This suit was brought by appellants against appellee in the chancery court of Pulaski County to enjoin the enforcement of act 118 of *Page 905 the General Assembly of 1929 of the State of Arkansas, entitled, "An act providing for the levying, collecting and paying of a tax on incomes," upon the ground that it is unconstitutional, and, even though constitutional, should be enjoined in order that it might remain in abeyance until a referendum vote of the people for and against the act may be registered. The necessary petitions to refer the act have been filed with the Secretary of State, and two years' taxes will be collected before the people can express themselves for or against it unless an injunction is issued.
According to the construction of the Constitution of 1874 in the case of Sims v. Ahrens, 167 Ark. 557,271 S.W. 720, the General Assembly of the State may enact a properly classified, fair net income tax law. The writer was one of the majority who handed down that opinion, and, after reading the able briefs filed in the instant case by learned counsel for appellants and as amici curiae, I am not convinced that the majority opinion was incorrect. I am convinced, however, that the act is void for other reasons. The first reason is that the act was not passed by a two-thirds vote of both houses of the General Assembly. The journals show that it only received a majority vote. Section 31, article 5, of the Constitution of 1874 provides that:
"No State tax shall be allowed or appropriation of money made, except to raise means for the payment of the just debts of the State, for defraying the necessary expenses of government, to sustain common schools, to repel invasion and suppress insurrection, except by a majority of two-thirds of both houses of the General Assembly."
This section of the Constitution definitely specifies the only purposes for which a tax may be allowed or raised by a majority vote for both houses of the General Assembly. An act allowing a tax for any other purpose than those expressed in this act must receive a two-thirds majority vote in each house. Belote v. Coffman, 117 Ark. 352,175 S.W. 37. One of the purposes expressed in *Page 906 act No. 118 of the Acts of 1929 for allowing the tax is the reduction of property taxes. This purpose is clearly not within the exceptions specified in 31, article 5, of the Constitution, and the act is void because it did not receive a two-thirds majority vote of both houses of the General Assembly.
The next reason is that the act is palpably discriminatory, unfair, and unjust. It was not ruled in the case of Sims v. Ahrens, supra, that a discriminatory net income tax law might be passed by the Legislature, but on the contrary it was ruled that the Legislature might pass a properly classified and fair net income tax law. It would extend this dissenting opinion to unusual length should the writer attempt to set out all the palpably discriminatory features in the act. I shall only set out a few of the glaring discriminations contained in the act.
According to the terms of the act, a corporation enjoying a net income of $50,000 a year would only have to pay $1,000, whereas an individual or partnership enjoying a net income of $50,000 derived from exactly the same kind of business would have to pay $2,050. In other words, an individual or partnership would be required to pay more than double the amount of taxes which a corporation would be required to pay on the basis of a $50,000 net income, where both conduct exactly the same kind of business in the same territory.
Again, the act in question is retroactive in that it imposes a net income tax upon all salaries earned in the year 1928 prior to the passage of the act. According to the terms of the act, a full year's income for the year 1928 will be collected from, individuals, partnerships and corporations who operated under a calendar year, but if they operated under a fiscal year, terminating before December 31, 1928, only a portion of the 1929 income tax will be collected from them in the year 1929. This is an arbitrary and unjust discrimination which the writer cannot approve as a fair and proper classification. Just because one person uses a calendar year in estimating his income and another a fiscal year, is no justification *Page 907 whatever for collecting a tax upon all of one person's income for 1928 and only a part of another's.
Again, the act makes such a difference and inequality in taxation on the sales of property that the effect will be not only to tax the income from the property but to tax the capital or property itself. A reading of 10 of the act, together with the subsections, reveals such a difference and inequality in the taxation sales that same is unreasonable, unfair and unjust, and necessarily void.
The writer of this dissenting opinion will not attempt to set out further discriminations in the act which render it void, but, in conclusion upon this feature of the act alone, will say that, after a very careful reading of the act, I cannot find a single tax imposed therein which is not palpably discriminatory, unjust and unfair.
