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The first question submitted is as to the meaning of the words "gross earnings . . . within the state," as used in the above section.
The tax imposed by the statute is similar in its nature to the tax imposed in this Commonwealth upon telegraph companies, and held to be constitutional in Western Union Telegraph Co. v. Massachusetts, 125 U. S. 530 (see also Massachusetts v. Western Union Telegraph Co., 141 U. S. 40), and to the taxes on express companies imposed in some other jurisdictions and sustained in the Adams Express Cases, 165 U. S. 194; 165 U. S. 255; 166. U. S. 171; 166 U. S. 185. See also Fargo v. Hart, 193 U. S. 490. It is an excise under the Massachusetts Constitution measured by the value of property within the Commonwealth not otherwise taxed. It is an attempt to reach the additional value "gained by the property being part of a going concern." The local tax and the excise "together fairly may be called a commutation tax." See Holmes, J., in Galveston, Harrisburg, etc., Railroad v. Texas, 210 U. S. 217, 226.
In the value of the property which is the measure of the tax, the Legislature, in my opinion, intended to include the increased value due to the use of such property in interstate commerce. The tax "is intended to reach the intangible value due to . . . the organic relation of the property in the State to the whole system." See Holmes, J., in Fargo v. Hart, 193 U. S. 490, 499.
This can constitutionally be done. Adams Express Cases, supra; Fargo v. Hart, supra; Galveston, Harrisburg, etc., Railroad v. Texas, supra.
The value of property within the State, including the increased value due to its use in interstate commerce, may be determined by reference to gross earnings within the State, including earnings from interstate business. In my opinion, the words "gross earnings . . . within the state," as used in the present statute, include earnings within the State from interstate business, and such earnings should be considered in determining the amount of the excise.
The statute, unlike many statutes imposing similar taxes,
does not provide a method of determining the part of the earnings from interstate business to be treated as earnings within the State. Cf. Maine v. Grand Trunk Railway Co., 142 U. S. 217; Wisconsin & Michigan Railroad Co. v. Powers, 191 U. S. 379; Galveston, Harrisburg, etc., Railroad v. Texas, supra. Such earnings are, therefore, to be determined as a matter of fact without the aid of prima facie rules. I shall not attempt to advise as to the method which should be followed in making this determination. Unless it has been made to appear to the Board of Appeal, as it has not to me, that the amount of the gross earnings within the State, used by the Tax Commissioner in the computation of the tax, includes a larger part of the earnings from interstate business than, all things considered, can fairly be apportioned to this State, the Board should not revise the determination of the Tax Commissioner upon this point.
The second inquiry is as to whether, in determining the fair cash value of the proportion of the capital, bonds and unfunded debt of the companies upon which the tax is levied, property consisting of stocks, securities and real estate outside the Commonwealth not used in the express business should be deducted from the total value of capital, bonds and unfunded debt.
In my opinion this deduction should be made. Fargo v. Hart, supra, is decisive upon the point that such property cannot be used as the measure of a tax such as is here in question. See also Delaware, Lackawanna & Western Railroad Co. v. Pennsylvania, 198 U. S. 341. The reason is clear. The tax is, in effect, a tax on the property by which it is measured. A State cannot tax property outside its jurisdiction. The more difficult question is whether such property should be deducted in computing the tax, or whether the statute should be regarded as unconstitutional as an attempt to tax property not within the jurisdiction of the Commonwealth. In my judgment, the former is the better view. Though the requirement of such a deduction may not be read into the statute except for good reason (American Glue Co. v. Commonwealth, 195 Mass. 528,
530), there is, in the fact that otherwise federal constitutional requirements would be infringed, a sufficient reason for implying authority to make such deduction. Such a construction is in accord with the established principle stated in Pittsburg, etc., Railway Co. v. Backus, 154 U. S. 421, 428:
It is not to be assumed that a State contemplates the taxation of any property outside its territorial limits, or that its statutes are intended to operate otherwise than upon persons and property within the State. It is not necessary that every section of a tax act should in terms declare the scope of its territorial operation. Before any statute will be held to intend to reach outside property, the language expressing such intention must be clear.
The conclusion which I have reached as to the second inquiry is in accord with an opinion given by my predecessor to the Tax Commissioner under date of Dec. 1, 1905.
