delivered the opinion of the Court.
Whether the tax imposed by § 3 of Chapter 505 of the Wisconsin Laws of 1935 may apply to a foreign corporation licensed to do business in Wisconsin without offending the Fourteenth Amendment of .the Constitution is the question before us. The statute is quoted in *440the margin.1 When this question originally came before the Supreme Court of Wisconsin it found no constitu*441tional infirmity in such an exaction. State ex rel. Froedtert G. & M. Co. v. Tax Commission, 221 Wis. 225; 265 N. W. 672; 267 N. W. 52. But deeming itself constrained by its reading of this Court’s decision in Connecticut General Co. v. Johnson, 303 U. S. 77, the Wisconsin Supreme Court in the present case found that the statute ran afoul the Due Process Clause insofar as it covered locally licensed foreign corporations. 233 Wis. 286; 289 N. W. 677. Inasmuch as important issues affecting the exertion of the taxing power of the states are involved, we brought this and its companion cases here. 310 U. S. 618, 619.
Por many years, corporations chartered by other states but permitted to carry on business in Wisconsin have been subject to a general corporate income tax act on earnings attributable to their Wisconsin activities. The state has, of course, power to impose such a tax. U. S. Glue Co. v. Oak Creek, 247 U. S. 321; Underwood Typewriter Co. v. Chamberlain, 254 U. S. 113. “For the privilege of declaring and receiving dividends, out of income derived from property located and business transacted in” Wisconsin, an exaction “equal to two and one-half per centum of the amount of such dividénds declared and paid by all corporations (foreign and local)” is the additional tax now-before us. In the enforcement of this measure against foreign corporations, the amount of in*442come, attributable to Wisconsin is calculated according to the same formula as that employed, in assessing the general corporate income tax paid by such foreign corporations. The practical operation of this legislation is to impose an additional tax on corporate earnings within Wisconsin but to postpone the liability for this tax until such earnings are paid out in dividends. . In a word, by its general income tax Wisconsin taxes corporate income that is taken in; by the Privilege Dividend Tax of 1935 Wisconsin superimposed upon this income tax a tax on corporate income that is paid out.
As pressures for -hew revenues become more and more insistent, ways and means of meeting them present to a state not only the baffling task of tapping fresh sources of revenue but of doing so with due regard to a state’s existing taxing system. The tax now assailed gains nourishing significance when placed in the context of the Wisconsin taxing system of which it became a part. Wisconsin relied heavily upon taxation of incomes and largély looked to this source to meet the increasing demands of the depression years. But a special Wisconsin feature was exemption of dividends from personal taxation. See Welch v. Henry, 305 U. S. 134, 142-43. This exemption persisted while regular and surtax .rates against personal incomes were raised. Attempts at relief from the. unfairness charged against this exemption of dividends, particularly advantageous to the higher brackets, were steadily pressed .before the Wisconsin Legislature. To relieve local earnings of foreign corporations from a dividend tax would have had a depressive effect on wholly local enterprises. The Privilege Dividend Tax-was devised to reduce at least in part the state’s revenue losses due to dividend exemptions, and also to equalize the burdens' on all Wisconsin-q^rnings, regardless of the formal home of the corporation.
Had Wisconsin, as part of its price for the privileges it afforded foreign corporations within its borders, ex*443plicitly provided for a supplementary tax on the Wisconsin earnings of such corporations, but postponed liability for the tax until such earnings were to.be paid out in dividends, the power of Wisconsin to do so would hardly be questioned. Compare Continental Assurance Co. v. Tennessee, ante, p. 5. But because the" legislative language ran “For the privilege of declaring and receiving dividends, out of' income derived from property located and business transacted in this state” the court below raised the barrier of the Fourteenth Amendment. Respondent is a Delaware corporation having its principal •offices in New York; its meetings are held in the latter state where the dividends are voted and the dividend checks are drawn on New York bank accounts. Since the process for declaring dividends and the details attending their distribution among the stockholders transpired outside Wisconsin, although" the exaction was apportioned to the earnings' derived from Wisconsin, the state court concluded that the tax was an attempt by Wisconsin to levy an exaction on transactions beyond Wisconsin’s borders.
The case thus reduces itself to the inquiry whether Wisconsin has transgressed its taxing power because its supreme court has described the practical result of the exertion of' that power by one legal formula rather than another — has labeled it a tax on the privilege of declaring dividends rather than a supplementary income tax. •
A tax is an exaction. Ascertainment of the scope of the exaction — what is included in.it — is for the state court. But the descriptive pigeon-hole into which á state court puts a tax is of no moment in determining the constitutional significance of the exaction. “In whatever language a statute may be framed, its purpose must be determined by its natural and reasonable effect.” Henderson v. Mayor of New York, 92 U. S. 259, 268. Such has been the repeated import of the cases which only recently were well summarized by the guiding for-*444mulatiori for adjudicating a tax measure, that “in passing on its constitutionality we are concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it.” Lawrence v. State Tax Commission, 286 U. S. 276, 280.
The Constitution is not a formulary. It does not demand of states strict observance of rigid categories nor precision of technical phrasing in their exercise of the most basic power of government, that of taxation. For constitutional purposes the decisive issue turns on the operating incidence of a challenged tax. A state is free to pursue its own fiscal policies, unembarrassed by the Constitution, if by the practical operation of a tax the state has exerted its power in relation to opportunities which i.t has given, to protection which it has afforded, to benefits which it has conferred by the fact' of being an orderly, civilized society.
