The Providence news. (Providence [R.I.]) 1891-1906, 1895-04-09
COURT DIVIDED.
Decision in Income Tax Cases
After Consideration.
Law in General is Valid But Parts Of
II Are Unconstitutional.
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month OF deiiberation tho United States
supreme court rendered It's decision yes
terday I'm the income tax cases, deciding
by divided court the law to be valid, ex-
cept as regards the incomes derived from
rents and from municipal bonds, on which
points tho decision was that the tax was
unconstitutional.
There was only one member OF the
bench absent-Justice Jackson, who has
not been able TO be in attendance upon
the court since last fall. and who has not
participated in the consideration Of the
ease In any way.
The judges filed In promptly at high
noon, ana there WAS very little prelimi-
nary work before the chief justice began the
delivery Of the opinion, which consumed
an hours time.
Mr.. Fuller began with brief reference
60 the question Of jurisdiction In the case.
This point had, he said, been frequently
referred to, but he dismissed it by saying
that as the question had not hoen raised
in the court below and had been waived
In the argument of the case In the supreme
court there appeared no objection to con-
siderlng the case purely on It's merits.
Proceeding to this end, he gave his at
tention TO the objections TO the law as
made by the appellant quoting the prin-
cipal ones as follows:
The Exceptions.
I. That the act imposes direct tax in re-
spect to real estate, rents, issues and profits as
well as of tho income and PROFITS Of personal
property and, not being apportioned, is in vio-
lation of section of article OF the constitu-
ton.
2. That the law IL not imposing direct tax,
is nevertheless unconstitutional in that its pro-
visions are not uniform throughout the United
States and do not operate with the same force
and effect upon the subject Of the tax wherever
found, and in that IL provides exemptions in
favorAUf individuals and oopartnerships while
denying all exemptions to corporations having
similar income derived from like property and
values, and provides for other exemptions and
inequalities in violations OF section OF article
/ of the constitution.
Q. That the act provides no exemption OF the
tax upon incomes derived from the stock and
bonds Of states Of the United States and coun-
ties and municipalities therein, which stocks
and bonds are not proper subjects for the tax
ing power of congress- The income from these
securities in the United States amounts to
over $65,0000 900 per annuin, on which the total
annual income tax wonld be 81 100000.
The body Of the opinion was devoted tn
the consideration Of the question from q
constitutional point Of view. The chief
Justice said that under the constitution
federal taxes were divided into direct
taxes, and duties imposts and excises,
and laid down the rule that direct taxes
should, under that instrument. be gov
erned by the rule OF apportionment among
the several states, according to population.
Referring to the question of direct taxa
tion, he said that the trainers OF the con-
stitution had before them more promi-
nently than any other thought the idea
that taxation and representation should
20 hand in hand. In support of that
idea, the just revolutionary struggle had
been made, and 1t had surely not been the
intention of the convention that q state
of affairs should arise which would make
it possible for any one of the states to COM
bine for the purpose Of extorting taxes
from other states.
Another Important Point.
Furthermore, the chief justice contin-
ued, the cons titution was the result Of q
compromise between the states and the
federal government whereby the states
surrendered the right of levylng imposts,
duties and excises, but 1t was evident they
did not mean to transfer to the general
government the right to levy direct taxes
except in cases Of great emergency, This
compact, the chief justice said, had been
observed up to the time Of the passage of
the act of August, 1894
The chief justice devoted O considerable
part of the opinion to tho especial con-
sideration Of taxation Of increases derived
from rents, and held that In taxing the in
come derived from land, 1t virtually and
to all intents and purposes taxed the land
ITSELF for, no asked. what was the land to
anyone but for the profit derived from its
He failed TO SEQ any distinction between a
- H.. a. n
rived from it, and no one had gone so far
as to contend that q tax on land would
not be direct tax.
Tho name Of the tax was unimportant,
but the effect was OF vast consequence,
and as there could be neither distinction
or material difference between taxing the
land and the profit derived from it, the
court had reached the opinion that this
portion Of the law was invalid and could
not be sustained.
The same conclusion was reached i'm re-
gard to the provision for taxing state,
county and municipal bonds. He said In
effect that 1t was clearly never intended
by the states to delegate authority to the
national congress TO weaken their credit
by providing tax upon their instru-
mentalities and revenue agencies. Power
TO tax these agencies must OF necessity
imply the exercise of an influence upon a
contract before 10 was made. Such an ex-
ercise of power was repugnant to the con-
stitution. and therefore the portion Of the
law putting it into exaction must also be
declared invalid.
On the other points involved. the opin-
ion did not venture, because of the even
division of the court.
The chief justice was not prepared to
give out the full text Of the decision, but
furnished tho following summary Of the
concluding portion to the press:
Substance of the Decision.
l. That by tho constitution federal taxation
ls divided into two great Glasses; direct taxes
and duties imposts aud excises.
2 That the imposition Of direct taxes is
governed by the rule OF apportionmont among
the several states, according 10 numbers, and
the imposition of duties, impost and excuses by
rule of uniformity throughout tho United
States.