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March 24, 1955


Appeal, No. 228, April T., 1954, from order of Court of Common Pleas of Allegheny County, April T., 1954, No. 3135, in case of Samuel M. Fischer, Morris Fischer, and Paul L. Fischer, trading as Fischer Bed Spring Company v. City of Pittsburgh, and David A. Smith, City Treasurer. Order affirmed.


David Stahl, Assistant City Solicitor, with him, J. Frank McKenna, Jr., City Solicitor, for appellants.

Jerome C. Bachrach, with him Abe R. Cohen and Crone & Cohen, for appellees.

Before Rhodes, P.j., Hirt, Ross, Gunther, Wright, Woodside and Ervin, JJ.

Author: Woodside

[ 178 Pa. Super. Page 18]


This is an appeal by the City of Pittsburgh from an order of the Common Pleas Court of Allegheny County sustaining a complaint in equity to prohibit the city from collecting a one percent tax on a partnership's net profits derived solely from the business of manufacturing.

The action was submitted to the lower court as a "case stated" so there is no dispute as to the facts.

The City of Pittsburgh by an ordinance approved January 27, 1954 imposed a one percent (1%) earned income tax on salaries, wages, commissions and other compensation and on net profits earned from businesses, professions and other activities conducted in the city. Under this ordinance and the regulations issued pursuant thereto, each partnership carrying on a business wholly within the City of Pittsburgh is required to pay the tax for each partner's share of the total net profits therefrom, whether or not such profits are distributed to him, unless such partner is exempt from the tax by the terms of the ordinance. The appellees

[ 178 Pa. Super. Page 19]

    admit that the ordinance was duly enacted, and its regulations issued in a regular manner.

Fischer Bed Spring Company, the plaintiff partnership, is a manufacturer of bed springs and allied products, and its entire business net profits are derived from manufacturing carried on within the City of Pittsburgh. The individual plaintiffs are all the members of the partnership, and all reside in Pittsburgh. The company regularly carries a substantial inventory of manufactured articles and articles in process of manufacture.

The question to be decided is whether the plaintiffs are subject to the earned income tax levied by the city, or whether defendant, City of Pittsburgh, is prohibited from imposing the tax on plaintiffs, who are engaged in manufacturing, by reason of the provisions contained in Section 1A(4) of the Act of June 25, 1947, P.L. 1145, as amended by the Act of May 9, 1949, P.L. 898, 53 PS ยง 2015.1.

In 1947 the legislature enacted the above "Act No. 481" which became popularly known as the "Tax Anything Act." It is under the authority of this act that the City of Pittsburgh claims the right to promulgate and enforce the above ordinance. In 1949 the legislature amended the act restricting the powers of municipalities to impose this tax.

The relevant part of this act, including the amendment, which is before us for interpretation provides as follows:

"A. The duly constituted authorities of: cities of the second class... may, in their discretion, by ordinance... for general revenue purposes, levy assess and collect... such taxes on persons, transactions, occupations, privileges, subjects and personal property within the limits of such... [city], as they shall determine, except that such... [city] shall not

[ 178 Pa. Super. Page 20]

    have authority by virtue of this act (1) to levy, assess and collect... any tax on a privilege, transaction, subject, occupation or personal property which is now or does hereafter become subject to a State tax or license fee;... or (4) to levy, assess and collect a tax on goods and articles manufactured in such political subdivision... or on any privilege, act or transaction related to the business of manufacturing,..."

Clause (4), supra, is the part added by the amendment of 1949.

At the outset it becomes important to determine whether the act should be strictly construed against the city or strictly construed against the taxpayer.

Municipal corporations can levy no taxes upon inhabitants or their property unless the power to do so is plainly and unmistakably conferred by the legislature. The grant of such right must be strictly construed and not extended by implication. Breitinger v. Philadelphia, 363 Pa. 512, 514, 70 A.2d 640 (1950); Hillman Coal & Coke Co. v. Jenner Twp., 300 Pa. 108, 112, 150 A. 293 (1930).

In Allentown School District Mercantile Tax Case, 370 Pa. 161, 171, 87 A.2d 480 (1952) the court said: "Neither municipalities nor school districts are sovereigns; they have no original or fundamental power of legislation or of taxation. They have the right and power to enact only those legislative and tax ordinances or resolutions which are authorized by an Act of the legislature; and if such ordinance or resolution is unauthorized or conflicts with the enabling statute or with some of its provisions it is in that respect or to that extent void: (citing). Moreover the grant of the right or power to levy taxes must be ...

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