Summary
differentiating a municipal mercantile license tax from the state foreign corporate franchise and corporate net income taxes, although all applied to "businesses"
Summary of this case from Williams v. City of Phila.Opinion
January 16, 1948.
January 19, 1948.
Municipalities — Powers — Taxation — Mercantile license tax — Duplication of State taxes — Mercantile license tax of school district — Corporate net income tax — Foreign corporation franchise tax — Acts of June 25, 1947, P. L. 1145, June 20, 1947, P. L. 745, and May 14, 1947, P. L. 232 — Foreign Corporation Franchise Tax Act.
1. Ordinances of the City of Pittsburgh, Nos. 488 and 489, dated December 1, 1947, imposing a mercantile license tax "on persons engaging in certain occupations and businesses", measured by the gross volume of business, passed under authority of the Act of June 25, 1947, P. L. 1145, are not invalid on the ground that they conflict with or duplicate a State tax imposed by the Pittsburgh School District under authority of the Act of June 20, 1947, P. L. 745. [455-8]
2. Ordinances of the City of Pittsburgh, Nos. 488 and 489, dated December 1, 1947, imposing a mercantile license tax "on persons engaging in certain occupations and businesses", measured by the gross volume of business, passed under authority of the Act of June 25, 1947, P. L, 1145, are not invalid on the ground that the subject matter of taxation has been preëmpted by the State under the Act of May 14, 1947, P. L. 232 (which imposed a corporate net income tax). [456-8].
3. Ordinances of the City of Pittsburgh, Nos. 488 and 489, dated December 1, 1947, imposing a mercantile license tax "on persons engaging in certain occupations and businesses", measured by the gross volume of business, passed under authority of the Act of June 25, 1947, P. L. 1145, are not invalid on the ground that they are within the prohibition of the Act of June 25, 1947, P. L. 1145, against taxation of subject matter taxed by the State in that they conflict with or duplicate the tax imposed by the State under the Foreign Corporation Franchise Tax Act of May 16, 1935, P. L. 184. [456-8]
4. Ordinances of the City of Pittsburgh, Nos. 488 and 489, dated December 1, 1947, impose a tax on the privilege of doing business within the city with respect to any individual, partnership or corporation, based upon the gross volume of business conducted by the taxpayer. [457]
5. A tax imposed by a political subdivision, pursuant to the authority of the Act of June 25, 1947, P. L. 1145, is invalid only if it duplicates a State tax on the same subject matter within the prohibition of the Act. [457]
6. McClelland v. Pittsburgh, 358 Pa. 448, followed. [456]
7. Blauner's, Inc., v. Philadelphia, 330 Pa. 342, and Philadelphia v. Samuel, 338 Pa. 321, followed. [456]
Before MAXEY, C. J., DREW, LINN, STERN, PATTERSON, STEARNE and JONES, JJ.
Original jurisdiction. Nos. 67 and 68, March T., 1948, bills in equity, in cases of Federal Drug Company v. City of Pittsburgh et al. and The May Department Stores Company et al. v. Same. Bills dismissed.
David B. Pitler, with him Jack J. Rosenberg, for Federal Drug Company, plaintiff.
Elder W. Marshall, with him P. K. Motheral, Clyde A. Armstrong, Kenneth G. Jackson, Reed, Smith, Shaw McClay and Thorpe, Bostwick, Reed Armstrong, for May Department Stores Company et al., plaintiffs.
Anne X. Alpern, City Solicitor, with her J. Frank McKenna, Jr., Assistant City Solicitor, for City of Pittsburgh, defendant.
T. McKeen Chidsey, Attorney General, and H. F. Stambaugh, Deputy Attorney General, for Commonwealth, intervenor.
Bills dismissed. Opinion will be filed later.
