Lawrence v. State Tax Commission of Mississippi, 286 U.S. 276 (1932)
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Lawrence v. State Tax Commission of Mississippi
No. 580
Argued April 18, 1932
Decided May 16, 1932
286 U.S. 276
APPEAL FROM THE SUPREME COURT OF MISSISSIPPI
1. A state has constitutional power to tax its own citizens on their net incomes, though derived wholly from activities carried on by them outside of the state. P. 281.
2. Domicile, in itself, establishes a basis for taxation. P. 279.
3. Whether the tax in question is called an excise by the state court or a property tax is not material in this case, since this Court, in passing on its constitutionality, is concerned only with its practical operation. P. 280.
4. A constitutional question properly raised in a state court may not be evaded by a decision on a nonfederal ground that is unsubstantial and illusory. P. 281.
5. Where the discrimination resulting from a statute creating exemptions from a tax is inconsistent with the equal protection clause of the Fourteenth Amendment, the constitutional rights of those not within the exception are infringed when they are taxed and the others are not assessed, and a refusal of the state court to decide the constitutional question, when properly before it, is as much a denial of those rights as an erroneous decision of it would be. P. 282.
6. A state tax on income resulting from activities outside of the state cannot be adjudged to violate the equal protection clause of the Fourteenth Amendment merely because it applies to individuals, but not to domestic corporations, though in competition with the individuals, in the absence of any showing of relevant local conditions and of how the provisions in question are related to the others by which a permissible divergency of state policy with respect to the taxation of individuals and corporations may be effected. P. 283.
7. The fact that the state has adopted generally a policy of avoiding double taxation of the same economic interest in corporate income by taxing either the income of the corporation or the dividends of its stockholders, but not both, may afford a rational basis for excepting domestic corporations from a tax on income derived from extra-state activities which is imposed on individuals. P. 284.
8. The equal protection clause does not require the state to maintain a rigid rule of equal taxation, to resort to close distinctions, or to maintain a precise scientific uniformity, and possible differences in tax burdens not shown to be substantial, or which are based on discrimination not shown to be arbitrary or capricious, do not fall within constitutional prohibitions. Id.
162 Miss. 338, 137 So. 503, affirmed.
Appeal from a judgment upholding a state tax in an action to set aside the assessment.