The Constitution of the United States of America: Analysis and Interpretation Part 180

Severance Taxes.--A State excise on the production of oil which extends to the royalty interest of the lessor in the oil produced under an oil lease as well as to the interest of the lessee engaged in the active work of production, the tax being apportioned between these parties according to their respective interest in the common venture, is not arbitrary as regards the lessor, but consistent with due process.[477]

Real Property Taxes (a.s.sessment).--The maintenance of a high a.s.sessment in the face of declining value is merely another way of achieving an increase in the rate of property tax. Hence, an over-a.s.sessment const.i.tutes no deprivation of property without due process of law.[478] Likewise, land subject to mortgage may be taxed for its full value without deduction of the mortgage debt from the valuation.[479]

Real Property Taxes: Special a.s.sessments.--A State may defray the entire expense of creating, developing, and improving a political subdivision either from funds raised by general taxation, or by apportioning the burden among the munic.i.p.alities in which the improvements are made, or by creating, or authorizing the creation of, tax districts to meet sanctioned outlays.[480] Where a State statute authorizes munic.i.p.al authorities to define the district to be benefited by a street improvement and to a.s.sess the cost of the improvement upon the property within the district in proportion to benefits, their action in establishing the district and in fixing the a.s.sessments on included property, after due hearing of the owners as required by the statute cannot, when not arbitrary or fraudulent, be reviewed under the Fourteenth Amendment upon the ground that other property benefited by the improvement was not included.[481]

It is also proper to impose a special a.s.sessment for the preliminary expenses of an abandoned road improvement, even though the a.s.sessment exceeds the amount of the benefit which the a.s.sessors estimated the property would receive from the completed work.[482] Likewise a levy upon all lands within a drainage district of a tax of twenty-five cents per acre to defray preliminary expenses does not unconst.i.tutionally take the property of landowners within that district who may not be benefited by the completed drainage plans.[483] On the other hand, when the benefit to be derived by a railroad from the construction of a highway will be largely offset by the loss of local freight and pa.s.senger traffic, an a.s.sessment upon such railroad is violative of due process,[484] whereas any gains from increased traffic reasonably expected to result from a road improvement will suffice to sustain an a.s.sessment thereon.[485] Also the fact that the only use made of a lot ab.u.t.ting on a street improvement is for a railway right of way does not make invalid, for lack of benefits, an a.s.sessment thereon for grading, curbing, and paving.[486] However, when a high and dry island was included within the boundaries of a drainage district from which it could not be benefited directly or indirectly, a tax on such island was held to be a deprivation of property without due process of law.[487]

Finally, a State may levy an a.s.sessment for special benefits resulting from an improvement already made[488] and may validate an a.s.sessment previously held void for want of authority.[489]

JURISDICTION TO TAX

Land

Prior even to the ratification of the Fourteenth Amendment, it was settled principle that a State could not tax land situated beyond its limits; and subsequently elaborating upon that principle the Court has said that "* * *, we know of no case where a legislature has a.s.sumed to impose a tax upon land within the jurisdiction of another State, much less where such action has been defended by a court."[490] Insofar as a tax payment may be viewed as an exaction for the maintenance of government in consideration of protection afforded, the logic sustaining this rule is self-evident.

Tangible Personalty

As long as tangible personal property has a situs within its borders, a State validly may tax the same, whether directly through an _ad valorem_ tax or indirectly through death taxes, irrespective of the residence of the owner.[491] By the same token, if tangible personal property makes only occasional incursions into other States, its permanent situs remains in the State of origin, and is taxable only by the latter.[492]

The ancient maxim, _mobilia sequuntur personam_, which had its origin when personal property consisted in the main of articles appertaining to the person of the owner, yielded in modern times to the "law of the place where the property is kept and used." In recent years, the tendency has been to treat tangible personal property as "having a situs of its own for the purpose of taxation, and correlatively to * * *

exempt [it] at the domicile of its owner."[493]The benefit-protection theory of taxation, upon which the Court has in fact relied to sustain taxation exclusively by the situs State, logically would seem to permit taxation by the domiciliary State as well as by the nondomiciliary State in which the tangibles are situate, especially when the former levies the tax on the owner in terms of the value of the tangibles. Thus far, however, the Court has taken the position that when the tangibles have a situs elsewhere, the domiciliary State can neither control such property nor extend to it or to its owner such measure of protection as would be adequate to meet the jurisdictional requirements of due process.

