The record-union., 1895-04-25

| - 10 COuCGu6u III all ln6So cases, ITOIl
! that OF Hilton to that of Springer, that
taxes on land are direct taxes, and in
! pone OF them is it determined that taxes
| on rents or income derived from land are
not taxes on land"
Summing up, the Chief Justice saws,
among other things: The requirement
| OF the Constitution is that no direct tax
shall be laid otherwise than by aDpor-
| tIonment The prohibition is not against
! direct taxes on land, from which the inn
! pIlcatIon Is sought TO be drawn that indi-
| rect taxes on land would be constitu-
t!onal, but it Is against all direct taxes;
ana 1t ls admitted q tax on real estate is a
dlrect toN. Unless, therefore, q tax upon
| rents or incomes issuing out of lands is
| lntrInsically 50 different from the land it.
| sell that 1t belongs to a wholly different
! class OF taxes, such taxes must be re-
| garded as falling within the same cate
CORY as tax on real estate.
The name OF the tax is unimportant
The real question is: Is there any basis
upon which to rest the contention that
real estate belongs to one OF the two great
classes of taxes, and the rent or income,
winch is the incident Of its ownership
belongs to the other? We are unable to
perceive any ground for the alleged dis
tInctlon. An annual tax upon the au-
nual value or annual uses of real estate
appears TO us the same in substance as
I
be paid out Of the rent or income. This
law taxes the income received from land
and the growth or produce Of the land.
Justice Patterson observed, in Hill
| toms case, that land il dependentIy OF its
products is OF no value and certainly
had no thought that direct taxes were
confined to unproductive land.
II 1t be true that by varying the form
the substance may be changed. il is not
easy to see that anything would remain
OF the limitations Of the Constitution. or
the rule OF taxation and representation,
so carefully recognized and guarded in
laYOl OF the citizens OF each State. But
constitutional provisions cannot be thus
eYaded. 1t is the substance, not the form,
which controls, as has been established
by repeated decisions OF this court.
1T is not doubted that property
ought to contribute i'll just measure to
the expenses of the Government As to
the States and their municipalities, this IS
reached largely through the imposition OF
direct taxes. As to the Federal Govern
ment, 1t Is attained In part through ex-
cIses and Indirect taxes upon luxUries
and consumption generally. to which dl-
rect taxes may be added TO the extent the
rule Of aDpOriOnment allows; and
through one mode or the other the entire
wealth Of the country, real and personal,
may be made, as IL should be, to con-
tribute to the common deteuse and GEN
eral welfare.
but the acceptance of the rule Of aD-
poIntment was one OF the compromises
which made the adoption of the Constitu-
uon possible and secured the creation of
that dual form Of government, so elastic
and 50 strong, which has thus far sur
YlVed IN unabated vigOr. If, by calling a
tax direct, When it Is essentially direct
the rule of protection could be frittered
away; one OF the great landmarks dehn-
ing the boundary between the Nation and
the States of which it is composed w0uld
have disappeared, and with it one of the
DulWarks Of private rights and private
property.
We are Of the opinion the law in cues
Llon' so lar as 1t Ievles tax on the rents
or income OF real estate, is in violation Of
the Constitution and is Invalid"
Comparatively brief space is devoted to
the question of a tax on income derived
from municipal bonds.
Inc Constitution" says the opinion,
'cOntemplates the Independent exercise
by the Nation and the States severaliy of
our constitutional powers. As the States
cannot tax the powers, the operations or
the property OF the United States, nor the
means which they employ to carry their
powers into execution, SO it has been held
the United States have no power under
the Constitution TO tax either the instru-
mentaIIties or the property Of q State. A
municipal corporation is the representa-
tive OF the State and one of the lustru-
mentaIitles OF the State Government. 1t
vas long ago determined that property
and revenues of the municipal cDrnora-
tons are not subjects of Federal taxa
ton"
After reference to the decision, the
opinion proceeds, concluding as follows:
ne law unuer consideration provides,
that nothing herein contained shall an
ms -, "a. >
1t Is cOntended that, although the prop
erty or revenues Of the States or their
lnstfuiuentalltleS cannot be taxed, never
theiess the income derived from State.
county and municipal securities can To
taxed; but we think the same want OF
power 10 tax the property or revenues Of
Tie States, or their lnstrumentalities eX-
lists IN relation to a tax on the incomes
from their securities and for the relation
TO tax on the incomes from their secur-
tues, and TOR the same reason, and that
reason IS given by Chief Justice Maxwell
ID W eStou VS.. Charleston, where he SAYS:
The right to tax the contract to auv
extent when made must operate on the
power to borrow before it Is exercised,
aud have a sensible influence on the con-
tract. The extent Of this power depends
on the will OF q distinct Government. To
any extent, however Uncomfortable, it is
burden on the operations of govern
ment. 1t may be carried TO an extent
which shall arrest them entirely
'Ine tax on Government stock is
thought by the court to be a tax on con-
tracts-a tax on the power to borrow
money on the credit of the United States
and consequently to be repuguant to the
Constitution.
applying the language to these ununic-
1pal securities, it is obvious that taxation
on the interest theretrom would operate
on the power to borrow before it is ex-
erclsed, and would have sensibl infiu-
ence on the contract, and that the tax in
question IS tax on the power Of the
States and their instrumentalities TO bOr-
row money, and consequently Tepuguant
to the COnstItuLIon.n