The San Francisco call., 1895-05-21

powers, he said, but they gave up great
sources of revenue derived from COM
merce and retained the power of levying
taxes and duties covering anything other
than excises, but in respect to them the
range of taxation was narrowed by the
power granted to the Federal Government
over interstate commerce. While they
granted the power apportioning direct tax
alton, they secured to the States an oppor-
tunity to pay the amounts apportioned
and to recoup from their own citizens in
the most feasible way. The opinion con-
tinued:
tits said, on the whole. that the income of
property is not direct tax, but duty. We do
not think so. Direct taxation was notrestricted
in a breath, and restriction blown to the winds
is another.
The opinion dismisses the Hylton case
with this comment:
What was decided in the Hylton case was
that the tax on carriages was an excise and
therefore indirect tax.
The opinion next took up the argument
that the tax upon property is not direct
tax within the meaning of the constitu-
ton, and said:
We find it impossible to hold that funda-
mental requisitlon deemed so important as to
be enforced by two provisions, one affirmative
and one negative, can be defined away by
forced distinctions between that which gives
value to property and property itself. Stress
OF argument is thrown, however, on the asser-
ton that the income tax is not a property tax
at all; thatit is an assessment upon the taxpayer
on account of his money-spending power as
shown by his revenue for the year preceding
assessments; that rents received, crops har-
vested and interest collected have lost all con-
nection with their origin, and although once
not taxable, have been transmitted in their
new form into taxable subject matter. In other
words, that the income is taxable irrespective
OF the source from whence it is derived.
The Chief Justice said that since the
court had held unanimously that receipts
from municipal bonds should not be taxed
because bonds were instruments of States,
the same rule applied to revenue from
other sources not subjected to the tax, and
the lack of power to levy any but appor-
toned tax on real and personal property
equally exists as to revenue therefrom.
The court does not understand that an in
come tax has ever been regarded in Eng
land as other than direct tax.
After a review of the cases and con-
sideration of arguments of counsel, the
court as it approached its conclusions
made the following general argument:
If it were fact there had been no income
tax law such as this at the time the constitu-
ton was framed and adopted, it would not be
OF controlling Importance. A direct tax can
not be taken out OF the constitutional rule be-
cause the particular tax did not exist at the
time the rule was prescribed.
AS Chief Justice Marshall said in the Dart
mouth College case: "It is not enough to say
that this particular case was not in the mind
OF the convention when the article was framed,
nor OF the American people when it was
adopted. 1t is necessary to go further and to
say that had this particular case been sug-
gested the language would have been SO varied
as to exclude it, or it would have been made a
special exception
The case being within the words of the rule,
must be within its operation likewise, un-
less there be something in the literal con-
struction SO obviously absurd misehievous
or repugnant to the general spirit of the in
strument as to justify those who expound the
constitution in making it an exception.
The tax being direct, and therefore to be laid
by apportionment is there any real difficulty
in doing SO? Cannot Congress, if the necessity
exists OF raising thirty, forty or any other num-
Der OF million dollars for the support of the
Government, in addition to the revenue from
duties, imposts and excises, apportfon the
quota of each State upon the basis of
census and thus advise it OF the pay
ment which must be made and pro-
ceed to assess that amount on all the real and
personal property or the income of all persons
in the State and collect the same if the States
do not in the meantime assume and pay their
quota and collect the amount according to
their own system and in their own way? In
conveniences might possibly attend the levy of
an income tax, but that it is apportionable is
hardly denied, although it is asserted that it
would operate SO unequally as to be undesir-
able.
1t is apparent that the suggestion that the
result of compliance with the fundamental
law would lead to the abandonment of that
method OF taxation altogether, because of in
equalities alleged to necessarily accompany its
pursuit, could not be allowed to influence h
conclusion, but the suggestion not unnaturally
invites attention to the contention of appel
lants counsel, that the want of uni
formity and equality in this act is
such as to invalidate it. And fgures drawn
from the census are given, showing that enor-
nous assets of mutual insurance companies, of
building associations, of mutual savings
banks, large productive property of ecclesiasti-
cal organizations are exempted, and that the
exemptions reach SO many hundred millions
that the rate of taxation would perhaps have
Deen reduced One-na1 III they had not bee n
made.
We are not dealing with the act from that
point of view, but assuming the data to be sub
stantially reliable, if the sum desired to be
raised had been apportioned, it may be doubted
whether any State which paid its quota and
collected the amount by its own methods could
under its constitution have allowed a large
part of the property alluded to to escape taxa.
ton. If so, a better measure of equality would
have been attained than would be otherwise
possible, since according to the argumen Is for
the Government the rule of equality is not pre-
scribed by the constitution as to Federal taxa
ton, and the observance of such rule as in
herent in all just taxation is purely matter
of legislative discretion.
Elaborate argument is made as to the effici.
cacy and merits of an income tax in general.
as on the one hand equal and just and on the
other elastic and certain that it is not open to
abuse by such deductions and exemptions as
might make taxation under it SO wanting in
uniformity and equality as in substance to
amount to deprivation of property without
due process of law-not that ii is not open to
fraud and evasion and inquisitorial
in its methods, but because it is pre-eminently