Lastly, according to the view of the majority, the act is valid, but that should not prevent the issuance of a temporary injunction to restrain the enforcement thereof until a referendum vote of the people can be had thereon. This is so because, in my opinion, the emergency clause purported to be attached to the act which passed both houses of the General Assembly was an insufficient emergency clause to put the act into immediate force and effect. The Constitution, as amended, requires that facts be stated by the Legislature which constitute the emergency declared by it. This amendment was passed to prevent the evil which had grown up of attaching emergency clauses to all acts, even though all emergency did not exist. The purpose and intent of the amendment was to require the Legislature to state facts which really justified the declaration of all emergency. The emergency clause purported to be attached to the act which passed both houses of the Legislature was, in substance, like the emergency clause attached to the act which this court had before it for construction in the case of Cumnock v. Little Rock, 168 Ark. 777,271 S.W. 466. In his dissenting opinion in that case Mr. Justice HART, now the Chief Justice of this court, said: *Page 908
"Having reached the conclusion that the proviso is not self-executing, it becomes necessary for me to pass upon the validity of the act of the Legislature of 1925 attempting to put the proviso in question in operation. Section six provides that the act is immediately necessary for the preservation of the public peace, health and safety, and that the shame shall take effect and be in force upon its passage. The reason given that it is declared an emergency is that, by reason of the heavy indebtedness hanging over many cities of the first class, they will be unable to procure proper facilities for the extinction of fires, proper police protection, and proper safeguards for the public health. This declaration on the part of the Legislature is a mere conclusion on its part. By all amendment to the Constitution of the State, adopted on the 11th day of November, 1920, the limitation upon the legislative power in declaring an emergency to exist is made. The section specifically provides that it shall be necessary to state the facts which constitute the emergency allowing the Legislature to put an act into immediate effect. The mere fact that cities and towns are largely in debt contains no statement of the facts of all emergency. I do not think that the legislative declaration of an emergency is final under the provision of the Constitution referred to, and am of the opinion that its action is subject to judicial reviews. The authorities on both sides of the question are cited in a case-note to Payne v. Graham, 118 Me. 251, 7 A.L.R. 516."
I thoroughly agree with what the Chief Justice said in that case relative to the sufficiency of the emergency clause being a question for review by the courts and that the facts stated by the Legislature must declare real and existing facts which justify the emergency declared. The writer of this dissent is also of opinion, from an inspection of the engrossed and enrolled act before the court for construction, that it is impossible to tell whether the emergency clause, or what emergency clause, was attached to the act by a two-thirds vote of both houses of the General Assembly. It is alleged in the complaint *Page 909 and conceded in the demurrer that the emergency clause to the engrossed and enrolled act was not the one attached to the original act as amended and engrossed which passed both houses of the General Assembly, but that, after the passage of the original act as amended and engrossed, the emergency clause now attached to the engrossed and enrolled act was substituted, without a vote of either house, for the one that both houses adopted and passed. Such a substitution, if made, was necessarily a fraudulent one under the allegation of the facts in the complaint. If it be conceded that the facts alleged in the complaint and admitted in the demurrer must be viewed in the light of the record, an inspection of the engrossed act reflects that the last page thereof, upon which the emergency clause appears, is written on older paper than the body of the act, and in slightly different type; and that the last page of the enrolled act upon which a part of the emergency clause appears fails to bear the red ink page number which the other pages bear in their order, and that the page next to the last one upon which the first part of the emergency clause appears is written over words which have been erased. It is true that the records in the passage of a law are the only evidences admissible to test its validity, but this rule of evidence is necessarily based upon the presumption that the records themselves are genuine, and not forgeries. If the records supporting the passage of a law are forged, the law must fall, as fraud vitiates everything, even to the highest and greatest legislative enactment. A law cannot escape the penalty of invalidity if it or a material part thereof is a fraudulent substitution for the law which actually passed both houses of the general Assembly. An inspection of the engrossed and enrolled act in question shows that the emergency clause attached thereto has been tampered with, and, in my opinion, this is enough to destroy the integrity of the emergency clause and justify a court in declaring that the act passed without all emergency clause being attached, unless it can be shown that the emergency clause *Page 910 attached was the one adopted by a two-thirds vote of both houses. In the present condition of the record the court should temporarily enjoin the enforcement of the law, just as it would if no emergency clause had been adopted or attached to the act. According to the allegation of the complaint, an insufficient emergency clause was adopted and attached to the act which passed both houses of the General Assembly, and since this allegation is sustained to a great extent by an inspection of the engrossed and enrolled act, the bars should be thrown down and the truth ascertained as to the particular emergency clause which was adopted and attached to the act which passed both houses of the General Assembly.
On account of the invalidity of the act, as well as the insufficiency of the emergency clause under the allegations of the complaint and inspection of the record, the writer is of the opinion that the court should enjoin the enforcement of the act.