Culliton v. Chase, 174 Wash. 363, 25 P.2d 81 (1933).

           [No. 24491. En Banc. September 8, 1933.]
      WILLIAM M. CULLITON et al., Respondents, v.
           SAMUEL H. CHASE et al., Appellants.
      McKALE'S, INC. et al., Respondents, v. SAMUEL H.
                CHASE et al., Appellants. 1

[1] TAXATION (6) - CONSTITUTIONAL REQUIREMENTS - EQUALITY AND
UNIFORMITY - TAXATION OF PROPERTY - INCOME TAX. Under the
fourteenth amendment of the constitution requiring that taxes
shall be uniform upon the same class of property, income
taxes are subject to the uniformity clause only if they are
deemed a property tax, under the definition of property as
including "everything whether tangible or intangible, subject
to ownership."

[2] STATUTES (2-3) - ENACTMENT AND VALIDITY - INITIATIVE ACTS.
That an income tax was passed as an initiative measure is of
no controlling importance in determining its
constitutionality, since an initiative measure is subject to
the constitution as any other legislative act.

[3] TAXATION (6) - CONSTITUTIONAL REQUIREMENTS - EQUALITY AND
UNIFORMITY - TAXATION OF PROPERTY - INCOME TAX. Under our
constitutional definition of property in the 14th amendment
to the constitution as including everything, "whether
tangible or intangible, subject to ownership," income is
property, and income taxes are property taxes, subject to the
uniformity clause of the 14th amendment.

[4] SAME (6). Laws 1933, chapter 5, p. 49, Rem. 1933 Sup., SS
11200-1 et seq., providing for a graduated income tax, fixing
rates of


1 Reported in 25 P.2d 81.

 364    CULLITON v. CHASE.
                    Citations of Counsel.           174 Wash.

taxation that become greater as the amount of taxable income
increases, violates the 14th amendment to the constitution
requiring that all taxes be uniform on the same class of
property.

Appeal from a judgment of the superior court for
Thurston county, Wright, J., entered April 7, 1933, in
favor of the plaintiffs, upon overruling demurrers to
the complaints, in consolidated actions for injunctive
relief. Affirmed.

The Attorney General and John W. Hanna, Assistant,
for appellant, contended, inter alia, that a tax on
income is not a tax on property: In re Opinion of the
Justices (dissenting opinion), 77 N.H. 611, 93 Atl.
311; Sims v. Ahrens, 167 Ark. 557, 271 S.W. 720;
Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88
South. 4, 25 A.L.R. 748; State ex rel. Knox v. Gulf,
M. & N.R. Co., 138 Miss. 70, 104 South. 689; Trefry
v. Putman, 227 Mass. 522, 116 N.E. 904, L.R.A. 1917
F, 806; Ludlow-Sayre Wire Co. v. Wollbrinck, 275
Mo. 339, 205 S.W. 196; Dubuque v. Northwestern Life
Insurance Co., 29 Iowa 9; Standard Lumber Co. v.
Pierce, 112 Ore. 314, 228 Pac. 812. Hence, the
constitutional limitations in the 14th amendment have no
application: Fleetwood v. Read,
21 Wash. 547, 58 Pac.
665, 47 L.R.A. 205; State v. Sheppard, 79 Wash. 328,
140 Pac. 332; State v. Clark, 30 Wash. 439, 71 Pac. 20;
Nipges v. Thornton, 119 Wash. 464, 206 Pac. 17; State
v. Hart, 125 Wash. 520, 217 Pac. 45. A graduated income
tax does not violate the constitutional mandates
as to uniformity or equality in the same classes
of property, or in the definition of the word property
as including tangibles and intangibles subject to
ownership: Wilson v. Lambert, 168 U.S. 611; Myles Salt
Co. v. Board of Comm'rs, 239 U.S. 478; Foster v.
Hart Mining Co., 52 Colo. 459, 122 Pac. 48; State ex
rel. Knox v. Gulf, M. & N. R. Co., 138 Miss. 70, 104

                     CULLITON v. CHASE.                365
 Sept. 1933              Citations of Counsel.

South. 689; State v. Pinder, 30 Del. 416, 108 Atl. 43;
Lake Superior Consolidated Iron Mines v. Lord, 271
U.S. 577; Peacock & Co. v. Pratt, 121 Fed. 772; Magoun
v. Illinois Trust and Savings Bank, 170 U.S.
283; Educational Films Corporation v. Ward, 282 U.S.
379; Pacific Co. v. Johnson, 285 U.S. 480; Minnesota
Law Review, Vol. 12, No. 7, June, 1928.

Lane & Thompson, amicus curiae, contended, inter
alia, that the proposed tax is an excise tax and not a
property tax: Cooley on Taxation (4th ed.), SSSS 1743,
1749-1751; 26 R.C.L. (Taxation) 142; 61 C.J. 1559;
Featherstone v. Norman, 170 Ca. 370, 153 S.E. 58;
Fitch v. Wisconsin Tax Commission, 201 Wis. 383, 230
N.W. 37; Indian Motorcycle Co. v. U.S., 283 U.S.
570; State ex rel. Moon Co. v. Wisconsin Tax Commission,
166 Wis. 287, 163 N.W. 639, 165 N.W. 470; Trefry
v. Putman, 227 Mass. 522, 116 N.E. 904, L.R.A.
1917F, 806; Diefendorf v. Gullet, 51 Ida. 619, 10 P.
(2d) 309; Black, Taxation (3rd ed.), SS 199. The
following cases hold that an income tax is constitutional:
Standard Lumber Co. v. Pierce, 112 Ore. 314, 228 Pac.
812; Ludlow-Sayre Wire Co. v. Wollbrinck, 275 Mo.
339, 205 S.W. 196; Waring v. Mayor of Savannah,
60 Ca. 93; Glasgow v. Rouse, 43 Mo. 479; Sims v.
Ahrens, 167 Ark. 557, 271 S.W. 720; Hattiesburg
Grocery Co. v. Robertson, 126 Miss. 34, 88 South. 4,
25 A.L.R. 748; State ex rel. Knox v. Gulf, M. & N. R.
Co., 138 Miss. 70, 104 South. 689; Savannah v. Hartridge,
8 Ca. 23; Shields v. Williams, 159 Tenn. 349,
19 S.W. (2d) 261; Clark v. Maxwell, 197 N.C. 604,
150 S.E. 190; Young v. Illinois Athletic Club, 310
Ill. 75, 141 N.E. 369, 30 A.L.R. 985; Stanley v. Gates,
179 Ark. 886, 19 S.W. (2d) 1000. The weight of authority
is that income is not "property" for tax purposes:
Eliasberg Bros. Mercantile Co. v. Grimes, 204
Ala. 492, 86 South. 56, 11 A.L.R. 300; Hattiesburg

 366    CULLITON v. CHASE.
                    Citations of Counsel.           174 Wash.

Grocery Co. v. Robertson, supra; State ex rel. Knox v.
Gulf, M. & N. R. Co., supra; Sims v. Ahrens, supra;
Young v. Illinois Athletic Club, supra; State ex rel.
Bundy v. Nygaard, 163 Wis. 307, 158 N.W. 87, L.R.A.
1917E, 563; Brushaber v. U.P.R. Co., 240 U.S. 1;
State ex rel. Manitowoc Gas Co. v. Wisconsin Tax
Commission, 161 Wis. 111, 152 N.W. 848; Stony Brook
R.R. Corp. v. Boston & Maine R.R. Co., 260 Mass.
379, 157 N.E. 607, 53 A.L.R. 700. Even if income be
held to be property, the requirement of uniformity is
not violated: Clark v. Maxwell, supra; Ludlow-Sayre
Wire Co. v. Wollbrinck, supra; Alderman. v. Wells,
85 S.C. 507, 67 S.E. 781, 27 L.R.A. (N.S.) 864;
New Orleans v. Fourchy, 30 La. An. 910; Diefendorf
v. Gallet, supra; Tekoa v. Reilly,
47 Wash. 202, 91
Pac. 769; State ex rel. Bolens v. Frear, 148 Wis. 456,
134 N.W. 673, 135 N.W. 164, Ann. Cas. 1913A, 1147,
L.R.A. 1915B, 569; Cooley, Taxation, SS 1760.