Intangible Personalty

General.--To determine whether a State, or States, may tax intangible personal property, the Court has applied the fiction, _mobilia sequuntur personam_ and has also recognized that such property may acquire, for tax purposes, a business or commercial situs where permanently located; but it has never clearly disposed of the issue as to whether multiple personal property taxation of intangibles is consistent with due process. In the case of corporate stock, however, the Court has obliquely acknowledged that the owner thereof may be taxed at his own domicile, at the commercial situs of the issuing corporation, and at the latter's domicile; but, as of the present date, const.i.tutional lawyers are speculating whether the Court would sustain a tax by all three jurisdictions, or by only two of them, and, if the latter, which two, the State of the commercial situs and of the issuing corporation's domicile, or the State of the owner's domicile and that of the commercial situs.[494]

Taxes on Intangibles Sustained.--Thus far, the Court has sustained the following personal property taxes on intangibles:

(1) A debt held by a resident against a nonresidence, evidenced by a bond of the debtor and secured by a mortgage on real estate in the State of the debtor's residence.[495]

(2) A mortgage owned and kept outside the State by a nonresident but on land within the State.[496]

(3) Investments, in the form of loans to residents, made by a resident agent of a nonresident creditor, are taxable to the nonresident creditor.[497]

(4) Deposits of a resident in a bank in another State, where he carries on a business and from which these deposits are derived, but belonging absolutely to him and not used in the business, are subject to a personal property tax in the city of his residence, whether or not they are subject to tax in the State where the business is carried on. The tax is imposed for the general advantage of living within the jurisdiction [benefit-protection theory], and may be measured by reference to the riches of the person taxed.[498]

(5) Membership owned by a nonresident in a domestic exchange, known as a chamber of commerce.[499]

(6) Membership by a resident in a stock exchange located in another State. "Double taxation" the Court observed "by one and the same State is not" prohibited "by the Fourteenth Amendment; much less is taxation by two States upon identical or closely related property interests falling within the jurisdiction of both, forbidden."[500]

(7) A resident owner may be taxed on stock held in a foreign corporation that does no business and has no property within the taxing State. The Court also added that "undoubtedly the State in which a corporation is organized may * * *, [tax] of all its shares whether owned by residents or nonresidents."[501]

(8) Stock in a foreign corporation owned by another foreign corporation transacting its business within the taxing State. The Court attached no importance to the fact that the shares were already taxed by the State in which the issuing corporation was domiciled and might also be taxed by the State in which the issuing corporation was domiciled and might also be taxed by the State in which the stock owner was domiciled; or at any rate did not find it necessary to pa.s.s upon the validity of the latter two taxes. The present levy was deemed to be tenable on the basis of the benefit-protection theory; namely, "the economic advantages realized through the protection, at the place * * *, [of business situs]

of the ownership of rights in intangibles * * *"[502]

(9) Shares owned by nonresident shareholders in a domestic corporation, the tax being a.s.sessed on the basis of corporate a.s.sets and payable by the corporation either out of its general fund or by collection from the shareholder. The shares represent an aliquot portion of the whole corporate a.s.sets, and the property right so represented arises where the corporation has its home, and is therefore within the taxing jurisdiction of the State, notwithstanding that ownership of the stock may also be a taxable subject in another State.[503]

(10) A tax on the dividends of a corporation may be distributed ratably among stockholders regardless of their residence outside the State, the stockholders being the ultimate beneficiaries of the corporation's activities within the taxing State and protected by the latter and subject to its jurisdiction.[504] This tax, though collected by the corporation, is on the transfer to a stockholder of his share of corporate dividends within the taxing State, and is deducted from said dividend payments.[505]

(11) Stamp taxes on the transfer within the taxing State by one nonresident to another of stock certificates issued by a foreign corporation;[506] and upon promissory notes executed by a domestic corporation, although payable to banks in other States.[507] These taxes, however, were deemed to have been laid, not on the property, but upon an event, the transfer in one instance, and execution, in the latter, which took place in the taxing State.

