STEINERT, MITCHELL, MAIN, and MILLARD, JJ., dissent. This is an action instituted in this court for the purpose of testing the constitutionality of chapter 191, Laws of 1933, p. 869 [Rem. 1933 Sup., § 8326-1 et seq.], imposing a tax on the privilege of engaging in business in this state. Relator seeks a writ of mandate to compel the respondent, as state auditor, to honor a voucher duly presented for services rendered by him at the behest of the state tax commission in forwarding its preparations to administer the act. The auditor refuses to recognize the voucher upon the ground that the act is unconstitutional. Hence, we have here only the one broad question as to the constitutionality of the act as a whole. No lesser or minor questions as to the reasonableness of the several classifications, as to the difference in rates as between the classes, or any other such question has been presented to us, and no such question is to be pre-judged by anything here said.
Without entering into a history of conditions giving rise to this legislation, it is sufficient to say that the legislature was confronted by a situation of the utmost gravity requiring the prompt and effective raising of much additional revenue and making necessary the placing of a heavy tax burden upon every available source from which taxes might legally be drawn, or from which revenue might be derived, without causing more harm and loss than the depressed state of industry could bear. Faced with this situation, chapter 191 was enacted, which is entitled: *Page 404
"An Act relating to taxation; imposing taxes upon the privilege of engaging in business activities and providing for the ascertainment, assessment, collection and distribution thereof; providing for the administration and enforcement of this act; providing penalties; making appropriations; and declaring that this act shall take effect immediately."
Section one of the act contains definitions of certain of its terms, one or two of which will be set out and referred to as we proceed.
Section two (p. 871) provides:
"From and after the first day of August, 1933, and until the thirty-first day of July, 1935, there is hereby levied and there shall be collected from every person an annual tax or excise for the privilege of engaging in business activities. Such tax or excise shall be measured by the application of rates against values, gross proceeds of sales, or gross income, as the case may be, as follows: . . ." [Rem. 1933 Sup., § 8326-2.]
Then follows the legislative classification of business into some twenty general classes, several of which are subdivided and subjected to different rates. The act, by reason of the governor's veto, had eliminated from it, when it finally became a law, those engaged in agriculture, using the term in its broad sense, and also those engaged in rendering services, professional or otherwise, and it is upon the omission of those classes, and others, if any such there be, from the act that the argument as to its unconstitutionality is now based.
The Attorney General, and the friends of the court appearing in defense of the action, appear to rely primarily upon the 14th amendment to the Federal constitution; § 3 of Art. I of the state constitution, which is to the same effect and provides, "No person shall be deprived of life, liberty, or property without due process of law;" Art. I, § 12, of the constitution, *Page 405 which forbids special privileges or immunities; and Art. VII, § 1, being the 14th amendment to the state constitution, which provides:
"The power of taxation shall never be suspended, surrendered or contracted away. All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only. The word `property' as used herein shall mean and include everything, whether tangible or intangible, subject to ownership. All real estate shall constitute one class:Provided, That the legislature may tax mines and mineral resources and lands devoted to reforestation by either a yield tax or an ad valorem tax at such rate as it may fix, or by both. Such property as the legislature may by general laws provide shall be exempt from taxation. Property of the United States and of the state, counties, school districts and other municipal corporations, and credits secured by property actually taxed in this state, not exceeding in value the value of such property, shall be exempt from taxation. The legislature shall have power, by appropriate legislation, to exempt personal property to the amount of three hundred ($300.00) dollars for each head of a family liable to assessment and taxation under the provisions of the laws of this state of which the individual is the actual bona fide owner."
[1] In the light of the constitutional provision, just quoted, it seems necessary first to determine whether the tax under consideration is a property tax or an excise tax, because of the uniformity clause which applies specifically to each class of property.
Relator, of course, bases his application upon the idea that this is an excise tax pure and simple, while the AttorneyGeneral and some of the friends of the court defending, though not so conceding, appear by the arguments presented to anticipate that we must so hold. Yet another firm, appearing as amicicuriae, does argue this question extensively. *Page 406
Time and space will not permit a review of the authorities on this question. Slight differences in the terms of the acts considered, or in constitutional provisions, have led to a maze of conflicting and bewildering decisions. It may be that we have, in some prior case, used language not wholly consistent with our present views. After an exhaustive study of the cases, we are well satisfied that this is not a property tax, even under the broad and all inclusive terms of our constitution. To hold otherwise would render it exceedingly difficult if not impossible to sustain any excise tax.
It is true that the constitution defines property as anything subject to ownership and, in a sense, one's business and its earnings are owned by him, but the privilege of engaging in business and gainful pursuits under the protection of our laws is something which must and does exist before the business can be established, and something far and away beyond and above the mere ownership of a business. Man in a state of nature gained his sustenance by his strength or cunning, or both, and that which he so gained might, and no doubt often was, taken from him before he could use and enjoy it by someone stronger and more cunning. Hence, the established state enacted laws for the protection of human rights, the rights of property, and to prevent the weak or the credulous from becoming the helpless victims of the force or fraud of the strong and the cunning.
