayflower If sion, encourage, Vermont chooses supra. rates of interest within loans at favorable
exemption, local state, it believes that interests will bene because reason contraven fited, hardly be for that to be can said protective that has known tariff a constitution ing hundred See Co. v. years. more than one Alaska Fish Smith, Co., & Rast Van Deman supra, 48; Lewis taxes may lay It true a state 342, commerce, interstate Mis on or burden Welton v. imports but too late for souri, it is this Court 91 U. S. *30 may not favor domestic interests that a state
declare in of exemptions taxing the its granting power. exercise say It is for us to that the Vermont was legislature not advantages, or that unmindful of these broader to declare the of within state offered the investment funds presence there, at to borrowers those who are including or less 5% on the business and not industry state, the carrying if any or that loans made within beneficial; state are the they or ever would used elsewhere are be more than amount; in or negligible they they if were not that could state, have effect on interest rates favorable within the which is a matter state concern. When Vermont the present the legislature adopted exemption, it had before reports two the committees specially appointed to inves-
440 indicate state, the tax of the which
tigate system clearly in study their based on a of conditions the judgment, investment state, existing system driving that the was or into and non-commercial capital the state secured ,a loans, embracing and that both secured exemption commercial to increase supply loans would tend the to rates investment for both and reduce interest capital in state.1 no basis for that saying the This Court has ,and say no it. wrong authority those committees were has stated in the supreme present state court case legislature that did have mind these broader ad- for vantages, ground it rested its on that the decision “ in exemption was made interest of thrift ” and for “ development agricultural the assistance of and industrial interests state.” If in of so much is persuasive legit- the face imate purpose and effect of this we are to legislation, de- clare say that we cannot whether the benefits intended either will' will not result, not follow it does Vermont legislature similarly uninformed. We must not, assume that it is are unless we to discard the salutary principle decision, out of a decent that, respect to an independent government, branch of legislative acts taken to be must be based on support facts which their constitutional validity contrary unless reasonably ap- appointed The committee Governor of Vermont investigate double taxation and to recommend measures for its relief existing taxing system found driving capital was from the exempt savings banks, suggested exemption state or .into tax an by property of loans secured returned for taxation the state. Vermont; Report Special Double Taxation in Appointed Committee Report Legislature a Measure its Relief to 1900, pp. recognized In a similar committee the same evils did but exemption alone, favor of secured loans because it would on increase rates unsecured loans interest and cause a dearth of com *31 mercial Vermont —Commission on Report credits. 1908, Taxation — pp. 43 ff.
441
in
held discriminations
true,
it
has
Court,
This
pears.
or
the record
the facts disclosed
where,
valid
say
to
it has
able
notice,
felt
range
judicial
within
ra
which could
of facts
be no state
that
there could
Virginia,
Co. v.
Guano
Royster
them.
tionally support
Louisville
312;
Donnan, 285 U. S.
412;
253
Heiner v.
U. S.
Co.
Coleman,
32; Liggett
277
S.
&
U.
Gas Electric
v.Co.
Lee,
it
such
in no case has
rendered
Even are to assume, we absence actual money loaned in knowledge, the state at favorable *32 442 further if and elsewhere, not benefit it used would
rates there is is so loaned and money used, that fact some why be no reason those circumstances should discernible by and the tax none is stated to invalidate deemed state, irrelevant that which selected Court. It is has of a exemption for furtherance domestic loans exemption from the every has not excluded trans policy, not conceivably might advance its purpose. action object completely is achieved legislative is Whether once Court, appears this it the ex of no concern a end permissible made for some emption is bears Purpose end. or relation to reasonable motive of taxation and objects exemption the selection is it is needful to ascertain only so far as material whether If is invidious. discrimination choice is not con reason, has never been for that it held demned that an fail it may must because benefit some exemption who do A legislative purpose. not advance classification for end not to be condemned because it permissible oper transactions themselves prohibit ates to harmless, or Powell v. Penn which are harmful. reach fails to others 678; Purity Extract Co. v. sylvania, Lynch, 226 127 U. S. Shaw, 192; Hebe Co. Jacob v. 248 297; U. S. U. S. Caffey, 251 Ruppert, Inc. v. Miller v. Wilson, 264; U. S. 373; Hawley Walker, v. 236 U. S. 718. necessity be general must levied All taxes rules In administration. practical drawing the capable line untaxed the equal the taxed protection between impossible not command the does clause imprac the line which the state Unless draws is tical. so wide of no to have reasonable palpably the mark as relation to judicial it end, legitimate power say that another must be reject substituted. Fuller, Telephone supra, 329; Co. v. Citizens’ Miller v. Wilson, Titusville, Clark v. 373, 384; 236 U. S. 184 U. S. Metropolis Theatre Co. v. Chicago, 228 U. S. 331; 329, Commission, Tax 61, 69, 70; also Salomon see v. 278 U. S. McCray 484; States, v. Wing United S. 27; Quong U. Kirkendall, Gap supra; Bell’s R. Pennsylvania, Co. v. 134 U. S.