Taxes on Intangibles Invalidated.--The following personal property taxes on intangibles have not been upheld:

(1) Debts evidenced by notes in safekeeping within the taxing State, but made and payable and secured by property in a second State and owned by a resident of a third State.[508]

(2) A property tax sought to be collected from a life beneficiary on the corpus of a trust composed of property located in another State and as to which said beneficiary had neither control nor possession, apart from the receipt of income therefrom.[509] However, a personal property tax may be collected on one-half of the value of the corpus of a trust from a resident who is one of the two trustees thereof, notwithstanding that the trust was created by the will of a resident of another State in respect of intangible property located in the latter State, at least where it does not appear that the trustee is exposed to the danger of other _ad valorem_ taxes in another State.[510] The first case, Brooke _v._ Norfolk,[511] is distinguishable by virtue of the fact that the property tax therein voided was levied upon a resident beneficiary rather than upon a resident trustee in control of nonresident intangibles. Different too is Safe Deposit and Trust Co. _v._ Virginia,[512] where a property tax was unsuccessfully demanded of a nonresident trustee with respect to nonresident intangibles under its control.

(3) A tax, measured by income, levied on trust certificates held by a resident, representing interests in various parcels of land (some inside the State and some outside), the holder of the certificates, though without a voice in the management of the property, being ent.i.tled to a share in the net income and, upon sale of the property, to the proceeds of the sale.[513]

Transfer Taxes (Inheritance, Estate, Gift Taxes).--Being competent to regulate exercise of the power of testamentary disposition and the privilege of inheritance, a State may base its succession taxes upon either the transmission, or an exercise of the legal power of transmission, of property by will or by descent, or the enjoyment of the legal privilege of taking property by devise or descent.[514] But whatever may be the justification of their power to levy such taxes, States have consistently found themselves restricted by the rule, established as to property taxes in 1905 in Union Refrigerator Transit Co. _v._ Kentucky,[515] and subsequently reiterated in Frick _v._ Pennsylvania[516] in 1925, which precludes imposition of transfer taxes upon tangible personal property by any State other than the one in which such tangibles are permanently located or have an actual situs. In the case of intangibles, however, the States have been hara.s.sed by the indecision of the Supreme Court; for to an even greater extent than is discernible in its treatment of property taxes on intangibles, it has oscillated in upholding, then rejecting, and again currently sustaining the levy by more than one State of death taxes upon intangibles comprising the estate of a decedent.

Until 1930, transfer taxes upon intangibles levied by both the domiciliary as well as nondomiciliary, or situs State, were with rare exceptions approved. Thus, in Bullen _v._ Wisconsin,[517] the domiciliary State of the creator of a trust was held competent to levy an inheritance tax, upon the death of the settlor, on his trust fund consisting of stocks, bonds, and notes kept and administered in another State and as to which the settlor reserved the right to control disposition and to direct payment of income for life, such reserved powers being equivalent to a fee. Cognizance was taken of the fact that the State in which these intangibles had their situs had also taxed the trust. Levy of an inheritance tax by a nondomiciliary State was sustained on similar grounds in Wheeler _v._ Sohmer, wherein it was held that the presence of a negotiable instrument was sufficient to confer jurisdiction upon the State seeking to tax its transfer.[518] On the other hand, the mere ownership by a foreign corporation of property in a nondomiciliary State was held insufficient to support a tax by that State on the succession to shares of stock in that corporation owned by a nonresident decedent.[519] Also against the trend was Blodgett _v._ Silberman[520] wherein the Court defeated collection of a transfer tax by the domiciliary State by treating coins and bank notes deposited by a decedent in a safe deposit box in another State as tangible property, albeit it conceded that the domiciliary State could tax the transfer of books and certificates of indebtedness found in that safe deposit box as well as the decedent's interest in a foreign partnership.

In the course of about two years following the recent Depression, the Court handed down a group of four decisions which, for the time being at any rate, placed the stamp of disapproval upon multiple transfer and--by inference--other multiple taxation of intangibles. a.s.serting, as it did in one of these cases, that "practical considerations of wisdom, convenience and justice alike dictate the desirability of a uniform general rule confining the jurisdiction to impose death transfer taxes as to intangibles to the State of the [owner's] domicile; * * *"[521]

the Court, through consistent application of the maxim, _mobilia sequuntur personam_, proceeded to deny the right of nondomiciliary States to tax and to reject as inadequate jurisdictional claims of the latter founded upon such bases as control, benefit, and protection or situs. During this interval, 1930-1932, multiple transfer taxation of intangibles came to be viewed, not merely as undesirable, but as so arbitrary and unreasonable as to be prohibited by the due process clause.