Grinstead, Laube, Laughlin & Meakim, E.W. Anderson.,
and Yantis & Brodie, amici curiae, contended,
inter alia, that the law is presumptively valid: State ex
rel. Mullen v. Howell, 107 Wash. 167, 181 Pac. 920;
State ex rel. Carroll v. Superior Court, 113 Wash. 54,
193 Pac. 226; Record Publishing Co. v. Monson,
123 Wash. 569, 213 Pac. 13. The constitution is a limitation
merely on the legislative power: State v. Clark,
30 Wash. 439, 71 Pac. 20; State v. Ide, 35 Wash. 576,
77 Pac. 961, 67 L.R.A. 280, 102 Am. St. 914; Thurston
County v. Tenino Stone Quarries, 44 Wash. 351,
87 Pac. 634, 9 L.R.A. (N.S.) 306; Walker v. Spokane,
62 Wash. 312, 113 Pac. 775, Ann. Cas. 1912C,
994; Paine v. Port of Seattle, 70 Wash. 294, 126 Pac.
628, 127 Pac. 580; Litchman v. Shannon, 90 Wash. 186,
155 Pac. 783; Standard Oil Co. v. Graves, 94 Wash. 291,
162 Pac. 558. In taxation there is a broader power
of classification than in any other exercise of legislative

                     CULLITON v. CHASE.                367
 Sept. 1933              Citations of Counsel.

power: Bell's Gap R.R. Co. v. Pennsylvania,
134 U.S. 232; Magown v. Illinois Trust & Savings
Bank, 170 U.S. 283; Michigan Central R. v. Powers,
201 U.S. 245; Alderman v. Wells, 85 S.C. 507, 67
S.E. 781, 27 L.R.A. (N.S.) 864; Ludlow-Sayre Wire
Co. v. Wollbrinck, 275 Mo. 339, 205 S.W. 196; State
ex rel. Bolens v. Frear, 148 Wis. 456, 134 N.W. 673,
135 N.W. 164, Ann. Cas. 1913A, 1147, L.R.A. 1915B,
569; Standard Lumber Co: v. Pierce, 112 Ore. 314,
228 Pac. 812. The legislative declaration will not be
set aside by the courts unless it is clear that the
declaration is obviously false or a palpable attempt at
dissimulation: State ex rel. Short v. Hinkle,
116 Wash. 1,
198 Pac. 535; State ex rel. Case v. Howell, 85 Wash. 294,
147 Pac. 1159, Ann. Cas. 1916A, 1231; Hovey v.
Foster, 118 Ind. 502, 21 N.E. 39; Block v. Hirsh, 256
U.S. 135, 16 A.L.R. 165; Radice v. New York, 264
U.S. 292; Lemon v. Rumsey, 180 W. Va. 242, 150 S.E.
725; Macallen Co. v. Massachusetts, 279 U.S. 620, 65
A.L.R. 866; Aberdeen Savings & Loan Assn. v.
Chase, 157 Wash. 351, 289 Pac. 536, 290 Pac. 697, 71
A.L.R. 232. Income property is not property for
the purposes of taxation: Stony Brook R.R. Corp. v.
Boston & Maine R.R. Co., 260 Mass. 379, 157 N.E.
607, 53 A.L.R. 700; Trefry v. Putnam, 227 Mass. 522,
116 N.E. 904, L.R.A. 1917F, 806. In re Opinion of
Justices, 77 N.H. 611, 93 Atl. 311; Glasgow v. Rouse,
43 Mo. 479; Alderman v. Wells, supra; State ex rel.
Moon Co. v. Wisconsin Tax Commission, 166 Wis. 287,
163 N.W. 639, 165 N.W. 470; Waring v. Mayor of
Savannah, 60 Ca. 93; Stanley v. Gates, 179 Ark. 886,
19 S.W. (2d) 1000; Featherstone v. Norman, 170 Ca.
370, 153 S.E. 58; Hattiesburg Grocery Co. v. Robertson,
126 Miss. 34, 88 South. 4, 25 A.L.R. 748; State
ex rel. Knox v. Gulf, M. & N.R. Co., 138 Miss. 70, 104
South. 689; Ludlow-Saylor Wire Co. v. Wollbrinck,

 368    CULLITON v. CHASE.
                    CItations of Counsel.           174 Wash.

supra; Crescent Manufacturing Co. v. Tax Commission,
129 S.C. 480, 124 S.E. 761; State ex rel. Bolens
v. Frear, supra; Diefendorf v. Gullet, 51 Ida. 619,
10 P.2d 309; Standard Lumber Co. v. Pierce, supra.
Classification for taxation is not reviewable by the
courts unless palpably arbitrary: Magoun v. Illinois
Trust & Savings Bank, supra; Bell's Gap R.R. Co. v.
Pennsylvania, supra; Keeney v. New York, 222 U.S.
525; Citizens Tel. Co. v. Fuller, 229 U. S, 322;
Stebbins v. Riley, 268 U.S. 137, 44 A.L.R. 1454;
Ohio Oil Co. v. Conway, 281 U.S. 146 ; Jackson v.
Commissioners, 283 U.S. 527, 73 A.L.R. 1464. Courts have
uniformly sustained graduated income taxes under
constitutional provisions requiring uniformity of
taxation as to class: Standard Lumber Co. v. Pierce,
supra; State v. Pinder, 30 Del. 416, 108 Atl. 43;
Ludlow-Sayre Wire Co. v. Wollbrinck, supra; State ex rel.
Knox v. Gulf, M. & N.R. Co., supra; Featherstone v.
Norman, supra.

Harvey W. McCormack and R.W. Maxwell, amici
curiae, contended that this income tax is an excise
tax.

A. Emerson Cross, amicus curiae, and Charles W.
Hall, amicus curiae, as attorney for Washington State
Grange, contended that the judgment should be reversed.

Preston, Thorgrimson & Turner and Lundin, Burro
& Devin, for respondents McKale's, Inc., et al.,
contended, inter alia, that the graduated feature of the
act is violative of the provision of the fourteenth
amendment to the state constitution requiring taxation
of each class of property to be uniform: Aberdeen
Savings & Loan Association v. Chase,
157 Wash. 351,
289 Pac. 536, 290 Pac. 697, 71 A.L.R. 232; Bank of
Fairfield v. Spokane County, 173 Wash. 145, 22

                     CULLITON v. CHASE.                369
 Sept. 1933              Citations of Counsel.

P.2d 646; MacCallen Co. v. Massachusetts, 279 U.S.
620, 65 A.L.R. 866; Northwestern Mutual Life Insurance
Co. v. Lewis & Clarke County, 28 Mont. 484,
72 Pac. 982, 98 Am. St. 572; Cruse v. Fischl, 55 Mont.
258, 175 Pac. 878; Eliasberg Bros. Mercantile Co. v.
Grimes, 204 Ala. 492, 86 South. 56, 11 A.L.R. 300;
In re Opinion of Justices, 220 Mass. 613, 108 N.E.
570. The constitutions of other states differentiate
this case from the cases in those states: In re
Opinion of Justices, 226 Mass. 583, 165 N.E. 900;
State ex rel. Moon Co. v. Wisconsin Tax Commission,
166 Wis. 287, 163 N.W. 639, 165 N.W. 470;
Alderman v. Wells, 85 S.C. 507, 67 S.E. 781, 27
L.R.A. (N.S.) 864; Featherstone v. Norman, 170 Ca.
370, 153 S.E. 58; Stanley v. Gates, 179 Ark. 886, 19
S.W. (2d) 1000; Sims v. Ahrens, 167 Ark. 557, 271
S.W. 720; Hixon v. School District, 60 S.W. (2d)
(Ark.) 1027.; State ex rel. Knox v. Gulf, M. & N. R.
Co. (dissenting opinion), 138 Miss. 70, 104 South.
689; Diefendorf v. Gallet, 51 Ida. 619, 10 P.2d 309;
State v. Pinder, 30 Del. 416, 108 Atl. 43; Ludlow-Sayre
Wire Co. v. Wollbrinck, 275 Mo. 339, 205 S.W. 196;
Bacon v. Ransom, 56 S.W. (2d) (Mo.) 786. The taxation
of property at a progressive rate is violative of
the uniformity clause of our constitution: In re
Opinion of Justices, 266 Mass. 583, 165 N.E. 900; In re
Opinion of Justices, 82 N.H. 561, 138 Atl. 284; In re
Opinion of Justices, 84 N.H. 559, 149 Atl. 321; Bachrach
v. Nelson, 349 Ill. 579, 182 N.E. 909; Evans v.
McCabe, 164 Tenn. 672, 62 S.W. (2d) 159; Raydure
v. Bd. of Supervisors, 183 Ky. 84, 209 S.W. 19;
re Cope's Estate, 191 Pa. 1, 43 Atl. 79, 45 L.R.A.
316, 71 Am. St. 749; Black v. State, 113 Wis. 205, 89
N.W. 522, 90 Am. St. 853; State ex rel. Schwartz v.
Ferris, 53 Ohio 314, 41 N.E. 579, 30 L.R.A. 218;
Cummings v. National Bank, 101 U.S. 153; Aberdeen

