The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1895-04-12

supreme court has decided that
the income tax law is uncon-
stitutional so far as il affects
incomes derived from rents and real
estate or from state, county and mu-
Of 10 the remainder of the law. and as
the decision of the court below was in
favor of its constitutionality that de-
cision must stand.
An Accurate Forecast.
Chief Justice Fuller read the decision
before one of the largest audi
ences that ever crowded into the
courtroom. The closest attention
was accorded him. but il was soon
evident that the press forecast had
been an accurate one. and hence there
was less interest taken in the decision
than would have been the case had it
not already been discounted in the
newspapers.
How the Justices Stood.
Upon the question of the constitu-
tionalitv of the taxation of incomes
from state and municipal bonds the
court was unanimously in the mega
tive.
Upon the question of taxation of
rents the court stood as follows
Affirming the law Justices Harlan and
White.
Against the law-Chief Justice Fuller, JUS
tces Field Gray, Brewer, Brown and Shiras.
Upon the general question of the
constitutionality of the law, the court
is said 10 be divided as follows:
Harlan RraNN
Brown ana White.
Against the law-Chief Justice Fuller JUS
toes Field, Gray and Shiras.
synopsis of the Decision.
The conclusions of the court were
stated 10 be as follows:
l. That by the constitution federal taxation
IS divided into two great classes: Direct taxes
and duties, imports and excuses.
= That the imposition of direct taxes is
governed 10y the rule OF appOrtionment among
the several states, according 70 numbers. and
the imposition Of duties impOsts and excuses
by the rule OF uniformity throughout the
United States.
3 That the principle that taxation and rep
RESERVATION go together was intended 10 be
and was prescribed IN the constitution 10y the
establishment OF the rule OF apportlonment
among the several states, SO that such appor
tionment should be according TO numbers in
each state.
That the states surrendered their power
20 levy impoSts ana 20 regulate commerce 10
the general government ana gave ii the con-
current power TO levy direct taxes in reliance
on the protection afforded by the rules pre-
scriued, and that the COMPROMISES OF the con-
stitutiOn cannot be disturbed 10y legislative
action.
g. That these conclusions result from the
text OF the constitution, and are supported 10y
the historical evidence furnished by the cir
cuustances surrounding the framing and
adoption OF that instrument. and the views OF
those VINO framed and adopted il.
That the understanding and expectation
nt the time OF the adoption of the con-
stitutiou that direct taxes would
not be levied 10y the general govern
ment except under the pressure OF eX
traordinary exigency and such has been the
practice down TO August 10, 1894 II the power
TO 90 so Is To be exercised as an ordinary and
usual means OF supply. that fact furnishes an
additional reason for clrcum>pectiOn in dis
posing of the present case.
T. That taxes on real estate belong To the
Glass OF direct taxes. and that the taxes on the
rent or income OF real estate, which is the in
cident OF il ownership, belong TO the same
class.
& That 10y no previous decision Of this court
has this question been adjudlcatea to the con-
trary Of the conclusions now announced
That 80 much OF the act OF August Is, lsgi
III aLitIh plS 10 lil4pOSt "a thA upon the rent OF
income Of real estate without apportionnent
a. invalid
The court is further OF opinion that the act
OF August l5 1894 is Invalid so far as il at
tempts TO levy Ia tax upon the income
derived from municipal bonds. AS mu-
nicipal corporation is the representative OF the
state and one Of the Observation-Disclosures OF the
state government the property and revenues
OF municipal corporations are not the subjects
Of federal taxation, nor Is the income
derived from state, county and munici pal
securities. since taxation on the interest
thereirom operates on the power TO borrow
before II is exercised and has "A sensible nfiu-
cnce on the contract. and therefore such "A tax
f. "a taXSn the power OF the states and their
instrumentahties TO borrow money, and conse-
Quently repugnant TO the constitution
Justices Are Divided In Opinion.
Upon each of the other questions argued at
the bar, to-wit: /. Whether the void provi-
sious TO rents and income from real estate
invalidates the whole act: 2 Whether rs TO
the income Of the personal property a. such, the
act j. unconstitutiona. as laying direct taxes:
Whether any part OF the tax, IL not con-
sidereG as Il direct tax. Is invalid for want OF
uniformity on either OF the grounds suggested:
the justices who heard the argument are
equally divided and therefore, no opinion is
expressed.
The result is that the decree OF the circuit
court - reversed ana the cause remanded with
directions TO enter u decree in favor OF com
plainant in respect only Of the voluntary pay
ment OF the TAX on the rents ana income OF its
reaI estate and that which IL holds in trust.
ono the income from the municipal bonds
owned or 80 held DS-1r
The Line at Argument.
Tne power to decide law unconstitutional,
tie chef justice said. was used with reluc-
tance. but the responsibility could not be
evaoed when the necessity arose The con-
tentions respecting this law were
!. That "a TAX on rents was tax on real es-
tate, ana that not beng laid according TO APP
pCrtionment IL was invalid
That i; was not uniform and violation
Of the constitutional requirements that such
taxes snail be laid with uniformity. Under
this herd came the exceptions in favor OF those
persons who were not in possession OF
an income Of $1,000; Of mutual insurance
COMPANIES. savings banks and partnerships
all organized for and doing the same business
ns that Of corporations authorized by the
states. These exceptions, IL was held, were
arbitrary and capricious, and not based upon
sound public policy
3 That incomes from Investments in state
and municipal bonds could no: be taxed
Taxation. Direct and Indirect.
The chief justice proceeded To a considera-
ton Of the constitutional requirements with
respect TO the imposition of taxation. direct
md indirect, and said that the trainers OF the