Beginning, in 1930, with Farmers' Loan and Trust Co. _v._ Minnesota,[522] the Court reversed its former ruling in Blackstone _v._ Miller,[523] in which it had held that the State in which a debtor was domiciled or a bank located could levy an inheritance tax on the transfer of the debt or the deposit, notwithstanding that the creditor had his domicile in a different State. Farmers' Loan and Trust Co. _v._ Minnesota, strictly appraised, was authority simply for the proposition that jurisdiction over a debtor, in this instance a State which had issued bonds held by a nonresident creditor, was inadequate to sustain a tax by that debtor State on the transfer of such securities. The securities in question, which had never been used by the creditor in any business in the issuing State, were located in the State in which the creditor had his domicile, and were deemed to be taxable only in the latter. In Baldwin _v._ Missouri,[524] a nondomiciliary State was prevented from applying its inheritance tax to bonds, bank deposits, and promissory notes, all physically present within its limits and some of them secured by lands therein, when the owner thereof was domiciled in another State. A like result, although on this occasion on grounds of lack of evidence of any "business situs," was reached in Beidler _v._ South Carolina Tax Commission,[525] in which the Court ruled that a State, upon the death of a nonresident creditor, may not apply its inheritance tax to a debt [open account] owned by one of its domestic corporations. Finally, in First National Bank _v._ Maine,[526] which has since been overruled in State Tax Commission _v._ Aldrich,[527] the Court declared that only the State in which the owner of corporate stock died domiciled was empowered to tax the succession to the shares by will or inheritance and that the State in which the issuing corporation was domiciled could not do so.

Without expressly overruling more than one of these four cases condemning multiple succession taxation of intangibles, the Court, beginning with Curry _v._ McCanless[528] in 1939, announced a departure from the "doctrine, of recent origin, that the Fourteenth Amendment precludes the taxation of any interest in the same intangible in more than one State * * *." Taking cognizance of the fact that this doctrine had never been extended to the field of income taxation or consistently applied in the field of property taxation, where the concepts of business situs as well as of domiciliary situs had been utilized to sustain double taxation, especially in connection with shares of corporate stock, the Court declared that a correct interpretation of const.i.tutional requirements would dictate the following conclusions: "From the beginning of our const.i.tutional system control over the person at the place of his domicile and his duty there, common to all citizens, to contribute to the support of government have been deemed to afford an adequate const.i.tutional basis for imposing on him a tax on the use and enjoyment of rights in intangibles measured by their value. * * * But when the taxpayer extends his activities with respect to his intangibles, so as to avail himself of the protection and benefit of the laws of another State, in such a way as to bring his person or * * *

[his intangibles] within the reach of the tax gatherer there, the reason for a single place of taxation no longer obtains, * * * [However], the State of domicile is not deprived, by the taxpayer's activities elsewhere, of its const.i.tutional jurisdiction to tax." In accordance with this line of reasoning, Tennessee, where a decedent died domiciled, and Alabama, where a trustee, by conveyance from said decedent, held securities on specific trusts, were both deemed competent to impose a tax on the transfer of these securities pa.s.sing under the will of the decedent. "In effecting her purposes," the testatrix was viewed as having "brought some of the legal interests which she created within the control of one State by selecting a trustee there, and others within the control of the other State, by making her domicile there." She had found it necessary to invoke "the aid of the law of both States, and her legatees" were subject to the same necessity.

These statements represented a belated adoption of the views advanced by Chief Justice Stone in dissenting or concurring opinions which he filed in three of the four decisions rendered during 1930-1932. By the line of reasoning taken in these opinions, if protection or control was extended to, or exercised over, intangibles or the person of their owner, then as many States as afforded such protection or were capable of exerting such dominion should be privileged to tax the transfer of such property. On this basis, the domiciliary State would invariably qualify as a State competent to tax and a nondomiciliary State, so far as it could legitimately exercise control or could be shown to have afforded a measure of protection that was not trivial or insubstantial.

