The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-04-25

of the two great classes of taxes and the
rent or income which is the incident of its
ownership belongs to the other? We are
unable to perceive any ground for the al
legged distinction. An annual tax on the
annual value or annual user of real estate
appears to US the same In substance as an
annual tax on real estate, which would be
taxes the income received from land and
the growth or produce or the land. Mr..
Justice Paterson observed in Hilton.s case.
Land Independently of its product is of
no value:' and certainly had not thought
mat direct taxes were confined to unpro-
ductive land.
CONSTITUTION CANNOT BE EvADED.
IF it be true that by varying the form
the substance may be changed, it is not
easy to see that anything would remain of
the limitations of the Constitution or of the
rule of taxation and representation SO care
fully recognized and guarded in favor of
the citizens of each State. But constitu-
tional provisions cannot be thus evadeds
1t is the substance and not the form which
controls. as has indeed been established by
repeated decisions of this court.
1T is not doubted that property owners
ought to contribute in just measure to the
expenses of the government; As to the
direct taxes. As to the federal govern
ment, it is attained in part through ex,
ciSeS and indirect taxes on luxurieS ana
consumption generally, tos which direct
taxation may be added to the extent the
rule OIL dDpOTl1Onf0ent dllONS. <iliQ t4tO0Si
one mode or the other the entire wealth
of the country, real and personal, may be
made, as il should be, to contribute to the
common defense and general welfare. But
the acceptance of the rule of .apport1on-
ment was one of the compromises which
made the adoption of the Constitution posi-
Bile and secured the creation of that dual
form of government, so elastic and so
strong which has thus far survived In
unabated vigor. If, by calling a tax in
direct when it is essentially direct. the
rule of protection could be FILTERED away
boundary between the Nation and the
States OF which 1T Is composed would nave
disappeared, and with it one Of the bull
erty. We are of opinion that the law in
question, so far as it levies a tax on the
ton of the Constitution and is invalid"
Comparatively brief space is devoted to
rived from municipal bonds. The Consti-
tuition" says the opinion, "contemplates
the independent exercise by the Nation
and the States severally of our constitu-
tional powers. As the States cannot tax
the powers, the operations or the property
they employ to carry, their powers into
execution, so 1T has been held that the
G nns states s nave no power bs nnaee tne
tiles or the property of a State. A munich
pal corporation is the representative of the
State and one of the insfrumentalities OF
the State government. 1t was long ago na-
termined that the property and revenues
of municipal corporations are not subjects
After reference to the decisions, the opin-
ion proceeds, concluding as follows: THE
law under consideration provides that Qoth-
ing herein contained shall apply to States,
counties or municipalities 1t is commended
that although the property or revenues of
the States or their instrumentalitieS cannot
be taxed, nevertheless the income derived
from State, county and municipal securi-
ties can be taxed. But we think the same
want of power to tax the property or reve-
nueS of the States or their
ties exists in relation to a tax on the in
come from their securities and for the same
reason, and that reason is given by Chief
Justice Marshall in Weston VS.. Charles
town, where he adds: The right to tax the
contract to any extent when made must
operate on the power to borrow before it
is exercised and have a sensible influence
depends on the will of a distinct govern
ment. To any extent, however inconsider-
able, it is a burden on the operations of
government. 1t may be carried to an ex-
tent which shall arrest them entirely.
$ 8 > The tax ON government stock is
thought by this court to be a tax on the
contract, a tax on the power to borrow
money on the credit of the United States,
and consequently to be reDugnant to the
Constitutions Applying this language to
these municipal securities. it is obvious
that taxation on the interest therefrom
would operate on the power to borrow be-
fore it is exercised and would have a sensi-
BILE influence on the contract, and that the
tax In question is a tax on the power of
the States and their instrumentalities to
borrow money and consequently repugnant
to the Constitution"