TAXATION-EXEMPTION-WOODLAND USED FOR EDUCATIONAL
A tract of woodland, acquired and used by Harvard University for the purpose of
You have requested my opinion as to whether a tract of To the Tax about seventeen hundred acres of woodland, situated in the town of Petersham, acquired by Harvard University for the teaching of forestry, is subject to taxation.
The woodland in question is taxable unless it is exempt because owned and occupied by Harvard University, or its officers, for the purposes for which the university was incorporated. R. L., c. 12, § 5, cl. 3. I am of opinion that it is exempt on this ground. No question is made but that the teaching of forestry is within the broad educational purposes for which Harvard University was incorporated. That woodland is as
necessary for the teaching of forestry as is a farm for the teaching of agriculture, is apparent. As a farm is exempt from taxation if used in the teaching of agriculture (Mt. Hermon Boys' School v. Gill, 145 Mass. 139), so, in my judgment, woodland used in the teaching of forestry is likewise exempt from taxation. To claim this exemption, of course, the officers of the university must, in their use of the woodland, be acting in good faith and reasonably. Emerson v. Trustees of the Milton Academy, 185 Mass. 414, 415. So far as disclosed by the facts submitted to me and agreed to by the assessors of the town and by the representative of the university, there is nothing to indicate that the use of the woodland in question is not in good faith and reasonable. It does not appear that the area is unreasonably large. It appears that the sales of lumber from the woodland are considerable in amount, but this fact does not deprive the university of its exemption, if such sales are merely incidental to the main use of the woodland as a place and means of instruction. From the statement submitted, it is to be inferred that such sales are merely incidental to such main use.
A part of the tract (whether of the seventeen hundred acres situated in the town of Petersham or of three hundred in the adjoining town of Phillipston is not stated) is poor farming land, on which are a dwelling house which is occupied and used by students, two barns and a few other buildings. This dwelling house is used as a dormitory and dining room and for lecture rooms; the resident superintendent lives in one wing of it. It is, by reason of this use, exempt from taxation. See Harvard College v. Cambridge, 175 Mass. 145. The barns and other buildings are exempt from taxation, since they are used for purposes incidental to instruction in forestry. See Mt. Hermon Boys' School v. Gill, supra; Emerson v. Trustees of Milton Academy, supra. The farming land not occupied by buildings is not used for purposes inconsistent with the general use of the woodland. It would be difficult to acquire a large area of woodland without some open. Under authority of Wesleyan Academy v. Wilbraham, 99 Mass. 599, 604, it is exempt from taxation.
TAXATION BUSINESS CORPORATION - DEDUCTIONS - STOCKS
In the assessment of the franchise tax upon a business corporation under St. 1903, c. 437, or St. 1909, c. 49, part III, the value of stocks and bonds which would be subject to taxation if owned by a natural person in this Commonwealth should not be deducted from the value of the corporate franchise.
You have requested my opinion as to the method of deter- To the Tax mining the amount upon which the franchise tax upon domestic business corporations is to be assessed.
Commissioner. 1909 October 22.
By St. 1903, c. 437, § 72, codified as St. 1909, c. 490, part III, § 41, cl. 3, it is provided that there shall be deducted from the value of the shares constituting the capital stock of a domestic business corporation the value "of its property situated in another state or country and subject to taxation therein," and "of securities which if owned by a natural person resident in this commonwealth would not be liable to taxation." In St. 1903, but not in the codification, it is further provided that "from such value there shall not be deducted securities which, if owned by a natural person resident in this commonwealth, would be liable to taxation."
Your inquiry is whether there should be deducted from the value of the shares constituting the capital stock of such a corporation the value of "certain stocks and bonds, all of which would be subject to taxation if owned by a natural person resident in this Commonwealth, which stocks and bonds upon the first day of May are situated in New York and Illinois."
In determining the amount upon which the franchise tax upon a business corporation is to be assessed, no deductions are to be made other than those expressly authorized by statute. Commonwealth v. New England Slate & Tile Co., 13 Allen, 391; Cf. Commonwealth v. Hamilton Mfg. Co., 12 Allen, 298; Manufacturers' Insurance Co. v. Loud, 99 Mass. 146; Home Insurance Co. v. New York, 134 U. S. 594.
In view of the express provision of St. 1903, it is clear that under that law the value of the stocks and bonds in question