Peace officers and courts, among many other things, were established to this end, and every citizen is now measurably safe in pursuing any gainful occupation with the expectation that he will be by the state fully protected and made secure in his property investment, and also in his gains therefrom. This is the privilege, far above mere property, which it is now sought to tax *Page 407 to the end that it may pay, in some part, its fair share of the cost to the state of its creation and continuance.
Income may be acquired, but only in exceptional cases, such as annuities and the like, is it susceptible of ownership. When acquired, income immediately becomes property in the hands of the acquirer, and it is, of course, taxable with other property of the same class.
This act does not concern itself with income which has been acquired, but only with the privilege of acquiring, and that the amount of the tax is measured by the amount of the income in no way affects the purpose of the act or the principle involved.
Among other authorities bearing upon the question which support our view, we refer only to the following few: SouthernRailway Co. v. Watts, 260 U.S. 519; Lawrence v. State TaxCommission, 286 U.S. 276, and our own cases of Pacific Tel. Tel. Co. v. Seattle, 172 Wash. 649, 21 P.2d 721; Puget SoundPower Light Co. v. Seattle, 172 Wash. 668, 21 P.2d 727;Bucoda v. Swaney, 163 Wash. 43, 299 P. 652; Sumner v. Ward,126 Wash. 75, 217 P. 502, and prior cases therein cited. These seem sufficient to decisively determine that we are now dealing with an excise tax and not with a tax on property.
[2] This being an excise tax, the legislature, under the 14th amendment to our state constitution, has very broad power, and we cannot interfere with that power except for arbitrary action, clear abuse, or constructive fraud appearing on the face of the act or from facts of which we may take judicial knowledge.
"A very wide discretion must be conceded to the legislative power of the state in the classification of trades, callings, businesses or occupations which may be subjected to special forms of regulation or taxation through an excise or license tax. If the selection or classification is neither capricious nor arbitrary, and *Page 408 rests upon some reasonable consideration of difference or policy, there is no denial of the equal protection of the law."Brown-Forman Co. v. Kentucky, 217 U.S. 563.
See, also, Tax Commissioners v. Jackson, 283 U.S. 527, 73 A.L.R. 1464; Miethke v. Pierce County, 173 Wash. 381,23 P.2d 405; and State v. Hart, 125 Wash. 520, 217 P. 45.
Having this rule at all times in mind, let us look at the act for any evidence of capricious or arbitrary action.
[3] In the first place, and to clear away immaterial matters, it should be said that the governor's veto of parts of the measure now means nothing whatsoever. In exercising the veto power, the governor acts as a part of the legislative bodies, and the act is to be considered now just as it would have been if the vetoed provisions had never been written into the bill at any stage of the proceedings.
[4] We have, then, a measure which evidences the purpose to tax the privilege of carrying on those businesses which are, in a broad sense, commercial in their nature, buying for resale at a profit, producing for sale, transporting and financing for profit (which are recognized as an important part of production), and all like enterprises which look to the purpose of bringing usable commodities of various sorts into the hands of the ultimate consumer. These commercial businesses are peculiarly dependent upon the state for protection in order that they may be carried on successfully, and they, more than all others, are responsible for, and receive the benefit of, that which the state expends in maintaining peace and order and the safety of private property.
In the many classes and subclasses are included, presumably, all occupations which, to the legislative *Page 409 knowledge, are so far motivated by the commercial spirit as to make them properly taxable; and, in the arguments addressed to this court, no omissions have been suggested save only those engaged in agricultural pursuits and those rendering personal or professional services.
To accent the argument that these omissions are fatal to the act, great stress is laid upon the definition of "business" contained in subdivision (7) of § 1 of the act. That definition is:
"The word `business' shall include all activities engaged in with the object of gain, benefit or advantage either direct or indirect, and not excepting sub-activities producing marketable commodities used or consumed in the main business activity, each of which sub-activities shall be considered business engaged in taxable in the class in which it falls." [Rem. 1933 Sup., § 8326-1.]
But we see nothing in this definition which affects the situation in any degree, or at all. The definition is used to define "business" as the word is used in the act; and wherever the word "business" is used in the act, in all its several classes and subdivisions, it is intended to include all activities engaged in for the purpose of gain coming under each such class or sub-division. Of course, the legislature was not engaged in the idle task of defining words not used in the act or for purposes not contemplated by the act. And when the definition is applied to the act itself, it broadens each class and subdivision so as to cover all those activities which should come within that class or subdivision. Consequently, as we see it, the legislative definition has nothing whatever to do with any business or occupation not made taxable by the act.