On the authority of Curry _v._ McCanless, the Court, in Pearson _v._ McGraw,[529] also sustained the application of an Oregon transfer tax to intangibles handled by an Illinois trust company and never physically present in Oregon, jurisdiction to tax being viewed as dependent, not on the location of the property in the State, but on control over the owner who was a resident of Oregon. In Graves _v._ Elliott,[530] decided in the same year, the Court upheld the power of New York, in computing its estate tax, to include in the gross estate of a domiciled decedent the value of a trust of bonds managed in Colorado by a Colorado trust company and already taxed on its transfer by Colorado, which trust the decedent had established while in Colorado and concerning which he had never exercised any of his reserved powers of revocation or change of beneficiaries. It was observed that "the power of disposition of property is the equivalent of ownership, * * * and its exercise in the case of intangibles is * * * [an] appropriate subject of taxation at the place of the domicile of the owner of the power. Relinquishment at death, in consequence of the non-exercise in life, of a power to revoke a trust created by a decedent is likewise an appropriate subject of taxation."[531] Consistent application of the principle enunciated in Curry _v._ McCanless is also discernible in two later cases in which the Court sustained the right of a domiciliary State to tax the transfer of intangibles kept outside its boundaries, notwithstanding that "in some instances they may be subject to taxation in other jurisdictions, to whose control they are subject and whose legal protection they enjoyed."

In Graves _v._ Schmidlapp[532] an estate tax was levied upon the value of the subject of a general testamentary power of appointment effectively exercised by a resident donee over intangibles held by trustees under the will of a nonresident donor of the power. Viewing the transfer of interest in said intangibles by exercise of the power of appointment as the equivalent of ownership, the Court quoted from McCulloch _v._ Maryland[533] to the effect that the power to tax "'is an incident of sovereignty, and is coextensive with that to which it is an incident.'" Again, in Central Hanover Bank & T. Co. _v._ Kelly,[534] the Court approved a New Jersey transfer tax imposed on the occasion of the death of a New Jersey grantor of an irrevocable trust executed, and consisting of securities located, in New York, and providing for the disposition of the corpus to two nonresident sons.

The costliness of multiple taxation of estates comprising intangibles is appreciably aggravated when each of several States founds its tax not upon different events or property rights but upon an identical basis; namely that, the decedent died domiciled within its borders. Not only is an estate then threatened with excessive contraction but the contesting States may discover that the a.s.sets of the estate are insufficient to satisfy their claims. Thus, in Texas _v._ Florida,[535] the State of Texas filed an original pet.i.tion in the Supreme Court, in which it a.s.serted that its claim, together with those of three other States, exceeded the value of the estate, that the portion of the estate within Texas alone would not suffice to discharge its own tax, and that its efforts to collect its tax might be defeated by adjudications of domicile by the other States. The Supreme Court disposed of this controversy by sustaining a finding that the decedent had been domiciled in Ma.s.sachusetts, but intimated that thereafter it would take jurisdiction in like situations only in the event that an estate did not exceed in value the total of the conflicting demands of several States and that the latter were confronted with a prospective inability to collect.

Corporation Taxes

(1) Intangible Personal Property.--A State in which a foreign corporation has acquired a commercial domicile and in which it maintains its general business offices may tax the latter's bank deposits and accounts receivable even though the deposits are outside the State and the accounts receivable arise from manufacturing activities in another State.[536] Similarly, a nondomiciliary State in which a foreign corporation did business can tax the "corporate excess" arising from property employed and business done in the taxing State.[537] On the other hand, when the foreign corporation transacts only interstate commerce within a State, any excise tax on such excess is void, irrespective of the amount of the tax.[538] A domiciliary State, however, may tax the excess of market value of outstanding capital stock over the value of real and personal property and certain indebtedness of a domestic corporation even though this "corporate excess" arose from property located and business done in another State and was there taxable. Moreover, this result follows whether the tax is considered as one on property or on the franchise.[539] Also a domiciliary State, which imposes no franchise tax on a stock fire insurance corporation, validly may a.s.sess a tax on the full amount of its paid-in capital stock and surplus, less deductions for liabilities, notwithstanding that such domestic corporation concentrates its executive, accounting, and other business offices in New York, and maintains in the domiciliary State only a required registered office at which local claims are handled.