 370    CULLITON v. CHASE.
                    Citations of Counsel.           174 Wash.

Savings & Loan Association v. Chase (dissenting opinion),
157 Wash. 351, 289 Pac. 536, 290 Pac. 697, 71
A.L.R. 232; State ex rel. Nettleton v. Case, 39 Wash. 177,
81 Pac. 554, 1 L.R.A. (N.S.) 152, 109 Am. St.
874; State ex rel. Lindsey v. Derbyshire, 79 Wash. 227,
140 Pac. 540; State v. Gorman, 40 Minn. 232, 41
N.W. 948, 2 L.R.A. 701; Fatjo v. Pfister, 117 Cal.
83, 48 Pac. 1012; Cook County v. Fairbank, 222 Ill.
578, 78 N.E. 895; Hauser v. Miller, 37 Mont. 22, 94
Pac. 197; Malin v. LaMoure Co., 27 N.D. 140, 145 N.W.
582, 50 L.R.A. (N.S.) 997, Ann. Cas. 1916C, 207;
Chapman v. Ada County, 48 Ida. 632, 284 Pac. 259;
Berryman v. Bowers, 31 Ariz. 56, 250 Pac. 361. A tax
upon the income from government bonds is a tax on
the bonds themselves: McCulloch v. State, 17 U.S.
316; Weston v. Charleston, 27 U.S. 449; Miller v.
Milwaukee, 272 U.S. 713; Northwestern Mutual Life
Insurance Co. v. Wisconsin, 275 U.S. 136; MacCallen
Co. v. Massachusetts, supra; Williams v. Bunn, 282
U.S. 216; Indian Motorcycle Co. v. U.S., 283 U.S.
570. An initiative measure has no greater strength
or dignity than attaches to any other legislation:
State ex rel. v. Richardson, 48 Ore. 309, 85 Pac. 225,
8 L.R.A. (N.S.) 362; Turnidge v. Thompson, 89 Ore.
637, 175 Pac. 281; Calvin v. Board of Supervisors,
195 Cal. 686, 235 Pac. 450; Wallace v. Zinman, 200 Cal.
585, 254 Pac. 946, 62 L.R.A. 1341; State ex rel.
Lashley v. Becker, 235 S.W. (Mo.) 1017; People v.
Provost, 55 Colo. 199, 134 Pac. 129; State ex rel. Berry v.
Superior Court, 92 Wash. 16, 159 Pac. 92. The invalid
part of the act is inseparable from the remainder:
Dorchy v. Kansas, 264 U.S. 286; Williams v. Standard
Oil Co., 278 U.S. 235; Hill v. Wallace, 259 U.S. 44.

Newman H. Clark, M.F. Mathewson and J.T. Trullinger,
for respondents Culliton et al., contended, inter

                     CULLITON v. CHASE.                371
 Sept. 1933          Opinion Per HOLCOMB, J.

alia, that a tax on income is a property tax: Pollock v.
Farmers' Loan & Trust Co., 157 U.S. 429, 158 U.S.
601; In re Opinions of Justices, 220 Mass. 613, 108 N.E.
570; Eaton, Crane & Pike Co. v. Commonwealth,
237 Mass. 523, 130 N.E. 99; State v. Pinder, 30 Del.
416, 108 Atl. 43; Eliasberg Bros. Mercantile Co. v.
Grimes, 204 Ala. 492, 86 South. 56, 11 A.L.R. 300;
Lilienthal Mercantile Co. v. Breslin, 204 Ala. 502, 86
South. 69; Bachrach v. Nelson, 349 Ill. 579, 182 N.E.
909; In re Opinion of Justices, 81 N.H. 552, 120 Atl.
629.

George Donworth, Charles T. Donworth, Allen,
Froude, Hilen & Askren, McMicken, Ramsey, Rupp
& Schweppe, and Peters, Evans & McLaren, amici
curiae, contended that the judgment should be affirmed.

HOLCOMB

BEALS, C.J., BLAKE, TOLMAN, and GERAGHTY, JJ. dissent.

HOLCOMB, J. - Alleging that the state income tax law
(initiative No. 69, chap. 5, Laws of 1933, p. 49 [Rem.
1933 Sup., SS 11200-1 et seq.]) was unconstitutional,
respondents instituted two actions, which were consolidated
for trial and appeal, against the members of the
state tax commission to secure a permanent injunction
restraining defendants from enforcing the act mentioned.
The trial court was of the view that the challenged
act offended against the uniformity requirement
of the fourteenth amendment to the state constitution,
and was therefore void. The demurrers to
the complaints were overruled, and a decree was entered
permanently restraining the enforcement of the
act, from which decree comes this appeal.

The fourteenth amendment to the state constitution
reads:

"The power of taxation shall never be suspended,
surrendered or contracted away. All taxes shall be
uniform upon the same class of property within the

 372    CULLITON v. CHASE.
                Opinion Per HOLCOMB, J.           174 Wash.

territorial limits of the authority levying the tax and
shall be levied and collected for public purposes only.
The word 'property' as used herein shall mean and include
everything, whether tangible or intangible, subject
to ownership. All real estate shall constitute one
class: Provided, That the Legislature may tax mines
and mineral resources and lands devoted to reforestation
by either a yield tax or an ad valorem tax at such
rate as it may fix, or by both. Such property as the
Legislature may by general laws provide shall be
exempt from taxation. Property of the United States
and of the state, counties, school districts and other
municipal corporations, and credits secured by property
actually taxed in this state, not exceeding in value
the value of such property, shall be exempt from
taxation. The Legislature shall have power, by appropriate
legislation, to exempt personal property to the
amount of three hundred dollars ($300) for each head
of a family liable to assessment and taxation under the
provisions of the laws of this state of which the
individual is the actual bona fide owner."

The income tax law provides:

"Section 1. Existing methods of taxation, primarily
based on property holdings, are inadequate, inequitable
and economically unsound. Present conditions
point the need of a new subject matter for taxation,
which should be based on the ability to pay. Earnings
for a given period are a fair measure of such ability.

"The people of the state of Washington, therefore,
exercising herein their supreme power and fundamental
right, declare their purpose hereby to tax all
annual incomes within the state as such, and not as
property.

"There shall be assessed, levied, collected and paid
annually, a tax on all net income as hereinafter
provided, by every person residing within the state of
Washington or by his personal representative in case
of death; and by every non-resident of the state, upon
such income as is derived from property located or
business transacted within the state, except as
hereinafter exempted. . . ." Rem. 1933 Sup., SS 11200-1.

                     CULLITON v. CHASE.                373
 Sept. 1933          Opinion Per HOLCOMB, J.

The system of graduated rates adopted by the income
tax law imposes upon the taxpayer a rate of taxation
that progresses and becomes larger with the
increase in the amount of his taxable income.

[1] Respondents insist that, under the constitutional
definition, "The word 'property' as used herein
shall mean and include everything, whether tangible
or intangible, subject to ownership," a tax on income
derived from property is a tax on the property from
which the income is derived, therefore the method of
classification adopted by the income tax law is violative
of the requirements of the state constitution that "all
taxes shall be uniform upon the same class of property."

Unless the income tax constitutes a tax on property,
the uniformity clause of the state constitution is not
violated. If income taxes

". . . are to be deemed a property tax, constitutional
limitations applicable to property taxes must
be applied. . . . If they are excise taxes, such
limitations are not applicable." 4 Cooley, Taxation
(4th ed.), SS 1743.

[2] The fact that the income tax law was passed as
an initiative measure is of no controlling importance,
nor can it be likened to an amendment to the
constitution. The constitution provides the means, methods
and processes for its own amendment.

Amendment 14, which replaced art. 7 of our constitution,
was adopted by the people by the proper method
in 1930. The income tax law was passed by the people
in 1932. All laws on any subject whatever, enacted by
either the people or the legislature, must be governed
by the provisions of the constitution in force at that
time. "The people in their legislative capacity are
not, however, superior to the written and fixed

 374    CULLITON v. CHASE.
                Opinion Per HOLCOMB, J.           174 Wash.

constitution." State ex rel. Berry v. Superior Court,
92 Wash. 16, 159 Pac. 92.