Keeping in mind, then, the broad purpose of the act to tax those engaged commercially, it would seem that *Page 410 the exclusion of those engaged in agriculture is a most proper one. Farming is not a commercial pursuit. It is not a business in the sense used in this act. By general knowledge and common consent, farming is classed as a way of life by means of which, in more prosperous times, the farmer gained a modest livelihood with security and, perhaps, some financial gain from the rise in land values which might enable him to provide a measure of comfort for his old age. Except in the rare instances of the so-called bonanza farms, no farmer has ever been expected to amass a fortune or even any considerable competency as a result of his productive labors. If this state ever had anything approaching the bonanza farm, recent years have annihilated it completely and it is common knowledge that the farmers of the state do not even earn laborer's wages for the hours they are employed.
Moreover, the farmer's products, except some minor items like fresh fruit and vegetables, do not enter largely into the stream of commerce until after they have left his hands and are processed in some manner. The farmer's wheat goes to the mill to be made into flour. His livestock goes to the packing house to be turned into merchantable meat. All who buy from the farmer for the purpose of processing and merchandising come under the act and are properly taxed, because the commercial element enters when they purchase the farmer's product from him, and not until then is that product in any fair sense within the spirit of this act. Moreover, the farmer cannot pass the tax to the ultimate consumer, while all those later dealing with his products, like all others engaged in commercial pursuits, may and probably will very largely do so.
Agriculture, therefore, lacking the commercial element which is the very essence of the act, was properly excluded. *Page 411
Much the same is true of those rendering services, professional and otherwise. It needs no argument to demonstrate that the wage earner is properly excluded, and that upon no theory can he be classed with those engaged in business. To tax him for the privilege of being employed would be out of harmony with the spirit of the act, and if such a tax would be collectible, it would necessarily have to be deducted at the source, and under present conditions, when the wage earner is barely subsisting, the tax would have to be paid by the employer and would thus subject him to double taxation under the act.
To one who has long followed a profession, the reason for the exclusion of professions seems equally clear. While there may be those who commercialize the professions, the rule to the contrary is very strict, and it is, we trust and believe, generally obeyed by those in the professions. A profession is not a money getting business. It has no element of commercialism in it. True, the professional man seeks to live by what he earns, but his main purpose and desire is to be of service to those who seek his aid and to the community of which he is a necessary part. In some instances, where the recipient is able to respond, seemingly large fees may be paid, but to others unable to pay adequately, or at all, the professional service is usually cheerfully rendered. But whether so or not, the commercial spirit which runs through this act is wholly condemned by the ethics of every profession of which we have judicial knowledge; and if there be violations and abuses, those should be cured, rather than that the whole of those engaged in professional service be stamped with the brand of commercialism and taxed accordingly.
The Attorney General relies very largely on a decision by the supreme court of Illinois in the case of *Page 412 Winter v. Barrett, 186 N.E. (Ill.) 113, recently decided. As we see it, the Illinois act there under consideration greatly differs from our act. The title of the Illinois act reads:
"An act in relation to a tax upon persons engaged in the business of selling tangible personal property at retail, the disposition thereof and making certain appropriations in connection therewith."
The act was held bad by the Illinois court because it excluded certain classes actually engaged in the business of selling tangible personal property at retail. Among other things, the Illinois court said:
"It will be observed, however, that this act does not purport to be a tax upon the butcher, the baker, or like occupations, as such, to the exclusion of those engaged in other occupations. There is created but one class to whom the tax is to be applied, and that class is `persons engaged in the business of selling tangible personal property at retail.' There is in this provision no limitation upon the word `persons,' and it must be construed to include all persons engaged in such business; the only exemption therefrom being inferred by the above quoted language of the statute declaring that certain property shall not be included within the meaning of the term `tangible personal property'."
The title of the act and this quotation seem to indicate, to some extent, the difference between the Illinois act and our own. This opinion is already overlong, and cannot be extended by a detailed discussion of the Illinois act and the Illinois decision. Suffice it to say that we have carefully considered the decision and the terms of the act as therein disclosed, and feel quite confident that the Illinois decision is not authority for holding our act to be unconstitutional. But, even if it be, our confidence in the soundness of our present views, even though inadequately expressed, is *Page 413 such that, greatly as we respect the Illinois court, we must refuse to follow it.
The state is facing stark necessity. The legislature has earnestly endeavored to meet this critical situation. This law is, perhaps, not perfect. No tax law yet devised has been entirely fair and just to all in its practical workings. This is an emergency measure, limited by its terms to a two-year period. If it works injustice to some, it will be but temporary, and such temporary injustice, if any, must be borne for the common good.
The act does not offend against either the Federal or the state constitution.
The permanent writ will issue as prayed for.
BEALS, C.J., HOLCOMB, BLAKE, and GERAGHTY, JJ., concur.