The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918. Page: 889
xv, 1025 p. ; 23 cm.View a full description of this legislative document.
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SHAFFER V. HOWARD
and resident of another sovereign state, this state has no jurisdiction
to tax him on his person Whether he shall be subjected to such per-
sonal income tax is a matter solely within the power of the state of
his domicile to determine.
' While styled an income tax, the subject of this tax is the recipient
of the income. The income merely affords the measure of tax. This
is the dominant conception in all modern so-called income tax leg-
islation by the several states, so far as relates to residents and citi-
zens of the state. The situs of the source of the income is ignored.
The power to tax rests in the jurisdiction exercised by the state over
the person receiving the income, and that its jurisdiction may not ex-
tend to the property or business producing the income is considered
immaterial. The attempt to combine with legislation providing for
such a tax a provision for a so-called income tax subjecting the net in-
comes of nonresidents upon property or business within the state,
founded not upon jurisdiction of the person, but upon the fact that the
situs of the property or business is within the state, cannot, in my
judgment, be sustained. They are essentially separate and distinct
provisions, relating to separate and distinct subjects of taxation, and
the latter provision as to nonresidents is in no wise strengthened be-
cause it is found coupled with the former. It is essentially a tax upon
the property or business involved. In fact, it must be that, for it
will not be contended that the state has the power to subject nonciti-
zens to a purely personal tax. For the purpose of determining its va-
lidity, it must be considered as standing alone; and, of course, it will
be conceded that an act imposing a tax upon the property or business
owned or conducted within the state by nonresidents, without im-
posing a like tax upon the property or business of residents, cannot be
sustained.
It is suggested that, because nonresidents can come into Oklahoma
and make fabulous profits from the exploitation of its great natural
resources, it is desirable that the state furnishing such opportunities
should, as a consideration therefor, be permitted to exact a return in
taxation commensurate with the opportunities afforded; and it is
further suggested that, if these noncitizens cannot be taxed on their
incomes as is sought to be done here, many operators who are now
citizens and residents of the state will expatriate themselves, so as to
avoid the income tax. But these are considerations which in no sense
affect the legal questions involved. The Constitution of the United
States has decreed that the natural resources of Oklahoma, however
great, as well as those of every other state, are subject to development
by all citizens of the United States alike, regardless of state lines, and
citizens of other states may acquire property and do business here
without subjecting themselves to liability for any purely personal
taxes such as may be assessed against citizens and residents, and shall
be subject to only such taxes on their property and business within the
state as shall be levied upon similar property and business of citi-
zens and residents of the state.
I am not unmindful of the fact that several other states have enacted
laws similar to the one under consideration, and that the federal in-1
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The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918., legislative document, 1918; Saint Paul, Minnesota. (https://digital.library.unt.edu/ark:/67531/metadc38821/m1/904/: accessed April 25, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.