[3] The pertinent portion of amendment 14 of our
constitution is:

"All taxes shall be uniform upon the same class of
property within the territorial limits of the authority
levying the tax and shall be levied and collected for
public purposes only. The word 'property' as used
herein shall mean and include everything, whether
tangible or intangible, subject to ownership."

The initiative act in question is clearly one for public
revenue.

It would certainly defy the ingenuity of the most
profound lexicographer to formulate a more comprehensive
definition of "property." It is "everything, whether
tangible or intangible, subject to ownership." Income
is either property under our fourteenth amendment,
or no one owns it. If that is true, any one can
use our incomes who has the power to seize or obtain
them by foul means. There being no other classifications
in our constitution but real and personal property
and intangible property, incomes necessarily fall
within the category of intangible property. No more
positive, precise and compelling language could have
been used than was used in those words of our fourteenth
amendment. It needs no technical construction
to tell what those words mean. The overwhelming
weight of judicial authority is that"income" is
property and a tax upon income is a tax upon property.

None of the decisions from other states have any
bearing upon the law before us, because of our peculiarly
forceful constitutional definition and the difference
in their constitutional authorization or restriction.

In State ex rel. Bolens v. Frear, 148 Wis. 456, 134
N.W. 673, Ann. Cas. 1913A 1147, L.R.A. 1915B 569,
an income tax act enacted in 1911 was apparently set

                     CULLITON v. CHASE.                375
 Sept. 1933          Opinion Per HOLCOMB, J.

out in full by the court and is almost identical with
our own income tax act. There are some unimportant
differences not necessary to mention. The constitution
of Wisconsin had been amended in 1908. It previously
had provided that:

"The rule of taxation shall be uniform, and taxes
shall be levied upon such property as the legislature
shall prescribe,"
which provision was amended by the addition of the
following words:

"Taxes may also be imposed on incomes, privileges,
and occupations, which taxes may be graduated and
progressive and reasonable exemptions may be provided."

Previous to the adoption of this amendment, the
supreme court of Wisconsin had held an income tax law
unconstitutional. In passing upon the income tax act
of 1911, the supreme court of that state, among other
things, said:
"Words could hardly be plainer to express that idea
than the words used. From them it clearly appears
that taxation of property and taxation of incomes are
recognized as two separate and distinct things in the
state constitution; both may be levied, and lawfully
levied, because the constitution says so . . . the
people of Wisconsin have said that 'property' means
one thing, and 'income' means another; in other words,
that income taxation is not property taxation, as the
words are used in the constitution of Wisconsin."

How different from the situation here. We have no
constitutional provision authorizing taxation of income
as one thing and property as another. We have
only the constitutional provision that property "shall
mean and include everything, whether tangible or
intangible, subject to ownership." Until we have such a

 376    CULLITON v. CHASE.
                Opinion Per HOLCOMB, J.           174 Wash.

constitutional amendment, the hands of the people, as
well as the legislature, in enacting laws, are tied.

It has been definitely decided in this state that an
income tax is a property tax, which should set the
question at rest here. Aberdeen Savings & Loan Assn. v.
Chase,
157 Wash. 351, 289 Pac. 536, 71 A.L.R. 232.
Even though some of us dissented from the majority
decision, the dissenting opinions show that the case
was thoroughly considered, and the opinion of the
majority should govern. In future cases, even a
dissenting justice should be bound by the decision of the
majority until and unless authoritatively overruled or
reversed by some higher tribunal, such as the supreme
court of the United States.

It is asserted that a state income tax is an excise
tax. That is not correct. The cases cited to sustain
the assertions all involved corporate franchise tax
laws and the like.

Great reliance is placed by appellants upon a recent
decision by the Idaho supreme court in Diefendorf v.
Gallet, 51 Idaho 619, 10 P.2d 307, sustaining an
income tax statute of that state, which decision also
contains an exhaustive discussion of the authorities upon
the question of income taxes. That decision involved
the interpretation of three sections of the constitution
of Idaho and of the income tax statute which declared
that income should not be taxed as property.

One of the peculiar constitutional provisions of
Idaho is art. 7, sec. 3, prescribing that, "The word
'property' as herein used shall be defined and classified
by law." Another constitutional provision is that,
"All taxes shall be uniform upon the same class of
subjects within the territorial limits," and providing
for the allowance of exemptions. That court held, as
would we, under a similar constitutional provision,
that the lawmaking power was absolutely free to

                     CULLITON v. CHASE.                377
 Sept. 1933          Opinion Per HOLCOMB, J.

define property to be taxed. Our constitution is to the
contrary.

Our attention has also been called to a decision by the
Montana supreme court, O'Connell v. State Board
Equalization, 25 P.2d (Mont.) 114, in which that
court held, by a majority of three to two, that an
income tax law enacted in Montana was valid. Stress
was laid in that case upon the fact that the law
was copied from the Idaho act, which had theretofore
been construed by the supreme court of that state, and
it necessarily followed that the law and the judicial
interpretation were adopted in the Montana statute.
With due respect to the majority of that court, it seems
obvious to us, as pointed out in the dissenting opinions,
that the majority lost sight of the unique provisions of
the Idaho constitution as stated by that court itself.
Had we the same "unique" constitutional provision
as has Idaho, we should probably follow the decision
of that court upon the validity of the income tax law
before us.

After the decision by this court in the Aberdeen
Savings & Loan Assn. case, supra, deciding that income
was property for the purposes of taxation, the people
adopted the fourteenth amendment, supra, which made
it a part of the fundamental law of the state.

It is also argued that, under the recent decision of
this court in Pacific Tel. & Tel. Co. v. Seattle,
172 Wash. 649, 21 P.2d 721, holding valid certain fees
exacted from the utility company in that case, these
are excise. taxes. That decision was correct solely
because such exactions are excise taxes. Such taxes were
long ago defined as

"'Taxes laid upon the manufacture, sale, or consumption
of commodities within the country, upon licenses
to pursue certain occupations and upon corporate
privileges." Cooley on Constitutional Limitations

 378    CULLITON v. CHASE.
                Opinion Per HOLCOMB, J.           174 Wash.

(7th ed.), 680. (Quoted in dissenting opinion in Aberdeen
Savings & Loan Assn. v. Chase, supra.)

The taxes here in question can in no sense be said
to be for licenses to pursue certain occupations, or
upon corporate or business privileges, or for the
manufacture, sale or consumption of commodities within the
state.

[4] Our fourteenth amendment prescribes that all
taxes shall be uniform upon the same class of property
within the territorial limits of the authority levying
the tax, etc. It needs no argument to demonstrate
that the income taxes here levied are wholly lacking
in uniformity.

It is sought to sustain the graduated features of the
income tax by analogy to a graduated inheritance tax.

The inheritance tax is really not a tax at all. It is
an impost laid but one time, and not annually, as is a
tax. The right of devisees, or in cases of inheritance,
the right of heirs at law, to take, is not a natural right.
It exists only because the state grants the right. After
having granted the right, the state may impose as a
condition upon the exercise of the right that the state
shall receive a certain percentage or proportion
thereof. This percentage or proportion may be graduated
and may be as large as the state may see fit to impose.
This court has so held in two cases: State v. Clark,
30 Wash. 439, 71 Pac. 20, and In re Ellis' Estate,
169 Wash. 581, 14 P.2d 37. There is no similitude between
incomes and the portion of an estate passing to
one upon the death of another. No well considered
decision has ever so held.

We do not lose sight of the well established principle
in this state, of which the author of this has always
been a pronounced advocate, that every intendment
should be brought to bear in favor of the validity of a
statute or enactment and if any reasonable doubt

                     CULLITON v. CHASE.                379
 Sept. 1933     Concurring Opinion Per MITCHELL, J.

appears it should be resolved in favor of the validity of
the law, as we have many times held. State ex rel.
Hamilton v. Martin,
173 Wash. 249, 23 P.2d 1.
Nor do we disregard the deplorable financial condition
of the state and its taxing divisions and the necessity
of raising additional revenues. As to such conditions,
it is better that we suffer the inconvenience of the
present loss of such revenues than that we disregard
the emphatic restrictions of the constitution for the
sake of temporary relief. It may be possible to frame
an income tax law which will assess all incomes
uniformly and comply with our constitution, which, of
course, is not now before us and we need not consider
it.