As the purpose exemption appears to en- courage lending money within Vermont its *33 at interest, low rates of and as it residents, rea- appears effect, calculated to and as sonably have we cannot loans not be of to say by that such will benefit the state rate at to establish the interest tending less, and 5% to for the stimulating loans borrowers purpose industry and within the state, on business carrying inescapable equal protection conclusion seems forbid it. does clause on a statute as denying is an attack indeed
2. Feeble from support any which can al- gain equal protection and clause of immunities forgotten privileges most The notion that Amendment. that clause Fourteenth but the any privileges to and im- application have could of the United States, as citizenship to peculiar munities of states, of citizens has long from those distinguished Cases, Slaughter-House 16 rejected. Wall. 36. been since no and immunities new privileges United It created Iowa, Bartemeyer 129, v. 18 Wall. 133, citizenship, States exclusively from the they are derived Constitution and, it, under the states were to powerless enacted and laws of the Fourteenth adoption them before abridge v. as after. See Crandall Nevada, as well 6 Amendment 35. Wall. privilege Amendment passing
Before purpose approaching for the state seat state transacting business with government, national courts, public to its its access offices and gaining and of it, Nevada, 44, v. supra, Crandall was declared ports, its national could be exer- citizenship right of to be of the of the will state. Upon independently this cised 444 a state that case that
ground placed was the decision of the transported on out capitation passengers No infringed railroad or Constitution. stage coach if the had made at one could doubt that decision been 21 472 after Railroad Wall. Maryland, time Co. v. have moment, until the it would been (1874), present many This has rested on the commerce clause. Court times out that movements across state pointed persons subject to commerce, boundaries are a of interstate part na regulation protection entitled tional under the commerce clause. Caminetti government States, States, 242 Hoke 470; United U. S. v. United v. 308; Mayor McNeely, Vidalia v. U. S. Pennsylvania, 196; v. U. 676; Ferry Gloucester Co. S. Cases, 7 cf. How. Passenger specifically And has Nevada, supra, out that is overruled pointed Crandall of such to the so far as it referred the commerce protection rather immunities than the com clause privileges *34 v. Randolph Kentucky, Helson 279 merce clause. and 251. 245, U. S. immunities clause consistently and has privileges
The
only
protecting
interests,
out
growing
been construed
the citizen
between
and the national
relationship
of the
by
Constitution and federal
created
the
laws.
government,
Kemmler,
436, 448;
136
Blacker,
U. S.
McPherson
In re
v.
Tiernan,
Giozza v.
148
1, 38;
657,
S.
U. S.
661;
146 U.
Missouri,
152
382.
U. S.
Appeals to this
Duncan v.
beyond
the clause
these limitations have
Court to extend
and even
uniformly been
those basic privileges
rejected,
federal
against
infringement by
and immunities secured
been
amendments have
held not to
eight
pro
the first
privileges
action
the
from state
and immunities
tected
Sauvinet,
90;
Illinois,
92
S.
Presser
Walker v.
U.
v.
clause.
Vermont, 144
O’Neil v.
U. S.
252;
323;
116
S.
Maxwell
U.
Twining v.
Dow,
581;
Jersey,
176 U. S.
New
211 U. S.
v.
