The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1895-04-09
DECISION IN DETAIL.
Opinion of the Supreme Court
on Income Tax.
The Reasons Are Given for It's
Conclusions.
OPINIONS REVIEWED.
Draa-11vrc
Previous Laws of the Same
Kind Gone Over.

WASHINGTON, April s.-Chief Justice Fuller
himself read the decision of the United States
supreme court in the income tax cases yester-
day. He began by stating the exceptions to
the law as made by counsel for the appellant
as fellows:
l. That the act imposes direct tax in re-
Spoct of the real estate, rents, issues and
profits as well the income and profits of per-
sonal property and not being apportioned is in
violation Of section article 1 of the consti-
tuition
2. That the law, If not imposing direct tax,
IS nevertheless unconstitutional in that its
provisions not uniform throughout the
United States and do not operate with the same
force and effect upon the subject of the tax,
wherever found, In that it provides exemp-
lions in favor of individuals and co-partuer-
ships while denying all exemptions to corpora
tions having similar income derived from
like property and values, and provides for
other exemptions and inequalities in violation
OF section of article of the constitution.
8. That the act provides no exemption of the
tax upon incomes derived from the stocks and
bonds of states of the United States and coun-
ties and municipalities therein which stocks
and bonds are not proper subjects for the tax
ing power of congress The income from these
securities in the United States amounts to over
| S65, 000,0 900 per annum, which the total an
nual income tax would be 81 100000.
The chief justice then took up the constitu-
tional points involved, dwelling upon the
fact that the constitution required the appor-
tionment of direct taxes and uniformity in ex-
cises and imports. He also dwelt upon
the question of representation and taxation,
which was, he said, foremost one when
the constitution adopted. The question
| of the tax on rents next discussed,
and in doing the issue of direct taxes
as considered at the time of the franz
| ing of the constitution considered.
| The trainers of the constitution were, he
| said. well Versed in the government of the col
onies and European countries and were we'll
Versed in the literature of the period, including
/ works on political economy, and well calcu-
lated to pass intelligently on this Question.
| Coming down to the present tariff act the
| chief justice said that the law was passed in a
! time of profound peace and it was to be taken
evidence that the congress had sought in
this matter to form precedent and establish
| departure from established lines, and it there
| fore became important to inquire into the cir
| cumstances with some attention to detail.
For the purpose of comparison, he went back
| to the enactment of an income tax during the
| civil war. He quoted from the decision in the
| Springer case. giving a history OF the case and
| devoting much attention to it.
1t was, the chief justice went on, conceded in
! all the cases from Hilton to Springer that taxes
| on land were direct taxes, while in of
! them it determined that taxes rents de-
rived from lands were indirect taxes. Was
| there, he asked, any distinction between q tax
on the land and on the income derived from
the lands? What in other words, was the
land but the profit on it? The name of the tax
| is unimpOrtant, and the court has been unable
to see any distinction He closed by saying:
1.-The court find difference between
tax land itself and a tax rents income
derived from land. The court therefore is of
| the opinion that a tax on rents or landed in
| vestments is direct taxation and unconstitu-
| tional."
The court next decided that the tax was IN
constitutional so far it related to incomes
| from state, county or municipal bonds. 1t was
| next ruled that the fact that the law pro-
nounced unconstitutional in these two particu-
| lars did not invalidate the law whole It
! was announced that in this latter conclusion
the court was equally divided. and therefore
| rendered no opinion. The lower court having
| ruled in favor of the law by divided court,
the law would stand except as to rents and
| state, county and municipal bonds, and on
these two points it was directed that the judg
i ment below be reversed.
The syllabus of the courts opinion is as fol-
| lows:
In Charles Pollock VS.. the Farmers Loan &
Trust Co. ct. al. it is established:
1. That, by the constitution. federal taxation
is divided into two great classes-direct taxes
| and duties, impostS and excuses.
| 2. The imposition of direct taxes is governed
| by the rule of apportionment among the sew
era1 states, according to numbers and the inn
! position of duties, imposts and excuses by the
rule of uniformity throughout the United
States.
8. That the principle that taxation and rep
resentation go together intended to be and
was preserved in the constitution by the estab-
1ishment OF the rule OF apport1onment among
the several states. that such apportion1nent
should be according to the numbers in each
state.
4. That the states surrendered their power to
levy imposts and to regulate commerce to the
general government and gave it the concurrent
power to levy direct taxes in reliance on the
protection afforded by the rules prescribed, and
that the com promises of the constitution can
not be disturbed by legislative action
s. That these conclusions result from the
text of the constitution and are supported by
the historical evidence furnished by the cir
cunstances surrounding the framing and adop-
ti0n of that instrument, and the views of those
who framed and adopted it.
g. That the understanding and expectation at
the time of the adoption of the constitution
was that direct taxes would not be levied upon
the general government except under the pres
sure of extraordinary exigeney, and such has
been the practice down to August Is, 1894 If
the power to de so is to be exercised as an or
binary and usual means Of supply, that fact
furnishes an additional reason for circumspec-
ton in disposing OF the present case.
z. That taxes real estate belong to the
class of direct taxes, and that the taxes on the
rent or income of real estate which is the Incl
dent of its ownership, belong to the same
class.
8. That by no previous decision of this court
has this question been adjudicated to the con
/, trary of the conclusions now pronounced.
9. That much of the act of August Is, 1894
as attempts to impose tax upon the rent OIL
income of real estate without apportionmen
is valid.
The court is further of the opinion that the
act of August IS, 1894, is invalid far as it at
tempts to levy tax upon the income derived
from municipal bonds AS municipal cor
poration is the representative of the stat*
and one of the instrumentalities of the
state government, the property and rev
| enues OF municipal corporations arr
not subjects OF federal taxation, nor i
the income derived from state county ant
municipal securities, since taxation on the in
interest therefrom operates on the power t.
borrow before 1t is exercised and has sensible
influence on the contract and therefore such
tax is a tax the power of the states ane
their instrumentalities to borrow money, ant
consequently repugnant to the constitution.
Upon each OF the other petitions argued a
, the bar, to-wit: First. whether the void pro
visions as to rents and incomes from real es
| tate inYalidateS the whole act; second. whethe
a | as to the income from personal propert
/ Snch unconStitufIon