59 S.W.2d 49 | Mo. | 1933
Lead Opinion
Injunction to restrain the collection of certain income tax for 1927. The controversy arises from the different construction placed by the parties hereto on the amendment of 1927 to the income tax law, Laws 1927, page 475. This amendment was passed and approved March 23, 1927, and, under the Constitution, went into effect July 3, 1927. The principal object of the amendment was to change the basis of income taxes levied against and to be paid by corporations from the whole net income of corporations except that derived from interstate commerce to the net income derived from all sources within this State, including a reasonable proportion apportioned to this State from the net income derived partially within and partially without the State. The rate of taxation was continued at one per cent. By this amendment of 1927, supra, Section 13106, Revised Statutes 1919, the one in controversy, was made to read:
"Section 13106. Rates to be levied — when: There shall . . . be levied, assessed and collected for the calendar year 1927, and annually thereafter, and paid by every individual, . . . and by every corporation, joint stock company or association, . . . an annual tax of one per cent upon the taxpayer's entire net income from all sources within this state, including a reasonable proportion apportioned to this state of net income derived from business partially within and partially without the state which cannot be definitely allocated."
The plaintiff, a Missouri corporation, is located in St. Louis and its business for 1927 was partially within and partially without this State. The facts are not in dispute. The total net income of plaintiff for 1927 was agreed upon. The reasonable proportion of this net income for that year apportioned to this State under the above statute was agreed upon, to-wit, 42.47 per cent of the total net income earned should be taxed here, the balance of 57.53 per cent being foreign business and the income therefrom not taxable here. It is plaintiff's insistence that under the express terms of the statute above quoted, "for the calendar year 1927," the net income for the entire year of 1927 should be apportioned in this way and it should be required to pay only 42.47 per cent of such entire net income. The entire net income for the year in question was agreed to be $568,470.48, of which $241,429.41 was properly this State's share of such income, and on this amount, and no more, plaintiff was willing to pay the income tax of one per cent. On this basis plaintiff offered to pay $2,414.29 for its income tax for 1927. The defendant taxing officials objected to this method of computing the tax and refused to accept this amount in full payment. They base their objection to the method of computation on the fact that the amendment of 1927, called the new law, did not go into effect till July 3, 1927, and the part of the year 1927 prior to that date, approximately one-half, was governed by the old law which required that the tax for that *159 period be computed at one per cent of the entire net income, just as the tax for 1926 and prior years had been computed, and that no deduction for the first half of 1927 should be made from the net income for that period because of a large part of plaintiff's business being transacted outside of this State or partly within and partly without this State. In other words, defendants insist that the income tax should be computed under the old law for the first half of the year 1927 and under the new or amended law for the last half of that year. It was agreed that if so computed, the net taxable income would be increased $163,520 and the tax increase would be $1,635.20. This is the amount in dispute. The trial court granted the injunction.
[1, 2, 3] The plaintiff bases its contention on the literal reading of the amended statute which provides that there shall be levied and collected "for the calendar year 1927" — all of it, an income tax of one per cent on only the proportional amount of the total income derived from business done within this State, and so the statute reads. To this the defendants reply that such amended statute did not go into effect till July 3, 1927, and therefore could not work any change in the income tax law as to the basis or mode of computing the tax till after that date, and that to hold otherwise and in accordance with plaintiff's contention, the amendment is "retrospective in its operation" and in contravention of Section 15, Article II, of our Constitution.
Defendants are clearly correct. A new or an amendment of an existing statute which reaches back and creates a new or different obligation, duty or burden which did not exist before the new law itself became effective, or which makes the obligation or burden begin at a date earlier than the date of going into effect of the law itself is retroactive in its operation and unconstitutional. A law is retroactive in its operation when it looks or acts backward from its effective date, and if it has the same effect as to past transactions or considerations as to future ones, then it is retrospective. [Leete v. State Bank,
In Bartlett v. Ball,
[4] Much this same question came before this court in Smith v. Dirckx,
This last holding effectually answers the contention made here that the income tax for a given year is a unit and not proportionable for a part of the year at one rate and for another part at another rate, in that such tax does not become due till the end of the tax year and is then to be computed as an entirety for that year; and that prior to the maturity date it does not have even a potential existence or rise to the dignity of an obligation.
In Smith v. Dirckx, supra, this court said: "However, this should not operate to prevent the collection of a tax not exceeding one-half of one per cent for the period above mentioned. This for the reason that since the old law imposed a tax of one-half of one per cent upon that portion of his income which appellant received prior to the taking effect of the 1919 amendment, that portion of the amended rate which did not exceed the old rate did not create a new obligation or impose a new duty." The court then quoted from a Texas case, Texas v. Railway,
The theory that the net income tax for the year did not come into existence until the end of the year, and then as an entirety, and that the law which was in force at the end of the year and then acted on such income for the whole of the year, is not retrospective, was ably presented in the dissenting opinion in the Dirckx case, but was rejected.
In State ex rel. v. Bell Telephone Company,
In the case last cited, the Bell Telephone case, the Legislature in 1921 (Laws 1921, 1st Ex. Sess., p. 189) amended the income tax law, Section 13112, Revised Statutes 1919, which provided for an annual rate of one and one-half per cent, so as to lower the rate to one per cent beginning with 1922, and also provided that for the balance of the year 1921 after the amended act took effect the rate should be only one-half of one per cent. The amended act was passed and approved August 1, 1921, with an emergency clause intending to put the amendment into effect at once, but such emergency clause was held void and the amendment did not become effective till ninety days after the adjournment of the Legislature, to-wit, November 2, 1921. The question there presented for decision was which rate was in force between the date of the act as was intended and the date it actually became effective. This court held that to carry out the legislative intent as shown by the emergency clause would make the statute retrospective in its operation, saying: "To attempt to give the act effect from the time of its approval is to make it retrospective contrary to Section 15, Article II, of the Constitution. This was distinctly held by this court in construing this income tax law in Smith v. Dirckx, 283 Mo. l.c. 197, 198. The law then had no force between the time of its passage and the time when it went into effect, November 2, 1921." [See Stouffer v. Crawford, 248 S.W. 581, 584.] This court so held, although the opposite holding would have decreased the amount of income tax received by the State.
[5, 6] In this connection the plaintiff contends that although the amended law of 1927 is retrospective in its operation if construed *162
to cover a period antedating the time it went into effect, yet as it is detrimental to the State only, and not to the taxpayer, there is no valid objection, so far as the State is concerned, to the law being retrospective. The provision of the Constitution inhibiting laws retrospective in their operation is for the protection of the citizen and not the State. The law is stated in 12 Corpus Juris, 1087, thus: "The state may constitutionally pass retrospective laws impairing its own rights, and may impose new liabilities with respect to transactions already past on the state itself or on the governmental subdivisions thereof." [See New Orleans v. Clark,
The result is that the judgment of the circuit court should be and is reversed.
Addendum
The foregoing opinion by STURGIS, C., in Division One is adopted as the opinion of the court en banc. All concur.
