Superior Bath House Co. v. McCarroll

Mr. Justice Stone,

concurring:

Me. Justice Robeets and I concur in the judgment of the Court but upon different grounds from those stated in its opinion.

The state court has held that so far as the state constitution and laws are involved it has power to lay the present tax. It is no concern of ours what reasons are assigned for that conclusion. The only question for decision here is whether there is anything in the acts of Congress establishing the reservation or in the relationship of the two sovereignties, state and national, to prevent the state from laying a tax on the net income of its own corporation.

If the consent of the national government were needful in order to sustain the present tax we should have difficulty in finding that consent in the words of the Act of Congress authorizing the state to tax “all structures and other property in private ownership on the . . . reservation.” But we think that such consent is unnecessary to enable a slate to tax the income of its own corporations, derived from property located on the reservation. It is enough that no Act of Congress and no agreement by the state with the Federal Government prohibits the tax.

The fact that income-producing property is physically located on the territory of another sovereignty does not foreclose the state from taxing its own residents and corporations on the income derived from the property. *182Cohn v. Graves, 300 U. S. 308; Lawrence v. State Tax Comm’n, 286 U. S. 276; see Newark Fire Insurance Co. v. State Board, 307 U. S. 313. We have recently held that such a tax is not a tax on the income-producing property in any such sense as to preclude the tax for want of “jurisdiction” of the state to lay it. Cohn v. Graves, supra, 313, 314; Graves v. O’Keefe, 306 U. S. 466, 480. There is no occasion now to give renewed currency to the notion erroneously attributed to Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429; cf. Cohn v. Graves, supra, 314, 315, that a tax on income is subject to the limitations of a tax on the property which produces it.

For that reason if Arkansas had made an unrestricted grant of the reservation it could not be said to have renounced its authority to tax income of its corporations or citizens derived from property on the reservation, more than if, it were located in the District of Columbia or in another state. It clearly has not done so by reserving the right to lay a property tax within the reservation or by agreeing that the United States shall have exclusive jurisdiction over it for any or for every purpose. The state’s power to lay the tax, being independent of its jurisdiction over the ceded territory, subsists unless waived or prohibited by competent authority.

Whatever constitutional power the Federal Government may have to prohibit the state taxation of income derived from property located on the reservation, regarded as a federal instrumentality, it is plain that it has not assumed to exercise the power. Graves v. O’Keefe, supra, 480. Since the state has not surrendered its constitutional power to tax the income and since Congress has not assumed in the act establishing the reservation, or otherwise, to prohibit the tax, the power of the state is unimpaired, unless restricted by its own constitution and laws.

*183Mr. Justice Frankfurter while agreeing with the Court’s opinion also agrees with the view expressed in this opinion.