River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1895-05-23
NOT A GOOD LAW.
The Income Tax Act in It's I'm
tirety Declared Invalid.
A Majority of the Members of the United
States Supreme Court Pronounced 1t
Unconstitutional-Opin Read
by the Chief Justice

WASHINGTON, May 2i.-The supreme
court of the United States Monday de-
clared the income tax law to be uncon-
stitutional.
The vote on the income tax resulted:
Five against the eonstitutionality of
the law to for the law. Those against
the law were Chief Justice Fuller and
justices Field, Gray. Rrewer and Shiras:
for the law, Justices Harlan, White,
Brown and Jackson.
Conclusion of Court.
Chief Justice Fuller announced the
conclusions of the court as follows:
IL We adhere to the opinion already an
noGneed that taxes o. real estate being indis-
putably direct taxes, taxes on the rents or in
come C real estate are equally direct taxes.
- We are OF the opinion that taxes OF per-
sonal property or on the income Of personal
property are likewise direct taxes
"S The tax imposed by sections q TO s.
inclusive, OF the act OF 1894. so far as 1t Ills
on the income OF real estate and on personal
property being :. direct tax within the meaL-
Ing of the constitution, Is therefore unconsti-
tutional and void, because not apportioned ac-
cordng to representation, all those sections
constituting one entire scheme Of taxation are
necessarily invalid
THE DEGREES hereinbeiore entered In this
court will be vacated The DEGREES below Will
be reversed and the cases remanded with in
struetions 10 grant the relief prayed"
Sections % to 81 of the tariff act of
1894 referred to in the conclusions of
the court in the opinions are all the
sections of the act relating to the in
come tax. so that the entire income
tax law is declared void specifically.
"As heretofore stated, the constitution d.
vided federal taxation into two great classes,
the class OF direct taxes and the class OF
duties. imposts and excuses, and prescribed
two rules which qualified the grant Of poVer
as to each class The power to lay direct
taxes apportioaed among the several states in
proportion to their representation In the
popular branch Of congress, representation
based on population as ascertained by the
census. was plenary and absolute, but to lay
direct taxes without apportionment was for
hidden. The power to lay duties. imposts and
excuses was subject TO the qualification that
the imposition must be uniform throughout
the United States.
Old Decision Too Narrow.
"Our previous decision was confined to the
consideration OF the validity of the tax on
the income from real estate and on the in
come from municipal bonds The question
thus limited was whether such taxation was
direct or not. in the meaning of the constitu-
ton, and the court went no farther to
the tax on the incoIaes from real estate than
TO hold that il fell within the same class
as the source whence the income was de-
rived--that is. that tax upol the realty
and a tax upon the receipts therefrom were
alike direct while TO the income from mu-
nicipal bonds that could not be taxed because
of want of power to tax the source. and no ref
erence was made 20 the nature OF the tax as
being direct or indirect
I'VE are now permitted to broaden the
field of inquiry and determine to which OF
the two great classes, a tax upon persons
entire income, whether derived from rents or
products or otherwise OF rea, estate. or from
bonds, stocks or other forms OF personal prop
erty, belongs. and we are unable to conclude
that the enforced subtraction from the yield
Of all the owners real or personal property, In
the manner prescribed, is so different from
tax upon the property itself that 1t is not
direct but an indirect tax in the meaning of
the constitution
MarshaIT's Decision Quoted.
1.-THE words OF the constitution are to be
taken in their obvious sense and TO have a rea-
sonable construction. In Gibbons VS.. Ogden,
Mr.. Chief Justice Marshall, with his usual fe-
licity. said;
LAS men whose intentions require no con-
cealment generally employ the words which
most directly and aptly express the ideas they
intend to convey, the enlightened patriots who
framed our constitution and the people who
adopt 1t must be understood 20 have employed
words in their natural sense. and to have in-
tended what they have said
I'VE know of no reason for holding
otherwise than that the words direct taxes
on the one hand. and duties. imposts and
excuses on the other we're used in the con-
stitution in their natural and obvious senses,
nor in arriving at what those terms embrace
do we see any ground for enlarging them To-
You'd or narrowing them within their natural
and obvious import. and the time the con-
stitution was framed and ratified. Pass
ing from the text,.we regard the conclusion
reached as inevitable when the circumstances
which surrounded the convention and con-
trolled its action and the views OF those who
framed and those who adopted the constitu-
tion are considered"
Property Tax Not Direct.
The opinion next took up the argument that
tax on property is not a direct tax within
the meaning of the constitution, aud on this
point 1t says:
"All the real estate of the country and all its
invested personal property are open to the d.
rect operation of the taxing power if an appor-
tionment be made according to the constitu-
tion. The constitution does not say that no
direct tax shall be laid by appOr tiOnment
on any property than land. On the
contrary 1t forbids all unapportioned direct
taxes; and we know of no warrant for except
ing personal property from the exercise OF the
power. or any re lson why an apportioled d.
rect tax cannot be laid and assessed as Mr..
Gallatin said in his report when secretary of
the treasury in 1912. upon the same objects of
taxation on which the direct taxes levied I'M
der the authority Of the state are laid and as
sessed.'
'.The stress of the argument is thrown. how
ever on the assertion that an income tax is
not property tax at all; that II is not q real
estate tax nor a crop TAX nor bond tax; that
1t is an assessment upon the taxpayer on ac-
count OF his money spending power, as shown
by his revenue for the year preceding the as
sessment: that rents received, crops harvested.
interest collected. although once not taxable,
have become Transmitted in their near form
into taxable subject matter; in other words.
that income is taxable irrespective Of the
source from whence It is derived"
The chief Justice said that since the court
had held unanimously that the receipts from
municipal bonds could not be taxed because
the bonds were instruments Of the states the
same rule applies to revenue from other
sources not subject to the tax. and the lack OF
power to levy any but an apportioned tax on
real and personal property equally exists as
to the revenue therefrom. The court does
not understand that the income tax has ever
been regarded in England as other than a
direct tax.
General Argument.
After the review of cases and consid-
Grafton of arguments of counsel the
court, as it approached its conclusion,
made the following general argument:
IF IL were the fact that there had been no
income-tax law, such as this, at the time the
constitution was framed and adopted. it would
not be OF controlling Importance. direct
tax cannot be taken out OF the constitutional
rule because the particular tax did not exist
at the time the rule was prescribed.
Being direct. and therefore to be LAID by
apportionment. is there any real difficulty in
doing soY Cannot congress, IL the necessity
exist OF raising thirty. forty or any number OF
million dollars for the support Of the govern
ment in addition TO the revenue from duties.
imposts and excuses. apportion the quota OF
each state upon the basis of census and thus
advise IL of the payment which must be made
and proceed 10 assess that amount on all the
real and personal property or the income Of
all persons in the state and collect the same
II the state does not in the meantime assume
and pay its quota and collect the amount ac-
cordIng to its own system and in its own way:
Inconvenience might possibly attend the
levy of an income tax, but that IL is appor-
tionable is hardly denied. although IL is as
serted that IL would operate SO unequally as to
be undesirable.
IF IL be true that the constitution should
have been so framed that tax OF this Ftnd
could be laid the instrument defines the way
for its amendment. In no part Of it was great
er sagacity displayed. Except that no state,
without its consent. can be deprived Of its
equal suffrage in the senate the constitution
may be amended upon the concurrence Of two
thirds of both houses and the ratification Of
the legislatures or conventions OF the several
states or through federal convention when
applied for by the Legislature Of two-thirds OF
the states and upon like ratification The
FIsaA into