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Keywords

injunctionlevy

plaintiffdefendantstatuteinjunctionwillobjectionlevy

Related Cases

Kelley v. Kalodner, 320 Pa. 180, 181 A. 598

Facts

Joseph J. Kelley, a taxpayer from Philadelphia, initiated this case to challenge the constitutionality of a graduated income tax established by an Act of Assembly approved on July 12, 1935. The act imposed taxes on the net income of both residents and nonresidents of Pennsylvania, with various exemptions and deductions. Kelley contended that the act violated the Pennsylvania Constitution, particularly sections regarding uniformity in taxation, and sought an injunction to prevent its enforcement.

The act, referred to above, the constitutionality of which is attacked by plaintiff's bill, is too lengthy to be set forth verbatim in this opinion. It will suffice to say that the statute provides a comprehensive system for the levy and collection of an annual tax upon the entire net income of residents of Pennsylvania and upon the net income received by nonresidents from property owned or from any business or occupation carried on within this commonwealth.

Issue

The main legal issue was whether the graduated income tax imposed by the Act of Assembly violated the uniformity clause of the Pennsylvania Constitution.

The principal objection to the bill is that it violates sections 1 and 2 of article 9 of the Constitution of Pennsylvania which read as follows: ‘Section 1. All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws; but the General Assembly may, by general laws, exempt from taxation public property used for public purposes, actual places of religious worship, places of burial not used or held for private or corporate profit, institutions of purely public charity, and real and personal property owned, occupied, and used by any branch, post, or camp of honorably discharged soldiers, sailors, and marines.’ ‘Sec. 2. All laws exempting property from taxation, other than the property above enumerated shall be void.’

Rule

The court applied the principle that all taxes must be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, as mandated by the Pennsylvania Constitution.

Our conclusion, accordingly, is that, in so far as the Act of Assembly of July 12, 1935, attempts to levy a tax upon the income from real estate or from stocks, bonds, and similar securities in the hands of the owner thereof, it is a property tax and subject to the constitutional requirement of uniformity.

Analysis

The court analyzed the nature of the graduated income tax and determined that it constituted a property tax rather than an excise tax. It found that the act's provisions, which imposed different tax rates based on income brackets, violated the constitutional requirement for uniformity. The court also noted that the exemptions for lower-income individuals further contributed to the lack of uniformity in the tax's application.

The act before us clearly falls within this language, and it is unnecessary to elaborate the matter further to show that the proposed income tax plainly and palpably violates the rule of uniformity.

Conclusion

The court concluded that the graduated income tax was unconstitutional due to its violation of the uniformity clause of the Pennsylvania Constitution, and therefore, the act was declared void.

Our conclusion is that our previous cases do not justify defendants' assertion that excise taxes need not be uniform in application, and that the tax in question, even though considered an excise, may nevertheless be subject to the constitutional requirement.

Who won?

Joseph J. Kelley prevailed in the case because the court found the graduated income tax unconstitutional, thus granting him the injunction he sought.

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