It is perfectly obvious that, when the proponents of
initiative No. 69 framed the act, they lost sight of our
constitutional definition in the fourteenth amendment.
The declaration in the law of a purpose to tax all annual
incomes as such and not as "property," cannot
override the constitution. It is also clear that the
people when legislating, the legislature, and the courts,
are and should be bound by the limitations, restrictions,
definitions and prohibitions of the constitution.
It is the fundamental law of the state.

For the reasons herein stated, the decree of the trial
court is affirmed.

MAIN, J., concurs.
-Concurring-

MITCHELL
-Concurrence-

MITCHELL, J. (concurring) - I think the views of this
case expressed in the opinion written by Judge Holcomb
are correct.

The taxes intended to be raised by the law appear
to be reasonable and fair, and, assuming that incomes
should be taxed, a system of graduated rates that become
greater as the amount of taxable income increases,
such as is provided for in this act, is a good

 380    CULLITON v. CHASE.
           Concurring Opinion Per MITCHELL, J.     174 Wash.

one. That question, however, is not here. The sole
question here relates to the validity of the act under
the fourteenth amendment to the state constitution.

I wish to speak more fury of the history of the
amendment and of the act, each with respect to the
other. In 1929, sixty-three financial associations from
different sections of the state brought an action against
the members of the state tax commission to enjoin the
enforcement of chapter 151, Laws of 1929, p. 380,
providing for a tax measured by income upon banks and
financial corporations. The action was dismissed by
the trial court upon sustaining a general demurrer to
the complaint.

In reversing the judgment of the trial court in June,
1930 (Aberdeen Savings & Loan Assn. v. Chase,
157 Wash. 351, 289 Pac. 536, 290 Pac. 697, 71 A.L.R. 232),
this court said:

"The question of whether or not the act which we
are now considering imposes a tax upon appellants
for the privilege of exercising their corporate powers
within this state, or whether, on the other hand, *it
purports to impose a tax directly upon property, to
wit, upon the net income earned* by appellants upon
which the amount of tax due is to be computed, or
upon the occupation with which appellants are enengaged,
is important." (Italics mine.)

The decision was that it was a tax upon property,
to wit, upon net income earned, and that the act in
question violated the fourteenth amendment to the
United States Constitution guaranteeing the equal
protection of the law, which holding it was said rendered
unnecessary any discussion of the subject of the
uniformity of taxation provision of the state constitution.
The decision was by six judges; three other judges
dissenting in two opinions. Thereafter, on rehearing the
case (157 Wash. 391), it was unanimously said:

                     CULLITON v. CHASE.                381
 Sept. 1933     Concurring Opinion Per MITCHELL, J.

"In order to clarify the situation, the court now
states that the opinions above cited were rendered
with a view to determining the questions presented
by the cases at bar . . .; that the majority of the
court was of the opinion that the legislation therein
attacked must be held, under the decisions of the
supreme court of the United States, to attempt to
*establish a property and not an excise or corporation
franchise tax.*" (Italics mine.)

Amidst the general and special publicity of the fact
that this court had thus decided that income is
property, the fourteenth amendment to the state
constitution was adopted at the following general election in
November, 1930. That amendment struck out certain
sections, including SS 2 of article VII of the constitution,
which section provided that "the legislature shall
provide by law a uniform and equal rate of assessment
and taxation on all property in the state, according to
its value in money," etc. However, it was carried into
amendment 14, which provides:

"All taxes shall be uniform upon the same class of
property within the territorial limits of the authority
levying the tax and shall be levied and collected for
public purposes only. The word 'property' as used
herein shall mean and include everything, whether
tangible or intangible, subject to ownership."

And now, if asked whether income is property within
the meaning of the fourteenth amendment to the state
constitution, a perfect answer could be given by
quoting the language of the amendment - "The word
'property' as used herein shall mean and include everything,
whether tangible or intangible, subject to ownership."
Thus, this court, in Aberdeen Savings & Loan Assn.
v. Chase,
157 Wash. 351, 289 Pac. 536, 290 Pac. 697, 71
A.L.R. 232, decided that income is property for the
purposes of taxation, and the people, by a
constitutional amendment, thereafter decided likewise.

 382    CULLITON v. CHASE.
           Concurring Opinion Per MITCHELL, J.     174 Wash.

In this situation, the income tax law was passed at
the general election in 1932, as initiative measure No.
69. Confessedly, the act upon its face fixes rates of
taxation that become greater with the increase of the
amount of taxable income. The amendment to the
constitution provides, however, "that all taxes shall be
uniform upon the same class of property," etc. This
principle of uniformity in taxation has been preserved
at all times in our constitution, as appears from article
VII, SS 2, of the constitution, and from the fourteenth
amendment. It might be reasonable, under the amendment,
to provide that, for taxation purposes, horses
be put in a class and bear a rate of taxation different
from that of lands devoted to reforestation; but not so
with a band of one thousand horses compared with
another band of two thousand horses, nor one acre of
land devoted to reforestation compared with other two
acres of land devoted to reforestation.

The constitutional amendment speaks of the same
class of property. One who pays a tax on a $2,000
taxable income pays a tax on precisely the same class
of property as one who pays a tax on a $1,000 taxable
income, and to tax the one at a progressively higher
rate than the other positively violates the other clause
of the amendment, that all taxes shall be uniform upon
the same class of property.

The fact that some of the terms of the act prescribe
personal penalties, if the owner of the property fails
to perform his duties, does not, in my opinion, convert
the act into one that operates in personam. The act
is essentially one for the taxation of property for
public revenue purposes. Section 1 in plain language
says: "There shall be assessed, levied, collected and
paid annually a tax o,b all net income," etc.

The provisions of the act in question are prohibited

                     CULLITON v. CHASE.                383
 Sept. 1933     Concurring Opinion Per STEINERT, J.

by the limitations contained in the fourteenth amendment
to the state constitution.

MILLARD, J., concurs with MITCHELL, J.
-Concurring-

STEINERT
-Concurrence-

STEINERT, J. (concurring) - I am in accord with the
views expressed in the preceding opinions written by
Judges Holcomb and Mitchell, respectively, except in
so far as those opinions recognize and affirm the
correctness of two of our recent decisions: Pacific Tel. &
Tel. Co. v. Seattle,
172 Wash. 649, 21 P.2d 721,
and State ex rel. Hamilton v. Martin, 173 Wash. 249,
23 P.2d 1. I dissented in both of those cases,
and am still of the opinion that both of them were
incorrectly decided.

With reference to the case now before us, there is
but one question involved. We are not here concerned
with an act relating to a uniform income tax, nor are
we concerned with the wisdom, expediency or desirability
of any particular kind of income tax. We are
here concerned only with a graduated income tax act
and its constitutionality.

Much argument of counsel has been devoted to an
analysis of various decisions arising under the
constitutions of other states and of the United States.
Those decisions are of little aid to us here, because
they rest upon peculiar constitutional provisions
obtaining in those jurisdictions. Our problem is to
determine the validity of the act before us in the light of
our own constitution. A comparative examination of
the constitution of this state at once reveals that it
differs radically from those of other states in its
provisions relative to taxation. It is sui generis in this
respect.

The fourteenth amendment to our constitution provides
that all taxes shall be uniform upon the same
class of property, and that "property," as therein

 384    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

used, shall mean and include everything, whether tangible
or intangible, subject to ownership. Regardless
of the precise definition of "income," it certainly is
something. Whether it be tangible or intangible, it
surely is subject to ownership. The income that an
individual earns or receives is his, not some one's else.
Having earned and received it, he is legally entitled to
keep it, or else to use and dispose of it. In other words,
he is entitled to exercise the rights of ownership over
it. The word "everything," of course, comprehends
and includes the word something. It is even broader
than the word anything. When we say everything, it
is impossible to conceive of something or anything else
beyond that. Had the constitution said that "property"
shall include something or anything subject to
ownership, those terms would certainly have included
income. Did the constitution say less when it used the
word everything? The question answers itself.

It might not be unwise, or even unfair, to tax the
man who owns ten thousand acres of land at a rate
different from that on which the owner of a hundred
acres is taxed; but the constitution forbids it. Again,
it might not be unwise, or even unfair, to tax the man
who owns ten thousand head of cattle at a rate different
from that on which the owner of a thousand
head of cattle is taxed; but the constitution forbids it.
And finally, it might not be unwise, or even unfair, to
tax the man who has an income of ten thousand dollars
at a rate different from that on which the man who
earns only one thousand dollars is taxed; but the answer
is the same the constitution forbids it.

The lower court was correct in declaring the act in
question unconstitutional.

-Dissenter-

BLAKE

BLAKE, J. (dissenting) - I dissent.

