Green-Mountain freeman. [volume] (Montpelier, Vt.) 1844-1884, 1865-11-07
STATE TAXATION OF INCOME OF U. S. BONDS
REPORT OF COMMITTEE OF WAYS AND MEANS.
Io "a Noug. q Kepreseulati0es


The Committee Of Ways and Means whom referred
House Bill No entitled amend section SIX OF chap
ter eg three Of the General Statutes and to tax the income
Of Unad States Bonds respectfully report that they have
consred the important question presented IN the bill ana SUD
NIT the 0Iowmg-as the result Of their examination
Tie power Of taxation exists both in the States and IN the
Goveumcu the Union and may be exercised concurrenty BY
the Governments This power essential to their existence
But the power taxation the State SHb0rdHe to the Con
sttutJu tho Union and the laws made IN pursuance thereof
ghich a supreme Such laws control the constitution and laws
Of the respective States and be controlled by them were
otherwise the power Of taxing by the States might be exor
cised such to defeat the legitimate operations OF
governueu he principles stated are embodied IN the uhah
nous opn9u OF the United State, Court, delivered by Cne
Justice 1919 and have not since been controYertea
This BID provides hat the income Of bonds stock and other se
cure o a United shall be HXabc and shall be set in
the grau list and he inquiry arises thus pr0riSi0H ~ conquer
wihH adoptsdbyth Uajted States Gop9nneW, or rs
calcpiI II Doe N 0bstruct H9Se neasHeSs II 50, IT Is
obvou wrong and will have no legal force The power OF the
Federa Government borrow and issue bonds and stocks
soyee1 per and no State has the night TO imposes tax On
such bonds stock, iich shall il any way qualify or impair them
a. as promote the 0bect- q cove ment Tins prncpe
was scta by decision Of the Supreme Court m loZ9 IN the
case oil Uo7 agqqH He CHy 0t ChlStpH and has never
been uu such the law in the abSeac Of special legal
exemrt9n but doubt exists in he premises the act OF Con
gess February - 1862, fully settles the question, for ut
EXPIRE po,de chat MI Stocks donds, and other securities
ofhhe Ja5 N0ty hei by Rd0Huqis, copordtlonS or as
sociatl7s He Iaitet Nqes shaH be erempt from far-
isting tt0n Of te employed by Government Tor ben
efcial uaf would be usurauon OF power
Itny be claimed that taxing income not taxing bondS, and
that M authorities stated have application to the question
presen.gj uc0ne ofbo0ds, Or tn Interest beconWg Pefi-
odicaHy d . pqf NJ tho orJiqai cotrac, amt IS denal
NTH I'D. tug OF the evidently much OF an inter-
ference with tJns the Government as the taxing OF the
other whether such interference be direct or mdred
The o income of bond to use the language OF the
authori,y already quo.e tax the operation OF an IN
srumeu employed by the Government Of the on to carry It's
powers into SUCH tax must be aac,aStHHth"
Unie States bonds stocks similar IN their provisions to
prom ,,3rg ii c payable in ustalmen Coupons or interest
warrant usually attached These warrants part Of the
origna ob.atou aud security identical with It, AT
interval months the interest becomes due the warrants are
deachc.p.euei to the Treasury for payment and their ma-
hy government security Other bonds are regis
tered or are payable maturity with the accrued interest but
all possessing Die general character The money received
for interest," the hands Of the owner, like other
person property. su9ec taxation under the provisions OF
the statute now If this OF the committee be cor
rect the proposed amendment would be merely cumulative, CIV
ing no additional force 10 existing law,
Ihe effect Of the proposed measure is not at once apparent
adop ted all the states will impair public securities and
render then ue5olon difficult if not impossible 1t would be
Ulfi rBVda9H What, then should be our State action III
refercuce connected intimately with national
charcer Independent Of interest as one OF the States OF the
Union The national debt contracted at period when lhe
exence our government was threatened and under solemn
pled Of the nations faith to pay IT. 1t you could pass tins
amer meut aud stocks and bonds the could not be
COLLECTED All the judicial tribunals of the nation, which have
passe upon the question: without exception have declared suc
taxatou unconstitutional and cOid.
The stocks bonds and other securities OF the United Sae
which would be embraced in the provisions Of this BILL would
ceed Of thousand and hundred million of dollars
Esmatug from the Grand List and other sources the amount
held by people of this State is twenty millions Of dollars
This equals sixth in value of the entire property of the
State as determined by the of 1860 From this comparison
it appuent taxation unequal Onesxth part OF the prop
erty pays Bondhoders are exempt while those whose
properly invested in other securities are compelled to sustain
the expenses Of the Government the interest
State debt build school houses support schools repair highway
and bridges and provide for other incidental expenses. Such ar
the relations existing between these classes but law paramount
to any authority possessed by the Sa.e, makes the distinction
The law is W8.ribthe effect aaUOidaJle-SHbniSS0na ne
ceSSig.
The Comptroller of the Currency in late communication
this suect addressed the State of Connecticut holds the fol
lowing language The law exemphng from taxation govern
ent securities ospecc and clear that it cannot be questioned
The bonds were disposed of and purchased with the provision
law part of the contract that they be exempt or
taxation and the country has received an equivalent for such eS
empon the additional price received for the bonds. Can an
one believe that the obligations of the Government would hav
sold for nyng like the price realized if had been suppose
possible that they could have been taxed by State laws dlrec
or Indirectly? 1t your Legislature impose tax of hee
per cent on the income derived from government securities
Just competent for to impose tax of N.Y. or one hmdre
per cent
There one other yew which the committee would call yot
attention BY the 9th Article of the Declaration of Rights
the Constitution OF this State it provided That every memb
Of society hath right be protected in the enjoyment of t
liberty and property aud therefore is bound contribute
proportion towards the expense Of that protection, &C., mp
ing uniform wopoonate rule of taxation and assesmen
This principle Of uniformity equality is believed is pr
vided Tor in the Constitution OF aH the States The povist
of the bill dermnates against incomes derived from stock
bonds and other securities and in favor of another class of
come derived from other In the of knOCb
against s Supervisors n Rock County Wisconsin, the Suprer
Court OF that State holds the following language The Go
a,ra
valuation be uniform and in all alike equai oT
rating alike upon all the taxable property throughout the ter
toria limits oil the State muncpalty-whin which, the
is to be ised-and when the legislature prescribe d6ae
ia tb ~