California,
445 inter of protection and control isiana, 194 pursuance on states, not carried between the course gov and thé national the citizen between relationship the clause, the interstate commerce ernment, to has been left the clauses of equal protection, and process due to the guaranteeing Art. IV, 2,§ and to Amendment, Fourteenth and immunities privileges the of each state citizens the to Fears, See in the several states. Williams v. of citizens adoption In case since the no U. S. 270. 179 immuni has the privileges Amendment Fourteenth move to to protection held afford clause ties been form of lines or other state across persons ments transaction. interstate to enlarge scope reluctance for this
The reason understood since decision has been well clause Cases, If upon its restraint Slaughter-House supra. more than is needful to protect action were extended state gov- the citizen the national between relationships duplicate protection it more than ernment, did and citizens persons property secured liberty and Constitution, enlarge it would other provisions action and multiply restrictions control judicial difficult to but sufficient define, an extent for the rightful apprehension independence serious cause That government. fought was issue out local Cases, with supra, the decision Slaughter-House of 2 Four- enlargement. Since adoption against forty-four at least cases Amendment have been teenth 36; 16 Wall. Bradwell v. 16 Wall. Slaughter-House Cases, State, 129; Wall. Minor v. Bartemeyer Iowa, 130; Happersett, *35 162; 90; v. 92 U. Sauvinet, Hotchkiss, S. v. Kirtland Wall. Walker 252; Illinois, 491; Presser v. 116 S. S. U. Mahon v. Justice, 100 U. 436; 700; 136 Kemmler, U. S. v. Crowley Christensen, re 127 U. S. In 86; 155; S. v. 142 U. Brush, McElvaine 137 U. S. McPherson v. 1; Blacker, 657; 146 U. S. Giozza v. 148 U. S. Tiernan, Duncan v. 377; 535; Missouri, 152 U. Miller v. 153 S. S. Texas, U. Lock In re 116; 154 wood, 160 Ry. 389; U. S. v. S.U. Iowa, Plessy Iowa Central 446 in which state statutes have been to this Court
.brought immuni- infringements privileges assailed legisla- has held that state today none Until ties clause. clause. infringed that tion include pro- be broadened to sweep were now to
If its
regardless
lines,
across state
every transaction
tection of
any
between the citizen
relationship
of
with
its connection
step
taken,
would
government,
the national
But it is
give
well
us concern.
might
gravity
necessary
go
can
present
to much further before the
If
protection
be condemned.
the freedom of the citizen
pass
object
from state to
were the
our solici-
tude,
privilege
adequately protected by
the com-
clause,
though
merce
even
purpose
going
his
be to
insurance
effect
or transact
other kind
of business
which is in itself not commerce. But protection of the
movement,
freedom of
whether by
citizen’s
the privileges
clause,
and immunities
clause
the commerce
will
appellant
afford
no relief from the present
tax. The
record
does
show that he was ever
outside
State
aught
Vermont
appears
acquired
he
his
investments,
extra-state
which are in the form of negoti-
537;
v.
163 U. S.
Ferguson,
Orient Insurance Co. Daggs,
v.
172 U. S.
557; Cumming v.
175 U.
Education,
Board
528;
S.
Maxwell v.
Dow,
581;
176
S.
Williams v.
270;
179 U. S.
Fears,
U.
v.
Orr Gilman,
183
278;
S.
Cox v.
U.
Texas,
446;
202 U. S.
Board
Education
v.
Illi
553;
nois,
203 U. S.
Hunter,
Ballard v.
241;
204 U. S.
Western Turf
Greenberg,
Assn. v.
204
359;
U. S.
Halter v. Nebraska,
34;
205 U. S.
Wilmington
Mining
Star
v. Fulton,
205
Co.
S.
73; Twining
U.
v.
78;
Jersey,
211 U. S. Western Union v.
New
Milling Co.,
Commercial
406;
218 U.
S.
Ry.
Missouri
Co. v. Castle, 224
541;
U. S.
Pacific
Graham v.
616;
224 U. S.
Virginia,
West
Selover, Bates &
v.
Co.
Walsh,
112;
226 U. S.
v. New
Rosenthal
York,
260; Waugh
226 U. S.
v. Board
Trustees,
589;
U. S.
v.
Porter Wilson,
170;
239 U. S.
304;
v.
Campbell,
Crane
S.U.
Armour &
Co. v.
Virginia,
1;S.U.
Omaechevarria v.
343;
Idaho,
246 Maxwell v.
Bugbee,
525; Ownbey
250 U. S.
v.
Morgan,
94;
256 U. S.
Prudential
Ins. Co.
v.
530;
259 U. S.
Cheek,
Hamilton
Such is the contention privilege the owning and income from acquiring, receiving of invest- of citizen- privilege ments without state is federal infringed And is that ship. suggestion privilege is taxing income by just this as the commerce clause is infringed taxation burdening the privilege state carrying commerce on across state lines. In any case the privileges immunities clause is said infringed and to be by taxing this income at a different rate than income from within investments made the state.
