Dissenting Opinion by
Mr. Justice Cohen:The sole issue involved in this matter is whether a limited partner’s share of income earned by a partnership is subject to Philadelphia Net Profits Tax. The Tax Review Board and the trial court held this to be earned income and therefore taxable under the Philadelphia Code, §19-501 et seq. The Superior Court reversed.
Our Court now adopts the Superior Court’s determination and analogizes the income of a limited partnership allocated to a partner to dividends of a corporation. I think our Court is in error in so doing. A corporation pays a tax on its earnings before it de*284dares dividends. A partnership pays no- tax — the tax on its earnings is paid through the partners; for taxing purposes the partnership is but a pass through device. Thus the majority permits the partnership business activity to escape taxation at both the partnership and individual partner levels.
Now a business entity operating as a limited partnership with all of its business conducted in Philadelphia and all of its limited partners residing in Philadelphia does not pay any city tax on the earnings generated by the partnership in Philadelphia and allocated to the limited partners who are residents of Philadelphia.
The federal government makes no distinction in taxing the income of a partnership whether reported by a general partner or a limited partner. Nor does it permit a limited partner to exclude flOO from his partnership income as he would be entitled to do if the income were a dividend. We stated in Taco Review Board v. Brine Corporation, 414 Pa. 488, 200 A. 2d 883 (1964), that it is the nature of the activity producing the receipt which determines taxability. In Bankers Securities Corporation v. Philadelphia School District, 397 Pa. 413, 155 A. 2d 835 (1959), we held that even dividends were taxable where those dividends were derived from a business activity, thus emphasizing that the nature of the activity producing the receipt is the determinative factor.
I dissent.
Mr. Justice Eagen and Mr. Justice O’Brien join in this dissenting opinion.