Taxation.

In laying taxes, the Federal Government is less nar-rowly restricted by the Fifth Amendment than are the states by the Fourteenth. The Federal Government may tax property belonging to its citizens, even if such property is never situated within the jurisdiction of the United States,535 and it may tax the income of a citizen resident abroad, which is derived from property located at his residence.536 The difference is explained by the fact that protection of the Federal Government follows the citizen wherever he goes, whereas the benefits of state government accrue only to persons and property within the state’s borders. The Supreme Court has said that, in the absence of an equal protection clause, “a claim of unreasonable classification or inequality in the incidence or application of a tax raises no question under the Fifth Amendment. . . .”537 It has sustained, over charges of unfair differentiation between persons, a graduated income tax,538 a higher tax on oleomargarine than on butter,539 an excise tax on “puts” but not on “call,”540 a tax on the income of business operated by corporations but not on similar enterprises carried on by individuals,541 an income tax on foreign corporations, based on their income from sources within the United States, while domestic corporations were taxed on income from all sources,542 a tax on foreign-built but not upon domestic yachts,543 a tax on employers of eight or more persons, with exemptions for agricultural labor and domestic service,544 a gift tax law embodying a plan of graduations and exemptions under which donors of the same amount might be liable for different sums,545 an Alaska statute imposing license taxes only on nonresident fisherman,546 an act that taxed the manufacture of oil and fertilizer from herring at a higher rate than similar processing of other fish or fish offal,547 an excess profits tax that defined “invested capital” with reference to the original cost of the property rather than to its present value,548 an undistributed profits tax in the computation of which special credits were allowed to certain taxpayers,549 an estate tax upon the estate of a deceased spouse in respect of the moiety of the surviving spouse where the effect of the dissolution of the community is to enhance the value of the survivor’s moiety,550 and a tax on nonprofit mutual insurers, even though such insurers organized before a certain date were exempt, as there was a rational basis for the discrimination.551

Footnotes

535
United States v. Bennett, 232 U.S. 299, 307 (1914). back
536
Cook v. Tait, 265 U.S. 47 (1924). back
537
Helvering v. Lerner Stores Co., 314 U.S. 463, 468 (1941). But see discussion of “Discrimination” supra. back
538
Brushaber v. Union Pac. R.R, 240 U.S. 1, 24 (1916). back
539
McCray v. United States, 195 U.S. 27, 61 (1904). back
540
Treat v. White, 181 U.S. 264 (1901). back
541
Flint v. Stone Tracy Co., 220 U.S. 107 (1911). back
542
National Paper Co. v. Bowers, 266 U.S. 373 (1924). back
543
Billings v. United States, 232 U.S. 261, 282 (1914). back
544
Steward Machine Co. v. Davis, 301 U.S. 548 (1937); Helvering v. Davis, 301 U.S. 619 (1937). back
545
Bromley v. McCaughn, 280 U.S. 124 (1929). back
546
Haavik v. Alaska Packers Ass’n, 263 U.S. 510 (1924). back
547
Alaska Fish Co. v. Smith, 255 U.S. 44 (1921). back
548
LaBelle Iron Works v. United States, 256 U.S. 377 (1921). back
549
Helvering v. Northwest Steel Mills, 311 U.S. 46 (1940). back
550
Fernandez v. Wiener, 326 U.S. 340 (1945); cf. Coolidge v. Long, 282 U.S. 582 (1931). back
551
United States v. Maryland Savings-Share Ins. Corp., 400 U.S. 4 (1970) (per curiam). back