668 HARVARD LAW REVIEW resident will be given any deduction for the contribution of his in- telligence to the creation of the income taxed. His intelligence is a factor only as it is applied, and it is applied where the business operations take place. Yet there still remains the inquiry whether extra-state operations should not, whenever feasible, be given weight in determining what portion of the result of bi-state activi- The weakness of the argument here is in the assertion that for the purpose of de- termining the validity of a tax on the property or business of nonresidents, "it must be considered as standing alone" (250 Fed. 873, 889). This is to say that it caimot be considered that residents are also taxed on their property and business within the state, when they are taxed on their income from that property and business and on other income besides. The argument is a flagrant example of the evil of reliance on differences in nomenclature to the disregard of similarity of substance. Whether a state should tax nonresidents on other income than that from business within its borders is open to doubt. The economic values behind income from ren- tals, from interest on bonds and from dividends on stock are within the state and are taxable by the state through appropriate methods. As to land within the borders there has never been any question. As to bonds secured by property within the state, State Tax on Foreign-Held Bonds, supra, on which Judge Campbell rehed, must be regarded as modified by Savings & Loan Society v. Multnomah County, note 109, infra, to the extent of permitting a state to declare that such bonds are an interest in the property by which they are secured and taxable as such an interest. So the stock of domestic corporations owned by nonresidents may be taxed. Corry V. Baltimore, 196 U. S. 466, 25 Sup. Ct. Rep. 297 (1905). On the other hand ordi- nary debts due from residents to nonresidents are not taxable except when there are special circumstances, as in Metropolitan Life Insurance Co. v. New Orleans, 205 U. S. 395, 27 Sup. Ct. Rep. 499 (1907), and cases therein cited. In so far as a state tax on income is in lieu of actual or possible taxes on the sources of such income, there would seem to be no constitutional objection to a tax on income derived by nonresidents from such sources. When, however, such a tax on the income of nonresidents is in addition to taxes on the sources of such income, or is on income from non-taxable sources, a different question is presented. The Manitowoc Gas case, note loi, supra, shows the disinclination of the Wisconsin court to permit the taxation of income due nonresidents from bonds issued by a domestic corporation. The decision professes to be based on an interpretation of the statute, but the construction is strained, and the decision is plainly influenced by a notion that an interpretation permitting such taxation would make the statute un- constitutional. There can be little dispute that a state ought not to tax nonresi- dents on both the income and the sources of income or on income from non-taxable sources, with the possible exception of the case where the combined tax on the source and on the income is not greater than customary taxation on the source alone. Whether the considerations which should induce self-restraint on the part of the state are sufficiently compelling to warrant coercion on the part of the Supreme Court is more debatable, but in view of the fact that all income is likely to be held taxable to an owner at his domicil, there seems good reason to insist that other states from which such income is derived should be restrained from adding more than one additional tax. We cannot hope to avoid double taxation by the action of different states, but so far as practicable the line should be drawn at this point.