Constitutional provisions are often so glossed over with commentary that imperceptibly we tend to construe the commentary rather than the text. We cannot, however, be too often reminded that the limits on the otherwise autonomous powers of the states are those in the Constitution and not verbal weapons imported into it. “Taxable event,” “jurisdiction to tax,” “business situs,” “extraterritoriality,” are all compendious ways of implying the impotence of state .power because state power has nothing on which to operate. These tags are not instruments of adjudication bpt statements of result in applying the sole constitutional test for a case like the present one.- That test is whether property was taken without due process of law, or; if paraphrase we must, whether the taxing power exerted by the state bears fiscal relation to protection, opportunities and benefits given by the state. The simple but controlling question is whether the state has given'' anything for which it can ask return. The substantial privilege of carrying on *445business in Wisconsin, which has here been given, clearly supports the tax, and the state has not given the less merely because it has conditioned. the demand of the exaction upon happenings outside its own borders. The fact that a tax is contingent upon events brought to pass without a state does not destroy the nexus between such a tax and transactions within a state for which the tax is an exaction. See Continental Assurance Co. v. Tennessee, supra. See also Equitable Life Society v. Pennsylvania, 238 U. S. 143; Maxwell v. Bugbee, 250 U. S. 525; Compañia de Tabacos v. Collector, 275 U. S. 87, 98; New York ex rel. Cohn v. Graves, 300 U. S. 308; Atlantic & Pacific Tea Co. v. Grosjean, 301 U. S. 412; Atlantic Refining Co. v. Virginia, 302 U. S. 22; Curry v. McCanless, 307 U. S. 357.
This analysis is merely a reformulation of the classic approach of this Court to the taxing power of the states. Lawrence v. State Tax Commission, supra, p. 280. Ambiguous intimations of general phrases in opinions torn from the significance of concrete circumstances, or even occasional deviations over a long course.of years, not unnatural in view of the confusing complexities of tax problems, do not alter the limited nature of the function of this Court when state taxes come before it. At best, the responsibility for devising just and productive sources of revenue challenges, the wit of legislators. Nothing can be less helpful than for courts to go beyond the extremely limited restrictions that the Constitution places upon the states and to inject themselves in a merely negative way into the delicate processes of fiscal policy-making. We must be on guard against imprisoning the taxing power of the states' within formulas that are not compelled by the Constitution but merely represent judicial generalizations .exceeding the concrete circumstances which they profess to sumnjarize.
Nor does Connecticut General Co. v. Johnson, supra, present a barrier against what Wisconsin has done. Its *446presuppositions recognize the scope of the state' taxing power we have outlined. 303 U. S. 77, 80, 82. In the precise circumstances presented by the record it was found- that the tax neither, in its measure nor in its incidence was related to California transactions.- Here, on the contrary, the incidence of the tax as well as its measure is tied to the earnings which the State of Wisconsin has made possible, insofar- as government is the prerequisite for the fruits of civilization for which, as- Mr. Justice Holmes was fond of saying, we pay taxes. See, for instance, his dissent in Compañia de Tabacos v. Collector, supra, p. 100.
Because the Wisconsin Supreme Court found the statute to be invalid as to foreign corporations in the position of the respondent it had no occasion to pass on certain claims relating to the application of the statúte to the specific dividends here involved. We therefore remand the case for the determination of such questions as are open in the light of this opinion.
Reversed.
Section 3, Chapter 505, Laws of Wisconsin, 1935, as amended by Chapter 552, Laws of Wisconsin, 1935:
“Section 3. Privilege Dividend Tax. (1) For the privilege of declaring and receiving dividends, out of income derived from property located and business transacted in this state, there is hereby imposed a tax equal to two and one-half per centum of the amount of such dividends declared and paid by all corporations (foreign and local) after the passage and publication of this act and prior to July 1, 1937. Such tax. shall be deducted and withheld from such dividends payable to residents and non-residents by the payor corporation. '
“(2) Every corporation required to deduct and withhold any tax under this section shall, on or before the last day of the month following the payment of the dividend, make return thereof and pay the tax to the tax commission, reporting such tax on the forms to be prescribed by the tax commission.
“(3) Every such corporation hereby made liable for such tax, shall deduct the amount of such tax from the dividends so declared.
“(4) In the case of corporations'doing business within and without the state of Wisconsin, such tax shall apply only to dividends declared and paid out of income derived from business transacted and property located within the state of Wisconsin.. The amount of income attributable to this state shall be computed in accordance with the provisions of chapter 71. In the absence of .proof to the contrary, such dividends shall be presumed to' have been paid out of earnings of such corporation attributable to Wisconsin- under the provisions of chapter 71, for the year immediately preceding the payment of such dividend. If a corporation had a loss for' the year prior to the payment of the dividend, the tax commission shall upon application, determine the portion of such dividend paid out of corporate surplus and undivided profits derived from business transacted and property located within the state.
“(5) Dividends paid by a subsidiary corporation to its parent shall not be subject to the tax herein imposed provided that the subsidiary and its parent report their income for taxation under the provisions of chapter 71 on a consolidated income return basis; or both corporations report separately.
“(6) The provisions of this section shall not apply to dividends declared and paid by a Wisconsin corporation out of its income which it has reported for taxation under the provisions of chapter 71, to. the *441extent that the business of such corporation consists in the receipts of dividends from which a privilege dividend tax has been deducted and withheld and the distribution thereof to its stockholders.
“(7) For the purposes of this section dividends shall be defined as in section 71.02, except that the tax herein imposed shall not apply to stock dividend or liquidating dividends.
“(8) The tax hereby levied, if not paid within the time herein provided, shall become delinquent and when delinquent shall be subject to a penalty of two per cent on the amount of. the tax and interest at the rate of one-half per cent per month until paid.
• “(9) The tax hereby imposed shall, when collected by the tax commission, be paid by it into the state treasury.”