Morris tribune. [volume] (Morris, Minn.) 1880-2000, 1895-04-10
VITALITY CHANGED.
The Income Tax Law Suffers in
the Supreme Court.

1t rs Said That the Coming Decision FIX
empts Landlords and Bondholders
from Payment on Rents and
Ineerest In Securities.
CHICAGO, April 6.-The Tribune this
morning publishes Washington spe-
cial over five columns in length giving
what purports to be an authentic out
line of the coming supreme court de-
cision with reference to the income tax
law, and the debates of the justices in
the case. The special says:
Rends tho Law.
1.-The United States supreme court has shot
the income tax law full OF holes. The de-
cision has been completed and put into type
and ,only awaits formal ratification at the con-
sultation to be held at noon to-day. The de-
.cision of the lower court Is reversed, but the
income tax as whole is upheld, but only by
divided court.
1.-TWO important portions OF the law, how
ever have been decided to be unconstitutional,
and they are so serious as to affect materially
not only the revenues Of the government. but
the estimation in which the income tax will be
held by the people.
The Important Changes
'Under the decision to DO handed down by
the court, probably next Monday. but possibly
later, all incomes derived from rents are
exempted from taxation by the federal gov
eminent and all incomes derived from state
and municipal bonds are similarly ex-
empted. In other respects the income tax
law stands as it was passed last August. but
the result of the consultations in the supreme
court shows very conclusively that the law
can easily be picked to pieces piecemeal, pro-
vided suits are brought to contest each par
ticular point as 1t comes up. &
Ia a curiOuS fact. none the less true.
that the law which was passed at the dictation
of the populistic wing OF democratic con-
eress has been distorted by the decision OF
the United States supreme court clearly on
constitutional grounds in such way that 1t
will absolutely protect the class OF capitalists
most offensive to the populistic element.
Landlords and Bondholders Exempt.
1.-THE landlords OF the country will pay no
income tax. The owners OF bonds of almost
any kind, either federal, state county
municipal, will also be free, while the business
man, the manufacturer and the salaricd en-
ploye will, for the present, at least be COM
PEELED to contribute to the treasury of the
United States government per cent. of oil in
comes in excess of $4,000 per annum.
The holes made in the income tax law are
so fatal as to necessitate either its repeal or
its material amendment as the people of the
country will hardly care to see the large CAPT
talists and trust companies absolutely pro-
tected while the poor men, comparatively
speaking, are forced to contribute to run the
national government
The entire income tax law as passed by
both houses OF congress and approved by the
president Of the United States has been
trembling In the balance for two weeks and
now will be construed as constitutional
statute only because the supreme court Of the
United States while upsetting two portions of
the law, is evenly divided on the general
principle of the cons titutionality OF the whole
enactment 4.s
Divided as to- Constitutionality.
when the first vote was taken as to the
general principle of the constitutionality of
law of congress taxing incomes, it was found
that the court evenly divided. Only
eight justices heard the arguments, Mr.. JUS
tice Jackson being too i'll to appear In court.
The vote disclosed the fact that Chief
Justice Fuller and Justices Field, Gray and
Brewer were opposed to the law in toto. They
believed 1t was unconstitutional as passed by
congress, and that it was direct tax which
according to the constitution must be levied
among the states according to the population
as returned by the census.
Justices Harlan, Brown, Shiras and White
voted to sustain the law as whole. They be-
heved and supported their opinions by con-
yincing argument that while particular por-
lions of the law were clearly unconstitutional,
the general effect OF an income tax could not
be considered as opposed to the principles laid
down in the constitution
Decided by Five to Three.
ION this proposition as to the constitution
atty of the law in so far as it related to rents
derived from real estate the chief justice and
judges Field, Gray and Brewer, who believed
the whole law was unconstitutional. voted
with Justice Brown, thus deciding this par
ticular portion Of the law unconstitutional by
q vote of s to3 This was the first and most
serious break for the entire income tax law.
The question then came up. of course, as to
whether the ruling out of incomes derived from
rents would make the whole law unconstitu-
tional. On this point Justice Brown promptly
deserted his four allies and the court was
again evenly divided They had decided the
tax on rents unconstitutional, but the question
of whether that invalidated the whole law or
not was still as far from settlement as ever
The break came finally from the place
where it least expec ted Chief Justice
Fuller, who believed that the whole law was
bad and direct violation of the constitutional
limitation upon the power of congress to levy |
taxes, was persuaded finally that rents
could be exempted from taxation by the court
without interfering with the constitutionality |
OF the statute as whole, leaving that to be |
affirmed by the doubtful process of divided /,
court. The deadlock was broken to a certain
extent by this proceeding and the court was
thus enabled to upset two important parts of
the law leaving the remainder Of the income |
tax to be practically affirmed. because di- |
v!ded court can neither affirm nor reverse the !
decision Of the court below, which accordingly |
stands
Field Sternly Against the Law.
1.-THE most vigorous opponent of the law |
throughout was Mr. Justice Field, who would |
consent to no compromise: who believed the |
law unconstitutional from beginning to end, |
and who supported his opinions in all the con- |
situations in the most vigorous and able |
manner. It is entirely probable that ne will |
write and submit a strong dissenting opinion, |
holding that the law is unconstitutional in it |
self and limiting at the compromise which has |
been reached by which certain classes Of cap
italists will be unduly favored while others !
will have to pay the tax.
The Opinion.
1.-THE opinion of the court, so far as IL was !
agreed upon, was turned over to the chief |
Justice, and he labored on it for four days so |
far as can be learned, putting aside all other (
business and endeavoring to make decision |
which would be satisfactory to the conflicting |
elements in the court. The opinion states |
specifically that the decision of the court be- +
low in the cases of Charles Pollock against |
the Farmers Loan and Trust company, of I
r II Ex,ln tho nfo1