227 Mass. 225 | Mass. | 1917
This petition was brought under St. 1909, c. 490, Part III, § 70, for the abatement of a portion of the corporation franchise tax assessed upon the petitioner for 1916.
In determining the amount upon which the corporate franchise tax on a domestic business corporation shall be computed the statute provides that certain deductions shall be made from the value of the corporate franchise as determined by the fair cash value of all its shares of capital stock. St. 1909, c. 490, Part III, § 41, as amended by St. 1910, c. 270, § 1, St, 1912, c. 491, § 1, and St. 1914, c. 198, § 6, and § 43 as amended by St. 1913, c. 453, § 2, and St. 1914, c. 198, § 6. In the case at bar the tax commissioner declined to deduct the value of the bank deposits and accounts receivable above referred to. The sole question presented by this petition is- whether these two items are "property situated in another State or country and subject to taxation therein” within the meaning of said § 41, cl. 3. If they are, they should have been deducted in the determination of the petitioner’s corporate franchise tax, and the abatement prayed for should be allowed; otherwise, the petition should be dismissed.
The recent case of Bellows Falls Power Co. v. Commonwealth, 222 Mass. 51, involved the question whether the value of shares of stock in a foreign corporation which were owned by a domestic, business corporation should be deducted in computing the latter’s corporate franchise tax. The court discussed the question whether these shares were (1) "securities which if owned by a natural person resident in this Commonwealth would not be liable to taxation” and (2) were “property situated in another state or. country and subject to taxation therein.” St. 1909, c. 490, Part III, § 41, cl. 3. While the first question was the one chiefly dis
It is strongly urged by the petitioner that, as it was decided that the shares of stock in a foreign corporation owned by the Bellows Falls Power Company were “securities which if owned by a natural person resident in this Commonwealth” would be liable to taxation here, and hence not to be deducted from the value of the corporate franchise, it was unnecessary for the court •.to go further and decide that those shares were not “property situated in another State or country and subject to taxation therein.” But this second point was specifically raised by the petitioner’s requests for rulings, it was argued in its brief, was expressly stated at the beginning of the opinion to be one of the two questions before the court, and was necessarily involved in the decision of the case. These shares in the foreign corporation had been actually and legally taxed in Vermont. They had “substantial . . . elements of property.” The decision that, although taxable in Vermont they did not come within the clause in question as “property situated in another State,” was in effect a ruling that that clause did not embrace all property subject to taxation in another State, and especially that it did not embrace intangible property.
Undoubtedly the word “property” is broad enough to include intangible property. But aside now from the controlling effect of the Bellows Falls Power Company case as authority, the same result would have to be reached in the case at bar. As was pointed
In construing the clause in said § 41 providing for deductions, the history of the present system of taxation of corporate franchises tends to sustain the contention of the Commonwealth. See New England & Savannah Steamship Co. v. Commonwealth, 195 Mass. 385. This legislation begins with St. 1864, c. 208, under which an excise upon the franchise of domestic corporations was based upon the total value of its capital stock after deducting the value of its real estate and machinery situated in Massachusetts and locally taxed. Commonwealth v. Hamilton Manuf. Co. 12 Allen, 298. Hamilton Co. v. Massachusetts, 6 Wall. 632. In the following year, instead of a fixed tax of one and one sixth per cent upon the excess value so ascertained, the system of averaging the tax rates of all the cities and towns was adopted. The corporation was not entitled to deductions which were not specifically granted by the statute. For instance, the corporation was allowed no credit for real estate outside the Commonwealth, for shares of another corporation on which it paid taxes in Massachusetts, or even for bonds of the United States. Commonwealth v. New England Slate & Tile Co. 13 Allen, 391. Commonwealth v. Hamilton Manuf. Co. ubi supra. In 1865 it was provided that the value of its real estate and machinery, subject to local taxation, "wherever situated” should be deducted. St. 1865, c. 283, § 5. By St. 1902,
It should be added that, as it was agreed for the purposes of this case that both the bank deposits and accounts receivable were taxable and actually taxed in Dlinois, the jurisdiction of that State to tax the items in question has not been considered.
Petition dismissed.