The novel application thus given to the and clause, used to arguments support it, leave one in doubt whether thought all preclude differences of taxation of the two classes or only forbid income, such inequality arbitrary as is some sense If unreasonable.
former, the clause becomes an inexhaustible source of im- munities, incalculable in their benefit to taxpayers and in harm to local government, their imposing on the states heavy burden an exact equality of taxation wher- across ever transactions state may lines If involved. seem latter, it would add nothing to the guarantee “ equal protection clause, extends to all per- sons,” including citizens the United States. In that upon case discourse the privileges and- immunities would appear gratuitous clause to be a labor super- erogation. privilege making
If investments without by the protected privileges one immunities clause analogous them is derived income upon a tax com on interstate carrying privilege *37 a tax the privi that the view accept only not must we
merce, follow tax, but it would present by the infringed is lege The answer is income forbidden. of the taxation any that from income derived on net a tax state course, that is, a burden regarded been as never has commerce interstate of the commerce infringement an or as commerce on Oak Creek, Glue Co. v. States United clause. See Peck Carter, 37; 252 U. S. cf. & Co. v. 321; U. S. Shaffer Covington, 165; Wagner v. U. Lowe, 247 S. on property, that a tax thought could it Far less with commerce be is an interference from it, income or been or might had at time some some property cause commerce. Cf. Heisler subject such become time In Co., applying the supra. privileges Colliery v. Thomas now no interpreted, ground as is clause, immunities a for tax on be, regarding income well could or suggested, infringing state as the privi without from investments any more than on interstate carrying transactions, lege from interstate derived commerce or net income a tax on at time moved had some interstate from property commerce clause. infringes the commerce a indirectly state tax affecting The contention lines, on across state by not forbidden carried transactions by IV, 2, Art. can be clause § condemned commerce immunities clause, was definitely privileges under the Fears, supra. Court Williams v. by this There rejected engaged tax those hiring occupation labor- a state outside the state was held not to in- employment ers and immunities clause or the privileges equal fringe clause. protection is objection addressed bare as inequality far
So interstate transactions, if affecting valid, it of taxation compelling equality as accepted taxation by must be residence by state of the citizen’s and well More than this, transaction since into which the extends. states, it involves both would privilege the exercise tax only by unequal imposed an infringed seem to be rate by normal either, by imposed at the but both. protec- assumption with the
Starting dubious the citizen an ac- every interstate, movement of tion clause, independ- is subject of the commerce knowledged clause, subject privileges immunities ently a until expanded afforded the latter protection taxation which has the citizen refuge affords movements to his interstate and relation necessary no *38 A any upon them. impose to restraint in fact not shown avowedly the of the protection for immunity tax created of state to state is thus movement from privilege citizen’s of interest requirements put the beyond far the pressed to a has it, which never been justify point and to forward the for of protection or even desirable needful thought It a nation. is transition effected of the commerce the of in this Court the decision Williams ignoring only by Fears, supra. v. in made the test in taxation is of difference
If mere equality iron rule taxation the which fringement, and due clauses to process have failed equal protection the Pennsylvania, R. Gap supra, Co. Bell’s see impose, of the expansion protection fruit this first is clause. To gain immunities and benefits of privileges a only acquire, has by transaction the citizen shelter its intrastate, an his investment outside state. I can wholly history of privileges and language im in the and find a no such restriction warrant clause munities and Citizens of policy. the United government local no pay taxes. given privilege are It would States taxing power that a subordination seem state to the wisdom, individual, of such debatable of the interests of the Con- a command by pointed justified only be could import. plain stitution of reasoning by application which this turn from the
If we taxation to state immunities clause and privileges actually seems made, now decision to the supported is only inequali- those thought to prohibit the clause is arbitrary to be are considered ties in taxation which from derived of dividends exemption unreasonable. The and the state, on within business carried corporate state, without dividends from of similar taxation Exemption infringement of the clause. held not to an within state property income from investments the state is from without like and taxation of income and immunities privileges be valid. But thought difference taxa- forbids clause, it is declared, made within the state from investment tion of income without, conclusion made income investment this to the belief dis- only can be attributed others, arbitrary from the distinguished crimination, as unreasonable. to a point beginning, to the We thus returned are exemption whether the question discussion so without of a unreasonable, support is so present infringe as to constitutional limi- permissible policy, does not merit exemption tations. condemnation If *39 protection which the equal as a denial Fourteenth nothing extends to can every person, Amendment be the vehemence or effectiveness of the added denuncia- invoking the command privileges tion immunities clause. affirmed. judgment should and Mr. Justice Cardozo con-
Mr. Justice Brandéis opinion. cur in this notes so far privileges, they flow from such citizenship, everywhere within the limits of the and vital and no United States. This fact is obvious it. required elaboration is establish contains the IV of the Constitution of Article Section “ be entitled of each shall The Citizens State provision, ,and several Immunities Citizens Privileges all Amendment, provides: § The Fourteenth States.” States, naturalized the United “All born or persons