Pierce Butler

“ Hence, whether the measure of the tax be technically described as taxable net worth or as taxable assets less an allowed deduction representing liabilities to which they are subject, the state, in fixing the tax, does not infringe any constitutional immunity by requiring liabilities to be deducted from all the assets, including tax-exempt bonds, or, what comes to the same thing, by deducting from taxable assets their proportionate share of the burden of policy liabilities. ”

“ But it is not to be supposed that a mathematician, an accountant, or a business man would regard the taxable assets as contributing nothing to surplus, or, where one-half of the taxpayer's property is tax free, that there is any basis for saying that net worth could, on any theory, be attributed more to one class of assets than the other. ”

“ It is said that the present tax must be held invalid because, as a matter of law, exemptions may not be reduced, nor may tax burdens be increased in consequence of the ownership of tax-free securities, and that in the present case their ownership was in fact used to increase taxable values. Neither proposition can, I think, be supported. First, it is not universally true that ownership of tax-exempt securities may not increase the burden of a tax. Taxes upon transfer at death, state or federal, may be increased by the ownership by deceased of tax-exempt securities. ”

“ The right of the state to tax net worth, so far as it is attributable to taxable assets, and that of the national government to insist upon its exemption so far as tax-free property enters into its computation, stand on an equal footing. ”

“ It necessarily follows from the immunity created by federal authority that a state may not subject one to a greater burden upon his taxable property merely because he owns tax-exempt government securities. Neither ingenuity in calculation nor form of words in state enactments can deprive the owner of the tax exemption established for the benefit of the United States. ”

“ That immunity always has been deemed an attribute of national supremacy and essential to its maintenance. The power of Congress to borrow money on the credit of the United States would be burdened and might be destroyed by state taxation of the means employed for that purpose. As the tax-exempt feature tends to increase and is reflected in the market prices of such securities, a state tax burden thereon would adversely affect the terms upon which money may be borrowed to execute the purposes of the general government. ”

“ The apportionment of net worth according to the amounts of the constituent elements which enter into its computation has long been a familiar method of accountants, and has repeatedly been incorporated in taxing statutes where, for one reason or other, it is desirable or necessary not to impose a tax on some of these elements. ”

“ For like reasons it would seem that the tax-free securities might rightly enter into the computation of net worth since they are liable for debts and so contribute to net worth, and that the net worth thus computed should be held subject to the state tax, except in so far as tax-exempt securities contribute to it. ”

“ If the constitutional inhibition is not directed against the imposition of burdens, but affirmatively compels the annexation of such benefits to the ownership of government bonds as will increase their currency and stimulate the market for them, even though those privileges are extended at the expense of the constitutional powers of the states, it is difficult to see what the limits of such a doctrine may be. ”

“ That is in violation of the established rule. National Life Ins. Co. v. United States, supra; Northwestern Ins. Co. v. Wisconsin, 275 U.S. 136, 48 S.C.t. 55, 72 L. Ed. 202; Miller v. Milwaukee, 272 U.S. 713, 47 S.C.t. ”