This is an appeal from a judgment of the superior
court for Thurston county, holding unconstitutional

                     CULLITON v. CHASE.                385
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

chapter 5, Laws of 1933 - commonly known as the income
tax act - being initiative measure No. 69. The
holding is based on the theory that, under the fourteenth
amendment to the state constitution, the tax
imposed is a property tax, and, being graduated in
relation to income, lacks uniformity, as defined in the
amendment.

Before considering the amendment and its meaning,
it is well to consider not only its historical background,
but the social and economic condition of the state when
article VII (which is repealed by the amendment) was
written into the constitution.

In 1889 the major portion of the wealth of the state
lay in its lands and their produce - agricultural,
mineral and timber. Taxation was a fairly simple process.
Its subjects were tangible, visible - easy to evaluate.
The functions of government were also fairly
simple. Relatively speaking, in those days the value
of tangible property was great and the cost of government
little. The burden of taxation was nothing compared
to the benefits the owner of real property received
as the result of his comparatively small contribution
to the organized state, which protected him
in his ownership and use of property.

But, even then, the economic complexion of the
country was changing. More and more of the country's
wealth was going into intangibles - into stocks, bonds,
securities of various sorts - indicia of property which
could easily elude the search of the tax collector. In
the light of subsequent history, even then it should
have been obvious that powers of taxation must be
elastic. It was only a few years after the adoption
of the state constitution (1894) that the income tax
theory ran afoul of constitutional inhibition. Pollock
13 - 174 WASH.

 386    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

v. Farmers Loan & Trust Co., 157 U.S. 429, 158 U.S.
601.

This, however, was a new state, whose vast resources
of wealth that lay in and on the land seemed
inexhaustible. After the depression of the middle nineties,
a tide of immigration started, which continued until
toward the end of the first decade of this century. As
a result of this influx of people, and the still popular
belief that wealth lay in the land, values of real
property increased amazingly and kept relatively well
ahead of increasing taxes. But in the latter part of
that decade the tide of immigration began to ebb rapidly,
and real property values receded with equal
celerity.

In the meantime, due to a growing complexity in
organic society, the state had been called upon to take
over an ever-increasing burden of functions, and the
cost of government had relatively increased. As long
as property values were increasing, the additional tax
burden went unnoticed. But when property values collapsed,
the problem of taxation began to be acute - and
for twenty odd years it has been increasing. The cry
for reduction of taxes has become ever louder in the
face of increasing cost of government.

The burden of taxation on real estate became more
onerous during the second and third decades of this
century by reason of several facts, among which were
the following: (1) Great areas were allowed to revert
to the municipalities for non-payment of taxes, and
completely disappeared from the tax rolls; (2) as the
burden of taxes on real property increased, capital
sought investment in bonds, stocks and other securities,
and escaped taxation entirely, or carried, at most, only
a small portion of the burden.

A growing agitation for decrease in taxes developed.
But the relief was not available, because the state

                     CULLITON v. CHASE.                387
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

found itself in a strait-jacket in the shape of article
VII of the constitution, with the judicial interpretations
that had been placed upon it. The cry for relief
became so loud, however, that the legislature, at the
session of 1929, passed an act empowering the governor
to appoint an investigating commission

". . . to make a thorough and comprehensive
study of the entire subject of taxation . . . and
. . . report their findings and recommendations to
the governor . . . to be by him transmitted to
the legislature on the opening day of the next session."

As a result of these years of agitation and investigation
of the subject, there was submitted to the people
and adopted by them at the general election of 1930,
what is now the fourteenth amendment to the constitution,
which reads as follows:

"Article VII is amended by striking out all of sections
1, 2, 3 and 4, and inserting in lieu thereof the
following, to be known as section 1:

"Art. VII, SS 1. The power of taxation shall never
be suspended, surrendered or contracted away. All
taxes shall be uniform upon the same class of property
within the territorial limits of the authority levying
the tax and shall be levied and collected for public
purposes only. The word 'property' as used herein
shall mean and include everything, whether tangible
or intangible, subject to ownership. All real estate
shall constitute one class: Provided, That the
Legislature may tax mines and mineral resources and lands
devoted to reforestation by either a yield tax or an
ad valorem tax at such rate as it may fix, or by both.
Such property as the Legislature may by general laws
provide shall be exempt from taxation. Property of
the United States and of the state, counties, school
districts and other municipal corporations, and credits
secured by property actually taxed in this state, not
exceeding in value the value of such property, shall be
exempt from taxation. The Legislature shall have
power, by appropriate legislation, to exempt personal
property to the amount of three hundred ($300.00)

 388    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

dollars for each head of a family liable to assessment
and taxation under the provisions of the laws of this
state of which the individual is the actual bona fide
owner."

As I see it, the real question presented on this appeal
is whether, by construction of this amendment, we are
going to thwart the effort of the state to throw off the
strait-jacket in which it was bound. To do so requires
a literal, technical construction of a few words of the
amendment, in perversion of their true and obvious
intent and purpose and in total disregard of its
historical background and the conditions which brought
it into being.

Before proceeding with the discussion of the
constitutionality of the act, it is necessary to note one more
step in the eventful history of taxation in this state.
At the general election of 1932, the people not only
passed this income tax bill, but they passed an act
limiting the levy of taxes on real estate to forty mills
on the dollar. The relief of real property is at last
achieved, but at what cost - if the income tax act is
held invalid? The consequences are too obvious for
discussion. They, however, are only of general interest;
we are concerned merely with the legal aspects
of the situation. It is no concern of ours that the
revenues from taxation on real property will be insufficient
to support the government and the schools, even though
the cost of the former is reduced twenty-five per cent
and the latter thirty-three and one-third per cent. For,
as we proceed, it will appear that, if this income tax
is unconstitutional, the state will have no other source
of substantial revenue than from taxes on real property.
In addition, of course, there will be inconsequential
revenues from taxes on tangible personal
property and licenses imposed under the police power.
All excise taxes for revenue will be obliterated.

                     CULLITON v. CHASE.                389
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

The argument in support of the attack on the income
tax act, briefly stated, is this: (a) That the
fourteenth amendment permits classification of property
for purposes of taxation, but requires uniformity
of taxation on property within a given class; (b) that
the amendment defines property to be anything, tangible
or intangible, subject to ownership; (e) that
income is subject to ownership; (d) that income is
therefore property constituted in one class; (e) that
a graduated income tax, classifying taxpayers in
groups according to the amount of their income, violates
the rule of uniformity, and the act is therefore
unconstitutional.

The syllogism seems perfect, but, as I see it, there
are two answers to it: (1) That, notwithstanding the
definition of property contained in the amendment, the
exaction imposed under the income tax law is an excise
and not a property tax; (2) that, if it is a property
tax, the classifications fixed by the act are within the
constitutional limitations of the fourteenth amendment.

(1) It does not follow, from the broad definition of
property contained in the amendment, that this is a
property tax. To so reason seems to me to be sheer
sophistry. The fundamental character of a tax cannot
be changed by legislative declaration. That which
was a tax on property prior to the fourteenth amendment
remains a property tax; and that which was an
exaction for the enjoyment of privileges, made possible
by the protection of the organized state, remains
an excise tax.

The decisions defining and distinguishing property
and excise taxes are in hopeless confusion, due in part
to differences in constitutional provisions under
consideration, but due mainly to a failure to apprehend
the generic differences between the two. The distinction

 390    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

is tersely stated in Hattiesburg Grocery Co. v.
Robertson, 126 Miss. 34, 88 So. 4, 25 A.L.R. 748:

"Income is necessarily the product of the joint
efforts of the state and the recipient of the income, the
state furnishing the protection necessary to enable the
recipient to produce, receive, and enjoy it, and a tax
thereon in the last analysis is simply a portion cut
from the income and appropriated by the state as its
share thereof, and, while a tax on income includes some
of the elements both of a tax on property and of a
tax on persons, it cannot be classified as strictly a tax
on either, for it is genetically and necessarily an excise,
and should be enforced as such unless and until so to
do would accomplish the result which section 112 of
the Constitution was adopted to prevent, which is to
prevent discrimination in the taxation of property,
so that all property shall bear its due proportion of the
burdens of government."

Judge Cooley, in SS 1723, volume IV (4th ed.) of his
work on Taxation, makes a statement pertinent to the
situation, with which we are confronted, both as to the
character of an excise and the effect of legislative
declarations relating to them.

