The herald., 1895-04-09

Quently referred to, but he dismissed 1t
by saying that as the question had not
been raised in the court below and had
been shelved in the argument of the case
in the supreme court. there appeared no
objection to considering the case purely
on its merits.
The body of the opinion was devoted to
the consideration of the question from a
constitutional point of view and included
yerv elaborate definition of the mean
ing of the phrase 'direct taxes, " and also
a construction of the constitutional re-
Guirements as to apportionment.
The Decision
The anxiolsly awaited decision o
the United States supreme court in
the income tax case was rendered to-
dav by Chief Justice Fuller. The
court knocked out the law as far as
it taxes incomes derived from rents and
also from state, county and municipal
bonds. By u tie vote of the court the
law was sustained in other respects. The
courts conclusions, after reviewing the
historical and other phases of the ques-
ton, were as follows:
In Charles Pollock VS.. the Farmers
Loan and Trust Company ct al. it is es
tablished:
First-That by the constitution, federal
taxation is divided into two great classes
direct taxes. and duties, imports and
eXcseS.
Second-The imposition of direct taxes
is governed by the rule OF appcrtionment
among the several states, according to
numbers and imposition OF duties, inn
ports and excises by the rule of uniform
itv throughout the United States.
Third-That the principle that the tax
alton and representation go together was
intended to be and was preserved i'll the
constitution by tue establishment of the
rule of apportionment among the several
states 50 that such apportionment should
be according to mum bers in each state.
Fourth-That the states surrendered
their power to levy imports and to regu-
late commerce to the general government
and gave it the concurrent power to levy
direct taxes III reliance on the protection
afforded by the rules prescribed, and that
the com mpromises of the constitution can
hot be disturbed by Legislative action.
Fifth-That these conclusions resulting
from the text OF the con nstiJution and are
supported by the historical evidence
furnished by the circumstances surround
ing the framing and adoption OF that in
strument and the views of those who
framed and adopted it.
Six th-Ihat the uno erstanding and ex-
pectatlon at the time OF the adoption of
the constitution was that direct taxation
would not be levied by the general gov
eminent except under the pressure of ex-
been the practice down to August 10, 1894.
Ii the power to do so is to be exercised as
an ordinary and usual means of supply
that fact further shows an additional rea-
son for circumspectlon in dlsposing of the
present case.
Seventh-rhat taxes on real estate be-
long to the class of direct taxes and with
the taxes on rent or income of real estate
which is the incident of its ownership
belonging to the same class.
Eighth That by no previous decision
of this court has this question been ad-
Indicated to the contrary of the conclu-
sions now announced.
Ninth-That SO much of the act of Aug
ust, 1894, as attempts to impose a tax
on the rent or income of real estate with
out apportionment is valid.
The court is further of the opinion that
the act of August To- 1894, is invalid so
far as it attempts to levy tax upon the
income derived from municipal bonds.
AS municipal corporation is the repre-
sentative OF the state. and one of the in
strumentalities of the state government,
the property and revenue OF municipaI
governments are not subjects of federal
taxation, nor is the income derived from
state, county and municipal securities
since taxation on the interest therefrom
operates on the power to borrow before it is
exercised and has a sensible influence on
the contract and therefore such tax is a
tax on the power OF the state and their
instrumentalities to borrow money, and
consequently repugnant to the constitu.
tion.
Upon each of the other petitions argued
at the bar, to'Kit:
First-Whether the void portion as to
rents and incomes from real estates in
yalidates the whole act
Second-Whether as to the income from
personal property as such the act is un-
constitutional, as laying direct taxes;
Third Whether any part of the tax, if
not considered as a direct tax is invalid
for want of uniformity on either of the
grounds suggested, the justices who
heard the arguments are equally divided,
and therefore no opionin is expressed.
The result is that the decree of the cir
cult court is reversed aud the cause re-
manded. with directions to enter a decree
in favor OF com plainant in respect only
OF the voluntary payment of the tax on
rents and income of its real estate and
that which it holds in trust, and on the
income from municipal bonds owned or so
held by il.
The announcement OF the foregoing
conclusions of the court was preceded bv
4 review OF many opinions of the supreme
court from the time of Chief Justice Mar
shal down to the celebrated Springer case
brought by ex-Representative Springer
of Illinois, and by an extensive review
of the nature OF the direct and indirect
taxation. in the course of which Chief
Justice Fuller reviewed the debates lead
ing up to the framing of the federal con-
Stitution.
that his opinion upon the Pollock case
covered the other two cases. The deliv-
cry of the opinion consumed Just one
hour.
Chief Justice Fuller was followed by
Justice Field, who read the first dissent.