These two cases were heard together on bills and answers and will be disposed of in one opinion. They are in equity to restrain the City of Pittsburgh from collecting, in No. 67, a mercantile license tax "on persons engaging in certain occupations and businesses" and providing for a tax levy and collection. This ordinance is No. 488, dated December 1, 1947. The bill also seeks to restrain the City of Pittsburgh from enforcing an ordinance requiring persons engaging in certain occupations and businesses to obtain a mercantile license upon payment of a fee therefor. This ordinance is No. 489, dated December 1, 1947. In bill No. 68, it is contended that ordinance No. 488, supra, is invalid as to domestic and foreign corporations. Both ordinances were passed under authority of the Act No. 481, enacted June 25, 1947, P. L. 1145, Purdon's Pennsylvania Legislative Service, page 1250, the constitutionality of which was upheld by this Court in English et al. v. Robinson Township School District et al., 358 Pa. 45, 55 A.2d 803. We have taken original jurisdiction.
Plaintiffs contend that the city ordinances conflict with or duplicate three legislative enactments, viz: (1) The mercantile license tax imposed by the Pittsburgh School District under authority of Act No. 320 of June 20, 1947, P. L. 745, Purdon's Pennsylvania Legislative Service, page 809.
It is urged that such a tax is a state tax and is therefore within the prohibition of Act No. 481, supra. This contention has been answered adversely to plaintiffs in Sarah C. McClelland v. City of Pittsburgh, 358 Pa. 448. (2) The Corporate Net Income Tax now levied under Act No. 99, approved May 14, 1947, Purdon's Pennsylvania Legislative Service, page 248.
It is claimed that this tax is an excise tax imposed by the state, which has therefore preëmpted this tax field, rendering the city ordinances invalid.
This contention is disposed of by our decisions in Blauner's Inc., et al. v. Philadelphia et al., 330 Pa. 342, 198 A. 889 and Philadelphia v. Samuels, 338 Pa. 321, 12 A.2d 79. In those cases, whether the enactment (Sterling Act) be regarded as a property tax or an excise tax, the tax imposed was upon property. In the present ordinance the tax is on the gross volume of business. (3) The Foreign Corporation Franchise Tax Act of 1935, May 16, P. L. 184 — 72 PS, 1871(b).
It is urged that this tax is an excise tax — upon a franchise or privilege of doing business within the state and is not upon property or capital. The contention is made that the city ordinance is therefore within the prohibition of Act No. 481, supra.
The answer to this contention is twofold. The Act of 1935, supra, is a tax for the privilege of a foreign corporation coming into the state of Pennsylvania for the purpose of conducting its business in corporate form. The city ordinance, under attack, is a tax for the privilege of doing business within the city with respect to any individual, partnership or corporation. It is not a tax limited to foreign corporate associations. In the second place, while in each case the object of the tax is to license for the purpose of doing business, the tax actually imposed by the Foreign Corporate Franchise Tax is measured by the value of the property of the foreign corporation within the state. In the Pittsburgh ordinances the tax is on the gross volume of business conducted by the taxpayer. The respective impacts of the two taxes are on a totally different basis.
There is an additional reason why the city mercantile tax is valid. Such tax is invalid only if it duplicates a state tax on the same subject matter within the prohibition contained in Act No. 481, supra. In the Blauner case, supra, an almost identical situation was presented. The Act of August 5, 1932, P. L. 45, 53 PS, 4613 (Sterling Act) authorized cities of the first and second class to impose, inter alia, mercantile taxes, with almost an identical prohibition as appears in Act 481 of 1947, supra, Philadelphia imposed a sales tax. The state at the same time was imposing a state mercantile tax. The same argument was there made, as is now presented. This Court decided that the city sales tax and the state mercantile tax, even if both were excise taxes, did not tax the same subject, nor the same person and that the field covered by the ordinances had not been preëmpted by the state mercantile license tax. What we held in the Blauner case has equal application here. Any possible doubt is dissipated when it is remembered that the state mercantile license tax imposed by the Act of 1899, May 2, P. L. 184, as amended, 72 PS, 2621, was repealed by the Act of 1943, May 7, P. L. 237, effective January 1, 1944, 72 PS Supp., 2621. When Act No. 481 of 1947 was passed, the state was no longer imposing a mercantile license tax. That tax field was therefore left open for political subdivisions.
For the foregoing reasons, we entered our order of January 19, 1948, pursuant to which this opinion is now filed. Each party to pay its own costs.