"SS 1723. An inheritance tax is an excise and not a
property tax. However, a statute may, in name, be
one imposing a tax on the right of succession, and, in
reality, be one on the property passing. In other
words, the title of the legislative act cannot always be
taken as conclusive of the character of the tax imposed.
An inheritance tax is not a tax on property merely
because the amount of the tax is made to depend upon
the value of the property transmitted, nor because the
tax is made a lien on the property the succession of
which is taxed."

Measured by these standards, what is the exaction
imposed by initiative No. 69? Without going into the
provisions of the act in too much detail, it is well to
note, in a general way, its contents. It is long, but
excellently drawn - clear, hardly susceptible of

                     CULLITON v. CHASE.                391
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

misconstruction, either by courts or administrative officials.
It is subject only to the general objection that all taxes
are obnoxious - so well answered by the supreme court
of Missouri:

"That the tax in question was exceedingly onerous
is undoubted; but it may be said that there is nothing
very poetical or romantic about tax laws, at best. They
are exacting and remorseless, and do not discriminate
with any particular nicety as to individual convenience.
But mere oppressiveness is no ground for setting them
aside or arresting their operation." Glasgow v.
Rowse, 43 Mo. 479.

Section 1 of the act provides that:

"There shall be assessed, levied, collected and paid
annually, a tax on all net income, as hereinafter
provided, by every person residing within the state
. . ."

Section 2 defines persons and income.

Section 3 provides for deductions to be allowed
corporations.

Section 4 provides for deductions to be allowed persons
other than corporations.

Section 5 provides for exemptions: (a) of income
received from various and certain specified sources; (b)
individuals and heads of families.

Section 6 prescribes the rates for computation of the
tax.

Section 7 provides for the personnel necessary for
the administration of the act.

Section 8 authorizes the state tax commission to
make rules and regulations looking to the enforcement
of the act and not in conflict therewith. It also
provides for the making of return by the taxpayer and
provides certain penalties for failure to make return,
subdivision (12) of the section providing:

"Any person, other than a corporation, who fails or
refuses to make a return at the time hereinbefore specified

 392    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

in each year or shall render a false or fraudulent
return shall upon conviction be fined not to exceed five
hundred dollars, or be imprisoned not to exceed one
year, or both, at the discretion of the court, together
with the cost of prosecution."

Section 9 provides for the making of returns by
administrators, executors, guardians and trustees of
estates, and the levy of the impost on such estates.

Section 10 provides for the collection of the tax, time
of payment and remedies for failure (which is by the
same method as the levy of a general execution on a
judgment of a court of record). It also provides a
method for contest of the amount of the tax by the
taxpayer; and also for recovery of overpayment.

Section 11 authorizes the tax commission to make
investigation of the taxpayer's records in such cases as
it deems advisable.

Section 12 provides that no additional assessment
shall be made without notice to the taxpayer and hearing
if demanded by him.

Section 13 provides for the setting up of a board of
review in each county, consisting of three persons,
whose function it is to hear grievances of taxpayers
and of representatives of the tax commission.

Section 14 contains certain prerequisites to actions
which may be brought by the taxpayer.

Section 15 provides for appeal to the state tax
commission from decisions of county boards of review.

Section 16 provides for appeal to and review by the
courts.

Section 17 provides for refunds.

Section 18 relates to taxpayers deriving income from
sources both within and without the state.

Section 19 relates to the disposition of the revenues
derived from the tax.

                     CULLITON v. CHASE.                393
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

Section 20 relates to administrative features of
enforcement.

Section 21 relates to the correction of assessments.

Section 22 relates to evasions by corporations.

Section 23 provides that the holding that any portion
of the act is unconstitutional shall not render the
rest of the act invalid.

Section 24 prohibits the publication of individual
returns, but provides for the publication of statistics,
and the inspection of returns by the attorney general.

Section 25 provides for the appropriation of $15,000
for paying expenses incurred in the administration of
the act.

Section 26 provides that the act shall be operative
on incomes received in 1932.

This somewhat detailed review of the provisions of
the act is primarily for the purpose of showing that it
has nothing whatever to do with property in the generally
accepted definition of the term. It operates
entirely in personam. It requires the taxpayer to act.
It charges him, not his property. And if he does not
act in accordance with the terms imposed upon him, he
is subject to penalty - fine and imprisonment. No lien
attaches to any particular property. His property is
not seized or sequestered, except upon what is the
equivalent of an execution issued on a judgment
against him in personam.

He pays for the privilege of being able to enjoy his
property, which he can enjoy only under the protection
of the organized state. And he pays according to the
degree of benefit he derives from that protection. If
he enjoys little, he pays little. If he enjoys much, he
pays (relatively not much) more.

While the act requires every person receiving an
income in excess of eight hundred dollars to make a
return, the head of a family is not required to pay a

 394    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

tax (providing he is a home owner) until his income
reaches the sum of four thousand dollars, for he is
allowed to deduct from the tax due $17.50 as a personal
exemption and $50 on account of taxes paid on his
home.

Let us consider another example or two. Take a
head of family and home owner whose income is ten
thousand dollars a year. Computation shows his assessment
to be $282.50. Deduct $17.50 personal exemption
and $50 for taxes paid on his home. He pays a
tax of $215. Take a man whose income is twenty
thousand dollars per year. Computation shows his
assessment to be $957.50. Allow the deductions, and
the tax paid is $890. Is this too high a price for him
to pay in support of the state, by the grace only of
whose protection he is guaranteed the enjoyment of
such an income? Is this a lack of equality and uniformity
in taxation? If the tax is an excise, it certainly
is not.

And this court has very recently held that such a.
tax is an excise. Pacific Tel. & Tel. Co. v. Seattle,
172 Wash. 649, 21 P.2d 721. There the question
involved was as to whether an ordinance of the city of
Seattle, which levied a tax based on gross revenues of
various public service corporations, contravened the
constitution. The ordinance provided a different rate
on corporations operating in different fields, but the
rate was the same on corporations operating in the
same field. We held the tax was an excise and that
the classifications were not arbitrary or unreasonable.

I can see no distinction in principle between the tax
involved in that case and the one under consideration
here. If a tax on gross revenue is an excise, a tax on
net income must be. I fail to see any distinction
between them in operation or result. Furthermore, if a
city, the creature of the state, whose power to tax is

                     CULLITON v. CHASE.                395
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

limited strictly within the grant of power from the
state, may impose an excise, I fail to see why the state
itself, whose power to tax is limited only by express
constitutional prohibition, may not levy such a tax.

I have refrained from discussing decisions of courts
of other states, because, as pointed out by counsel for
respondents, they deal, for the most part, with
constitutional provisions so different from ours that they
cannot be deemed authority for sustaining initiative
No. 69. There is one case, however, decided since this
case was first argued, which deals with a constitutional
provision defining "property" in even more comprehensive
terms than our own fourteenth amendment.
O'Connell v. State Board of Equalization, 25 P.2d
(Mont.) 114. There the supreme court of Montana had
under consideration a graduated income tax law, enacted
by the legislature under a constitutional provision
defining property as follows:

"Article XII, SS 17: The word property as used in
this Article is hereby declared to include moneys,
credits, bonds, stocks, franchises, and all matters and
things (real, personal and mixed) capable of private
ownership, but this shall not be construed so as to
authorize the taxation of the stocks of any company
or corporation when the property of such company or
corporation represented by such stocks is within the
state and has been taxed."

The court said:

"It is not necessary for us to declare the exact
nature of the income tax under consideration. It is
apparent that the legislature of the state of Montana
intended to enact an income tax and did not intend
that it should be considered as a property tax law. It
is also apparent that the legislature by the adoption of
the statute from the state of Idaho, took the statute
with the Idaho construction, which was to the effect
that it was an excise tax. It is also further apparent
that if the definition of 'property' contained in section

 396    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

17 of Article XII is to be given the effect as expressed
by this court in Hilger v. Moore, supra, then the
argument of plaintiff that the Act imposes a property tax
falls to the ground.

"It is important to note that if section 17, supra,
does not limit the legislature in the particular under
consideration, then the general power of the legislature
to enact legislation, as discussed earlier in this opinion,
comes into effect, and the legislature, in the absence of
the restriction, was just as free in that particular as
was the Idaho legislature under its permissive
constitutional authority. In that event the legislature was
free to enact Chapter 181, and it follows that the
provisions of section 1 and section 17 of Article XII are
not prohibitive, because the same degree of uniformity
is not required in the case of an excise tax or in the
case of an income tax statute that is required in one
providing for a levy upon 'property.' (Hale v. County
Treasurer, 82 Mont. 98, 265 Pac. 5; Quong Wing v.
Kirkendall, 39 Mont. 64, 101 Pac. 250; s.c. 233 U.S.
59, 56 L. Ed. 350, 32 S. Ct. 192.)"

