299 Mass. 296 | Mass. | 1938
These are three appeals under G. L. (Ter. Ed.) c. 58A, § 13, from the refusal of the Board of Tax Appeals to grant an abatement of taxes assessed by the appellee on income received by the appellants in each case during the year 1933. Each of the two individual appellants was a resident of this Commonwealth and the owner of one hundred shares of common stock in the Home Electric Light and Power Equipment Company, a corporation organized under the laws of this Commonwealth in 1916, acquired by each of them by gift in 1931. The individual appellants and the corporate appellant were, during 1933, the duly appointed executors under the will of Fred S. High, who died, in December, 1931, while an inhabitant of this Commonwealth, and in their capacity as such executors were the owners of the remainder of the common stock, comprising eight hundred shares. These shares were acquired by their testator prior to his death and came to the executors as a part of the capital of his estate. An inheritance tax had been paid by the executors on this stock on a valuation of $400 for each share, the determination of value made by the appellee and accepted by the executors. The Home Electric Light and Power Equipment Company in 1932 passed appropriate votes by its directors and stockholders, which, after reciting that the corporation was no longer engaged in active business and that all its indebtedness had been fully discharged and satisfied, resolved that the “corporation be dissolved, its charter and franchise surrendered,” and “that the dissolution of the corporation be effected by a distribution of the funds, secu
The relevant statutes are these: St. 1933, c. 307, had an emergency preamble; it was approved July 1; it was provided in § 9: “Income received by any inhabitant of the commonwealth during the years nineteen hundred and thirty-three, nineteen hundred and thirty-four and nineteen hundred and thirty-five from dividends on shares in all corporations, . . . organized under the laws of this commonwealth or under the laws of any state or nation . . . [with exceptions not here material] shall be taxed at the rate of six per cent per annum. Except as otherwise provided in this section, the provisions of chapter sixty-two of the General Laws, as amended, shall apply to the taxation of income received by any such inhabitant during said years. Subsection (b) of section one of said chapter sixty-two shall not apply to income received during said years.” It was provided in G. L. (Ter. Ed.) c. 62, § 1 (g): “No distribution of capital, whether in liquidation or otherwise, shall be taxable as income under this section; but accumu
The appellants contend that St. 1933, c. 307, § 9, which took effect on July 1, 1933, does not subject to taxation the income derived from the corporation here in question, which was distributed on January 31, 1933. They urge that this statute can reach only dividends received after, its effective date. It is a general principle that taxing statutes are to be construed strictly. If the power to tax is not conferred by plain words, it is not to be extended by implication. Hill v. Treasurer & Receiver General, 229 Mass. 474, 475. Sayles v. Commissioner of Corporations & Taxation, 286 Mass. 102, 104. In general, a taxing statute cannot be given a retroactive effect in the absence of explicit language to that end. Magee v. Commissioner of Corporations & Taxation, 256 Mass. 512, 517. The words of said § 9 here involved are plain. They include all dividends received in 1933, whether before or after the effective date of the statute. The words are: “Income received . . . during the years nineteen hundred and thirty-three . . . shall be taxed . . . .” No income material to the questions here raised is excepted. The words of a statute must be “construed according to the common and approved usage of the language.” G. L. (Ter. Ed.) c. 4, § 6, Third. Boston & Maine Railroad v. Billerica, 262 Mass. 439, 444. The usual meaning of the word “income” in the statutes relating to taxation is “the true increase in amount of wealth which comes to a person during a stated period of time.” Bingham v. Commissioner of Corporations & Taxation, 249 Mass. 79, 80. Tax Commissioner v. Putnam, 227 Mass. 522, 526. The period of time designated in the present statute as applied to the facts was the year 1933. The word “year” in a statute ordinarily signifies a calendar year. G. L. (Ter. Ed.) c. 4, § 7, Nineteenth. It is to be
The statute thus construed does not violate the due process clause of the Fourteenth Amendment to the Constitution of the United States. Touching this subject, it was said in United States v. Hudson, 299 U. S. 498, at page 500, with ample citation of supporting authorities (which need not be repeated): “As respects income tax statutes it long has been the practice of Congress to make them retroactive for relatively short periods so as to include profits from transactions consummated while the statute was in process of enactment, or within so much of the calendar year as preceded the enactment; and repeated decisions of this Court have recognized this practice and sustained it as consistent with the due process of law clause of the Constitution.”
The income tax under the statutes of this Commonwealth is not an excise but a property tax. Kennedy v. Commissioner of Corporations & Taxation, 256 Mass. 426, 428. Bryant v. Commissioner of Corporations & Taxation, 291 Mass. 498, 500.
The case at bar on this point is covered by Lanning v. Tax Commissioner, 247 Mass. 496. In that case a dividend was voted by the corporation before 1916 and was payable, and received by the taxpayer, in January of 1916. The taxing statute was enacted on May 26, 1916. It was held to include all income received for the calendar year 1916. It was adjudged that the tax was valid.
The appellants contend that the transaction of surrendering their stock to the corporation upon the distribution to them of their proportionate share of the assets thereof constituted a sale of the stock to the corporation, the gain resulting from which was taxable at three per cent under G. L. (Ter. Ed.) c. 62, § 5 (c), and not the payment of a dividend taxable at six per cent under St. 1933,
Those of the appellants who are executors contend that they are not “inhabitants of the commonwealth” within the meaning of those words in St. 1933, c. 307, § 9. That section provides expressly that income “received by any inhabitant of the commonwealth” during the specified years, from dividends on shares in corporations, shall be taxed. The individual appellants were inhabitants of the Commonwealth, and the corporate appellant had its usual place of business at Boston. Nothing in the record indicates that
A further contention of the executors as appellants is that, if the dividends received by them are taxable at all, they are taxable only to the extent of the excess of the distribution over the value placed upon the shares in the estate for inheritance tax purposes. That is to say, the contention is that they can be taxed only upon $18.28, which is the excess of the dividend in liquidation over the value of each share for inheritance tax purposes. This contention is without foundation. The inheritance tax is an excise based on the privilege of succeeding to the property of the decedent. Minot v. Treasurer & Receiver General, 207 Mass. 588. Attorney General v. Stone, 209 Mass. 186. It is not a tax on the property, although the value of the property is a measure of the excise. The income here in issue was not arid could not in the nature of things have been the subject of a succession tax. The present tax was a property tax assessed upon a substantial income actually received during 1933. Hart v. Tax Commissioner, 240 Mass. 37. Kennedy v. Commissioner of Corporations & Taxation, 256 Mass. 426, 428. The appellants by this contention attempt to claim a deduction from an income tax of the amount paid for a succession tax. They refer to no applicable statute permitting any such deduction or exemption. Exceptions cannot readily be read into a statute enacted, as this was, as an emergency measure to collect revenue from all dividends within legislative jurisdiction. Boston Safe Deposit & Trust Co. v. Commissioner of Corporations & Taxation, 273 Mass. 187, 194. Follett v. Commissioner of Corporations & Taxation, 267 Mass. 115, 118. Boston Safe Deposit & Trust Co. v.
In each case the entry may be
Petition dismissed.