Lee v. State Tax Commission , 219 Ala. 513 ( 1929 )

I cannot escape the conviction that the plan for taxing foreign securities found in sections 44 to 52 of the General Revenue Act of 1927 (Acts 1927, p. 174 et seq.) is violative of the uniformity provision of our State Constitution, § 211.

Upon the owner's voluntary listing of such securities with the state tax commission, he is privileged to pay at a reduced rate far below that at which other property is taxed. Indeed, one rate is fixed on securities of this class if listed with the state tax commission and a different rate if listed with or by the tax assessor.

True, the act calls the reduced tax a privilege tax. A study of its provisions discloses no privilege made the subject of taxation.

The list need not disclose the name of the beneficial owner. Section 45.

By section 50 the record of such list is not notice to any purchaser or pledgee for value, and is declared operative only until such time as the owner shall part with such securities.

Clearly enough the scheme is not intended to provide a registry of title and transfers of record, but intends that all such stocks, bonds, etc., shall be transferable in the usual manner and without reference to this recorded list. Under the terms of the statute itself, no one can look at the recorded list on any given day, and there find who is the owner of such securities.

Designation of the reduced tax as a privilege tax is, therefore, merely colorable. The only privilege of value is the partial exemption thus secured.

The entire argument on the question of classification for the purpose of levying privilege taxes, we respectfully submit, is beside the mark. We think this an ad valorem, not a privilege, tax. Who would pay 2 1/2 mills for the mere privilege of listing his securities?

He is invited to list them and pay this tax to avoid section 52, imposing a full ad valorem tax if he fails so to do.

The authority of the Legislature to exempt this class of property from state, county, and municipal taxes is not the question at issue. The issue is this: Can the Legislature, under the authority to exempt, impose a greatly reduced tax upon those who voluntarily come forward and list their securities, and a much higher rate on those who do not? If so, the uniformity provision is, in our opinion, entirely wiped out. If this statute can apply to securities, it can apply to live stock, to jewelry, to any species of property the Legislature may elect. By this statute the owner gets a reduced rate by merely claiming it in a prescribed manner.

Whether or not this species of property ought to be taxed on a full ad valorem basis or on a lower one, we cannot consider. The gross rates of state, county, and city taxes may consume an unduly large proportion of the income from many such securities. It is not with us nor with the Legislature to determine whether all classes of property taxed at all must be taxed at the same rate. We must uphold our Constitution as it is.

SAYRE and BROWN, JJ., concur in the foregoing dissent.