Of course, this decision carries no binding force
upon this court. But if the principle, that legislative
enactments are to be upheld unless their invalidity is
apparent beyond all reasonable doubt, is to be adhered
to, it brings to us a persuasive power well nigh
irresistible. The disagreement of courts and judges on
identical problems seems to afford the highest proof
that "reasonable doubt" does exist.

(2) Let us assume, however, that the character of
the tax has been changed by this broad definition of
property; that the declaration in the fourteenth
amendment has converted an exaction for the enjoyment
of a personal privilege from an excise to a property
tax. Still, the income tax act is not beyond the
pale of its limitations. It must always be borne in
mind that the state constitution is not a grant of
power; it is a limitation. The theory is that the power
of government is in the people, and that the legislature,

                     CULLITON v. CHASE.                397
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

representing the people, has all the powers of government
inherent in the people, except such as are specifically
withheld. In this case, it is particularly important
to remember this principle, because the act under
attack was enacted by the people themselves as initiative
measure No. 69. So the essence of this phase
of the question is: Have the people, by the enactment
of the fourteenth amendment, placed a limitation upon
their own inherent power of taxation, which renders
them impotent to impose an income tax upon themselves?

It cannot be gainsaid that the purpose of the amendment
was to remove limitations on the taxing power,
as defined in article VII. The latter was archaic, but
under it the state had power to levy excises for revenue.
This right had been consistently sustained by
this court, from Fleetwood v. Read,
21 Wash. 547, 58
Pac. 665, 47 L.R.A. 205, to Pacific Tel. & Tel. Co. v.
Seattle, 172 Wash. 649, 21 P.2d 721. Can it be
possible that, by defining as property everything
capable of ownership, the people intended to destroy this
lucrative source of revenue? Patently, they did not.

Of course, citation of cases is not necessary in
support of legislative authority to classify persons in
groups for the purposes of exacting excise taxes from
them. The only limitation is that the classification
shall not be unreasonable or arbitrary. And the courts
will not weigh with too much nicety the legislative
discretion in that respect. State Board of Tax
Commissioners v. Jackson, 283 U.S. 527, 73 A.L.R. 1464.

While the amendment placed a limitation of uniformity
of taxation on property in the same class, it
placed but one limitation (and that qualified) on the
power of classification. Reverting to the terms of the
amendment, we find four elements in the body of it -
prohibitory, declaratory and mandatory. They are:

 398    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

(1) "The power of taxation shall never be suspended,
surrendered or contracted away" (distinctly prohibitory);
(2) "taxes shall be uniform upon the same class
of property" (mandatory); (3) property "shall mean
and include everything, whether tangible or intangible,
subject to ownership" (declaratory); and (4) "all real
estate shall constitute one class" (mandatory). Those
subdivisions constitute the essence of the amendment.
I fail to see wherein there is any limitation contained
therein to classify property for purposes of taxation,
other than that real estate shall constitute one class.
It goes without saying that the amendment was
adopted, holding in view the judicial interpretation
and limitation of article VII. If that be true, and if
the purpose of the amendment was to broaden, rather
than restrict, the power of taxation, it is sacrificing
substance to form to so construe the amendment as to
deprive the state of a source of revenue which it had
before its adoption.

This phase of our problem was presented to and met
by the supreme court of Missouri in Ludlow-Saylor
Wire Co. v. Wollbrinck, 275 Mo. 339, 205 S.W. 196. It
was there said:

"The appellant contends that the act under review
(Laws 1917, p. 524, et seq.) in taxing incomes, thereby
imposed a tax on property in contravention of Section
4, supra, in that by the terms of the act the tax was
not laid in proportion to value. . . .

"In law and in the broadest sense 'property' means
'a thing owned,' and is, therefore, applicable to
whatever is the subject of legal ownership. It is divisible
into different species of property, including physical
things, such as lands, goods, money; intangible things,
such as franchises, patent rights, copyrights,
trademarks, trade names, business good will, rights of
action, etc. In short it embraces anything and everything
which may belong to a man and in the ownership
of which he has a right to be protected by law. The

                     CULLITON v. CHASE.                399
 Sept. 1933         Dissenting Opinion Per BLAKE, j.

court held, in effect, that in directing as the
Constitution does, that taxes on property should be levied
according to value, reference was intended to be made
to other species of property than that which a person
has in his income; that the Constitution did not abridge
the power of the Legislature to provide revenue by a
taxation of income; that its command was directed to
other and distinct classes of property which (on account
of their peculiar nature could be measured in
value) become the object of taxation independent of
the owner, and are susceptible, by proper procedure,
to lien or seizure for the enforcement of the tax. The
court held that it was property having such a nature
and characteristics, and not the mere usufruct of such
property, nor the earnings of physical or mental labor,
which was referred to in the clause under review and
intended thereby to be subjected to taxation according
to its value.

"It may be that the construction of the word 'property'
which has appeared as definitive of the subject of
ad valorem taxation in all of the three constitutions of
this state when originally made, was not in full accord
with the broadest possible meaning of that term,
in that literally it might include every species of
property. But that was not a compellable view, and the
restricted construction (which excluded from its purview
personal earnings and incomes) had been affixed
to this term six years prior to the adoption of the
Constitution of 1875, and the principle of that construction
has since been applied in sustaining taxes of a similar
nature, although levied without proportioning the
taxation to the value of the thing taxed. . . .

"That income is property because it is an ownable
thing, is a matter of simple apprehension which has
been affirmed under the definition of property above
stated. That it is, 'in effect' a taxation of the labor
or capital which produced it, may be conceded, since by
reaction it affects the value of the thing or things from
which it is derived. But none of these considerations.
alter the fact that incomes are distinguishable from
the tangible or intangible property yielding them, nor
do they affect the established law in Missouri, that
incomes are thus connoted by our Constitution and

 400    CULLITON v. CHASE.
               Dissenting Opinion Per BLAKE, J.      174 Wash.

decisions. These recognize incomes as one of the classes
entering into the concept of property not required to
be taxed in proportion to value, and, therefore, not
falling within the designation of property which the
Legislature is forbidden to tax except in that way; and
(as a consequence of the plenary power of that body
to raise revenue at will, absent a constitutional
prohibition) falling wholly within the scope of the
authority of the Legislature to impose taxes for the
sustenance of the State without measuring its impose by
the value of the thing taxed. Taxation of incomes,
therefore, does not offend Section 4 of Article 10 of
the Constitution of 1875. . . .

"In the act under review it is not even contended
(conceding the power to levy the tax) that the
provisions distinguishing the persons and grading the tax
to be paid in accordance with such distinctions, are not
founded in reason, in justice and for the utility of the
public - the true criteria which should govern all
legislative action. Indeed the essential justice of the
various classifications of the act seems to be evident.
Practically identical gradations of tax, classifications
of persons, etc., are contained in the Federal act which
is the pattern of the Missouri law, and are set forth in
the discriminations found to exist in the acts of many
other states of the Union and the most enlightened
nations of the world."

While the constitutional provision considered in
that case was not the same as that contained in the
fourteenth amendment, the question raised under it
was identical with the one here presented. The decision
is of peculiar importance to the solution of the
problem here presented, in that it makes clear that the
fourteenth amendment must be construed in the light
of the law as it existed, under the decisions of this
court, at the time the amendment was adopted. In the
Telephone Co. case, supra, we sanctioned a tax in no
essential element distinguishable from the exaction
here questioned, and we based that holding on a line

                     CULLITON v. CHASE.                401
 Sept. 1933         Dissenting Opinion Per BLAKE, J.

of decisions extending over a period of thirty years
prior to the adoption of the amendment. The Telephone
Co. case was decided subsequent to the adoption
of the fourteenth amendment. By implication, at least,
the court, by that decision, held that existing methods
and forms of taxation were in no wise impaired by
the terms of the amendment.

Conceding the exaction imposed by the income tax
act to be a property tax, the amendment still leaves to
legislative discretion and determination the classification
of persons and subject matter to which the act
applies. So whether the tax imposed be considered
an excise or a property tax, it in no wise runs counter
to any prohibitory or mandatory provision of the
fourteenth amendment.

The judgment, in my opinion, should be reversed.

BEALS, C.J., TOLMAN, and GERAGHTY, JJ., concur
with BLAKE, J.