The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-05-08
Contentious as to the Con-
stitutionaIity of the Levy
on Incomes.
CHoATE's REPLY TO oLNEY.
AssaiIants of the Tax Do Not Expect
to Lose Anything by the
Rehearing.


ond day of the rehearing of the income tax
cases in the Supreme Court began with
Assistant Attorney General Whitney IN
the midst of his argument for the reversal
of the former opinion of the court on the
validity of the Federal tax on incomes de-
rived from rents. All the seats on the
bench were again occupied to-day as yes
terdav and visitors crowded the court
room.
Whitney said his historical brief, which
he had promised yesterday, had not
reached him from the printer, but he had
already gone almost as far into the ques-
ton as he should in quoting English pre-
cedents orally and giving facts as to the
meaning of the various words and phrases
used in taxation. He said his statement
of the facts would be his principal argu-
ment and he believed that in cases of the
character of the income-tax cases the facts
were the best argument that could be
made. He claimed that the weight of evil
dence was to the following account:
First-The word duty" had legal
definition. The phrase "direct tax" had
none. but was borrowed from political
economy.
Second-A specific personal property
tax, a specific real-property tax and a
specific income tax were each duty within
the meaning of the constitution. A gen.
eral tax on all personal property at valua-
ton was not duty, impost or excise at ALL
nor was it direct tax in political economy.
Third-A specific real-property tax
would probably have been considered an
indirect tax.
Fourth-A general income tax, properly
so called, was unknown at the time of the
adoption of the constitution, but was a
duty within its meaning.
Fifth-A specific personal property or
specific income tax was a duty, and not a
direct tax.
Taking up the American system of taxa
ton at the time of the revolution Mr..
Whitney said it was devoid of uniformity
and very difficult of classification. 1t could
only be shown thoroughly by going through
the statutes of the thirteen States as he
had gone through those of Great Britain.
He quoted frequently from the report of
the Secretary of the Treasury (Wolcott)
made in 1886 in which that official states
that the system was entirely different in
various States, and some of the States were
almost without any form whatever.
In North Carolina, for instance. lands
were taxed uniformly, in South Carolina
by districts and in Virginia by classical
ton of counties. He directed special men
ton to Wolcott's report, saying that his
explanation was clear, and while he did
not use the term direct taxes" in the legal
meaning, he gave it the meaning of the
political economists. He said there had
been no income tax in any of the States
prior to the convention unless it was in
Delaware, and concerning that State there
was apparently doubt. The system in use
in most of the States was that of rating
land for tax purposes at an annual valua-
ton. Summing it up, he said the main
result of the examination of the system in
the various States had been negative in
character, and had shown, first, that the
systems were so different that it was hard
to determine how they did pay their taxes,
and secondly, that there was no settled
meaning to the word duty" The same
tax was duty at one place and an excise
at another.
Mr.. Whitney argued at great length to
show that the present income tax is not
tax imposed on land nor on rents because
they are derived from land, but on prop
erty of all kinds accfuing to the owner
}
In the question of uniformity he said he
had nothing to offer that had not been
given in the original hearing but he re-
peated some of these for the purpose, as he
said, of setting the opposing side right as
to the position of the Government.
Mr.. Whitney contended against the
theory of personal uniformity as intended
by the constitution. He argued that so
far as corporations are concerned the
theory of individual uniformity would not
be applied to them. In estimating the
profits of an individual no account was
taken of his time, he did not pay himself
for managing his own business yet cor
porations paid salaries to their officers for
managing the business. In considering
the matter of fairness of the exemption of
incomes below $4,000 Mr.. Whitney asserted
that the court had never assumed to de-
clare that Congress had in any case exer-
cised its discretion in any matter unrea-
sonabe, and intimated that it never would
go to that length.
1t appeared to be the undercurrent of
Mr. Whitneys remarks that the Govern
ment did not contend that the exemptions
of certain classes of corporations were
Just. He referred to the authorities, how
ever, to show that the Supreme Court had
held that individual corporations might be
exempted by name even from taxation.
Mr.. Whitney finished at 2:20 O'Clock
with a very brief peroration, and Attor-
ney-General Olney addressed the court. He
said:
81 fully appreciate the liberality OF the
court both in according this rehearing and
in the matter of the time allowed for argu-
ment. l realize at the same time that 1t
cannot be fairly taken advantage of merely
to reiterate considerations already fully
presented and that it should be availed OF
only for the new matter proven to be i'm
portant, but which, so far as the Govern
menJ IS concerned, has thus far been prac-
tlcally untouched. The present posture
OF the case | conceive to be this: The con-
tention of the Government at the former
hearing was that the validity of the general
income tax law could not now be drawn in
question, being conclusively settled by re-
peated adjudIcations of this court as well
as by the uniform and long continued