New York v. Latrobe, 279 U.S. 421 (1929)

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New York v. Latrobe


No. 601


Argued April 10, 1929
Decided May 13, 1929
279 U.S. 421

APPEAL FROM THE CIRCUIT COURT OF APPEALS
FOR THE THIRD CIRCUIT

Syllabus

1. The issued capital stock of a foreign corporation may constitutionally be made the basis of a state franchise or license tax at a flat rate per share when apportioned to the property and business of the corporation within the state. P. 426.

2. The kind and number of shares with which a foreign corporation is permitted to carry on its business within the state is a part of the privilege which the state extends to it and is a proper element to be taken into account in fixing a tax on the privilege. Id.

3. The measurement of such a tax upon a foreign corporation at a flat rate upon its issued stock, either par or nonpar, used within the state is reasonably related to the privilege granted by the state and to the protection of its own interest in the maintenance of its similar policy of taxation with respect to domestic corporations, and so does not infringe any constitutional immunity. P. 427.

4. Measurement of the tax at a flat rate per share on nonpar value stock and at a fixed percentage of par value on par value stock is based on a reasonable classification because of the different characteristics of the two kinds of shares, and is therefore consistent with the equal protection clause of the Fourteenth Amendment. P. 428.

28 F.2d 1017 reversed.

Appeal from a judgment of the circuit court of appeals affirming an order of the district court rejecting a claim for taxes made by the State of New York in a bankruptcy proceeding. The court below adopted the opinion of the district court. 26 F.2d 713.