The state herald. (Holyoke, Logan County, Colo.) 1887-1921, 1895-04-12

Municipal Bonds and the Majority OF
pose Ta& on Rental Incomss-A Tie
Vote Allows tho Balance Of the Law
to Stand.
Washington, April D.-After almost
a month Of deliberation, the United
States Supreme court rendered its de
cislon yesterday In the income tax
cases, deciding by divided court the
law to be valid, except regarding the
incomes derived from rents and from
municipal bonds, on which point the
decision was that the tax was unconsti
tutionai.
The court was Unanimous. In declar
Ing the law invalid as rlGards mu.
nicipal and state bonds anda majority
agreed that the provision taxing rrnt;
from land is unconstitutional.
Chief, Jdstice Fuller announced the
decision.
The trainers of the .fupdaiHental law
had before them more proniient than
any other thought tile Idea that taxa.
tton and representation should go hand
In hand. The constitution was the re-
suit of compromise between the
states and the, federal. goyefnihent,
whereby the states surrendered the
right II levylng imposts. duties and
excuses, but 1t was evident they did
not mean to transfer to the general gov.
eminent the right to levy DIRECT taxes.
except in cases Of great e2hsgencies.
This compact, the chief said.
had been obseryed, M ,-n,e of
the, passage 0f the act u August, 1894.
The chief justice held that in taxing
the income derived from land itself, 1t
virtually and to all int,nts and purposes
taxed tho land i,sel', for, he, nsked,
what was the lind I, anyone but for
the profit derived fr,m 1t?
1t was clearly never intended by the
states to delegate authority to the ia
tional Congress TO weaken their credit
by providing Il tax upon their instru.
mentalities and revenue agencies. Such
an exercise Of power was rcpugnnnt To
the constitution, and therefore the por.
ton of the law putting 1t into execu.
ton must always be declared ,ipynlld,,
Upon each OF the othe- petitions dir
gned at the bar, to-wit:,
u. Whether the void provisions MS
To rents and incomes from real estate
invalldates the whole act.
go. Whether rs to the income from
personal property as sticl 4ie net is un.
constitutional as laying direct taxes.
IS. Whether any part of the tax, II
not considered rs direct tax, IL In
valid for want OF uniformity on either
of the grounds suggested. the Justices
who heard the arguments are equally
divided and therefore no opinion Is OK
pressed, ., ,.r
THE resnl! Is that the decree Of the
Circuit court is reversed and the case
remanded with directions to enter Il
decree in favor of complainant In re.
spcct only Of the voluntary payment
of the tax on rents and income OF Its
real estate and that which 1t holds In
trust and on the Income from the mu.
nicipal bonds owned or 50 held by it,
Justice Field read 4 dissenting opin.
Ion In support OF His view that the
whole act was unconstitutional lie
lsitse OF It's discriminating character
Justice White and Justice Harlan also
read dissenting opinions.
Treasury officials are greatly dis.
spirited over the Supreme courts de
cision on the income tax ease, and
while admitting that they have no re-,
liable data upon which to form nm nc.
tufaia estimate, they express lie be.
lief that the net result OF the decision
will be n loss OF at least 80 per cent.
from the receipts from Incomes. In
some cities the loss will be far greater
than this. notably the city of Washing.
ton, where the loss Is expected TO rcacl,
20 per cent.
Comparatively little wvs-txpcctcd ON
state. county and municipal bonds, hui
the total loss. II Is thought. will not fall
short OF Sl5,OO0.OOD or SaO.OOO,OOO for
the first year, and this loss Is expected
Us incrcasr rather iiiaii diminish In
succeeding years, should tho law re-.
main unrcpealcd. The loss OF this rev.
cnuc. however. Is not the only cause OF
regret among the officials. The fact
that the court was evenly divided on
the main constitutional question Ii IL
expected will result In almost endless
litigation. thus very materially adding
TO the expenses OF collecting the tax.
Nevertheless, the revenue officials will
proceed at once TO prepare supplement.
tnl regulations TO conform to to-day's
decision and from now ON until next
Monday, when the time expires within
which returns may he made, my re.
turns In which Incomes from rents aud
bonds are deducted will be regarded ms
full compliance with the tax. Per
sons who have already made their re-
turns and paid the tax will he advised
OF the change In the regulations and M
soon Ms possible the proportlonate
amount OF tax paid by each on rents
and bonds will be- refunded to them un.
der the general law. which authorizes
the commissioner Of Internal revenue -
refund taxes wrongfully collected. Al.
torney General olncy was much sur
prised ut that part OF the decision
which cxcmpts rents under the income
tax. AS to the section OF the net reln,.
Ing to bonds, the attorney general rath.
or expected an adverse decision. but
he regards the action OF the court on
the rent proposition rs having been
taken on technlcnlltlcs. which he be-
licves Will not stand the test OF time.
and cannot remain the permanent law
OF tho land. ON all other points sac
government, he believes. has no serious
cause for complaint. II Is universally
regretted that there was not n full
bench 10 hear the ease and should Jus.
ticc jackson resign there IL very good
reason TO believe his successor would
almost certainly be- favorable TO The
law. In which event another tcst cas-
very soon would be brought TO ill.,
court for determination.