Income Taxes.—A state law which taxes the entire income of domestic corporations which do business in the State, including that derived within the State, while exempting entirely the income received outside the State by domestic corporations which do no local business, is arbitrary and invalid.1416 In taxing the income of a nonresident, there is no denial of equal protection in limiting the deduction of losses to those sustained within the State, although residents are permitted to deduct all losses, wherever incurred.1417 A retroactive statute imposing a graduated tax at rates different from those in the general income tax law, on dividends received in a prior year which were deductible from gross income under the law in effect when they were received, does not violate the equal protection clause.1418
1416 F.S. Royster Guano Co. v. Virginia, 253 U.S. 412 (1920). See also Walters v. City of St. Louis, 347 U.S. 231 (1954), sustaining municipal income tax imposed on gross wages of employed persons but only on net profits of business men and self-employed.
1417 Shaffer v. Carter, 252 U.S. 37, 56, 57 (1920); Travis v. Yale & Towne Mfg. Co., 252 U.S. 60, 75, 76 (1920).
Last modified: June 9, 2014