Despite "the vicissitudes which the so-called 'jurisdiction-to-tax'

doctrine has encountered * * *," the presumption persists that intangible property is taxable by the State of origin.[540] But a property tax on the capital stock of a domestic company which includes in the apprais.e.m.e.nt thereof the value of coal mined in the taxing State but located in another State awaiting sale deprives the corporation of its property without due process of law.[541] Also void for the same reason is a State tax on the franchise of a domestic ferry company which includes in the valuation thereof the worth of a franchise granted to the said company by another State.[542]

(2) Privilege Taxes Measured by Corporate Stock.--Since the tax is levied not on property but on the privilege of doing business in corporate form, a domestic corporation may be subjected to a privilege tax graduated according to paid up capital stock, even though the latter represents capital not subject to the taxing power of the State.[543] By the same token, the validity of a franchise tax, imposed on a domestic corporation engaged in foreign maritime commerce and a.s.sessed upon a proportion of the total franchise value equal to the ratio of local business done to total business, is not impaired by the fact that the total value of the franchise was enhanced by property and operations carried on beyond the limits of the State.[544] However, a State, under the guise of taxing the privilege of doing an intrastate business, cannot levy on property beyond its borders; and, therefore, as applied to foreign corporations, a license tax based on authorized capital stock is void,[545] even though there be a maximum to the fee,[546] unless apportioned according to some method, as, for example, a franchise tax based on such proportion of outstanding capital stock as is represented by property owned and used in business transacted in the taxing State.[547] An entrance fee, on the other hand, collected only once as the price of admission to do an intrastate business, is distinguishable from a tax and accordingly may be levied on a foreign corporation on the basis of a sum fixed in relation to the amount of authorized capital stock (in this instance, a $5,000 fee on an authorized capital of $100,000,000).[548]

(3) Privilege Taxes Measured by Gross Receipts.--A munic.i.p.al license tax imposed as a percentage of the receipts of a foreign corporation derived from the sales within and without the State of goods manufactured in the city is not a tax on business transactions or property outside the city and therefore does not violate the due process clause.[549] But a State is wanting in jurisdiction to extend its privilege tax to the gross receipts of a foreign contracting corporation for work done outside the taxing State in fabricating equipment later installed in the taxing State. Unless the activities which are the subject of the tax are carried on within its territorial limits, a State is not competent to impose such a privilege tax.[550]

(4) Taxes on Tangible Personal Property.--When rolling stock is permanently located and employed in the prosecution of a business outside the boundaries of a domiciliary State, the latter has no jurisdiction to tax the same.[551] Vessels, however, inasmuch as they merely touch briefly at numerous ports, never acquire a taxable situs at any one of them, and are taxable by the domicile of their owners or not at all;[552] unless, of course, the ships operate wholly on the waters within one State, in which event they are taxable there and not at the domicile of the owners.[553] Only recently airplanes have been treated in a similar manner for tax purposes. Noting that the entire fleet of airplanes of an interstate carrier were "never continuously without the [domiciliary] State during the whole tax year," that such airplanes also had their "home port" in the domiciliary State, and that the company maintained its princ.i.p.al office therein, the Court sustained a personal property tax applied by the domiciliary State to all the airplanes owned by the taxpayer. No other State was deemed able to accord the same protection and benefits as the taxing State in which the taxpayer had both its domicile and its business situs; and the doctrines of Union Refrigerator Transit Co. _v._ Kentucky,[554] as to the taxability of permanently located tangibles, and that of apportionment, for instrumentalities engaged in interstate commerce[555] were held to be inapplicable.[556]

Conversely, a nondomiciliary State, although it may not tax property belonging to a foreign corporation which has never come within its borders, may levy on movables which are regularly and habitually used and employed therein. Thus, while the fact that cars are loaded and reloaded at a refinery in a State outside the owner's domicile does not fix the situs of the entire fleet in such State, the latter may nevertheless tax the number of cars which on the average are found to be present within its borders.[557] Moreover, in a.s.sessing that part of a railroad within its limits, a State need not treat it as an independent line, disconnected from the part without, and place upon the property within the State only a value which could be given to it if operated separately from the balance of the road. The State may ascertain the value of the whole line as a single property and then determine the value of the part within on a mileage basis, unless there be special circ.u.mstances which distinguish between conditions in the several States.[558] But no property of an interstate carrier can be taken into account unless it can be seen in some plain and fairly intelligible way that it adds to the value of the road and the rights exercised in the State.[559] Also, a State property tax on railroads, which is measured by gross earnings apportioned to mileage, is not unconst.i.tutional in the absence of proof that it exceeds what would be legitimate as an ordinary tax on the property valued as part of a going concern or that it is relatively higher than taxes on other kinds of property.[560] The tax reaches only revenues derived from local operations, and the fact that the apportionment formula does not result in mathematical exact.i.tude is not a const.i.tutional defect.[561]

Income and Other Taxes