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The Green Bag

stock, and that reference was made to the capital stock for the purpose of determining the amount of the tax. The court cited with approval the case

to three-quarters of one per cent on the

total amount of deposits.”12 Undoubtedly, a corporate franchise

of Munroe Savings Bank v. Rochester,9

tax computed on income would operate _ the same on the treasury of the corpora

to the effect that where a state tax is imposed as a property tax, so much of

tion as a tax levied directly upon income. From the ﬁnancial point of view of the

the property as is invested in United

corporation, there would be little to

States bonds is to be deducted,—“but

choose between them. Economic iden tity, however, does not establish identity of legal effect. This proposition was forcibly asserted by Justice Moody in delivering the opinion of the court in

this rule can have no application to an assessment upon a franchise, where a reference to property is made only to

ascertain the value of the thing assessed." ImHome Insurance Co. v. New York,

Home Savings Bank v. Des Moines13

the court placed reliance upon a prior decision, appealed from the Supreme

when he said: “If the state has not the

Court of Connecticut, where a savings

power to levy this tax, we will not in quire whether another tax which it

bank, to the extent that its deposits were invested in United States securities,

might lawfully impose would have the

sought to escape the burdens of a tax equivalent to a certain percentage on the

stands for the proposition that the

same ultimate incidence."

This case

capital of a corporation, invested in

total amount of deposits.10 The federal

United States securities, may not be

Supreme Court, conceding its illegality viewed as a tax on the deposits, and

taxed by merely adopting as a measure of taxable value the value of the shares in the hands of the stockholders, although such shares are themselves taxable. The

observing that a corporate franchise or privilege is a thing of value and tax able, ruled that reference was made to the total amount of deposits, "not as the subject-matter of assessment, but

asthe basis for computingthe tax. . . .” In this connection, it is interesting to compare the argument of the counsel

for the corporation, to the effect that a franchise tax, “estimating its value by the money it has secured, is the same thing in substance as taxing the money received,” with that employed by those who argue that a tax on a corporate

validity of a tax on that which consti tutes the measure of taxable value, no

more than its invalidity, is conclusive of the validity of the real subject—matter of the tax.

We may therefore consistently con clude that while Congress may not levy a general tax on incomes without appor tionment, whenever the income of a

corporation represents the fair and rea sonable value of a right, privilege or

franchise, computed on its income, is

substantially a tax on the income.11 The force of this decision is not dimin ished by the fact that the statute did not purport to be a franchise tax, but

simply a tax on the corporation “equal 9 37 N. Y. 365. 10 Society for Savings v. Coils, 6 Wall. 594. ‘1 See also the argument of Mr. Bristow in Home Insurance Co. v. New York, 119 U. S. 133.

1' A similar result was reached in a Massachu setts case, where a "tax on account of its depos itors" of a certain percentage on the amount of its deposits was held to be a franchise tax on the bank, and not a tax on property, i. 0., the deposits. Provident Institution v. Mass., 12 Allen (Mass) 312; 6 Wallace 611. In this case, a tax on the deposits would have been doubly objectionable, as an unproportional property tax under the state

constitution, and as being in part invested in federal securities. See also Comm. v. People's Savings Bank, 5 Allen 428. 1' 205 U. S. 503.