The record-union., 1895-05-08
ALI the Argument Before the Su.
preme Court Completed
EXCEPT THAT OF CHOATE FOR THE
APPELLANTS
and the Courtroom Crowded With
Vfsitors-Messrs. Whitney and Ol-
ney Uphold the Validity of the Law,
as Passed by Congress.
Special to the REcoRD-UNIoN.

Special to the RECoRD-UNIoN.
WASHINGTON, May The second
days rehesring of the income tax cases
in the Supreme Court began with Assist
ant Attorney General Whitney in the
midst of his argument for the reversal of
the former opinion of the court upon the
question of the validity of the Federal tax
on incomes derived from rents. All the
neats on the bench were again occupied
to-day, as yesterday, and visitors crowded
the courtroom.
Mr.. Whitney said that his historical
brief. which he had promised yesterday,
had not reached him from the printer,
but he had already gone as far into the
question as he should, in quoting Eng
lish precedents orally and giving facts as
TO the meaning of various works and
phrases used in taxation.
He said his statement of facts would be
his principal argument, and he believed
that in case of the character of the in
come tax facts were the best argument
that could be made. He claimed the
weight of evidence 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, specific real property tax and 6
specific income tax were each duty
within the meaning of the Constitution.
A general tax on all personal properly at
valuation was mol a duty, an lmpoSC or
an 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
80 called, was unknown at the time OF
the adoption of the Constitution, but was
duty within its meaning.
Fifth-A specific personal property or
specific income tax was duty, and not d
direct tax.
Taking up the American system Of tax
alton at the time of the revolution, Mr.
Whitney said it was devoid of uniform
ity, and very difficult of classification.
1t could only be shown thoroughly by
going through the statutes of the thir-
teen States. as he had gone through those
of Great Britain. He quoted frequently
from the report of Secretary OF the Treas
ury Wolcolt, made in 1876, in which that
official states that the system was entirely
different in various States. and some OF
the States were almost without any form
stance, lands were taxed uniformly, in
South Carolina by districts and in Nir-
ginia by classification OF counties. he
directed special mention to Walcotts re-
port, 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 econ
Omists.
He said there had been no income tax
in any of the States prior to the conven-
ton, unless it was in Delaware, and con-
cerning 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 valuation.
Summing 1t up, be SAID, the main re-
suit 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 1t 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 O.
tax imposed on land nor on rents, be-
cause they are not derived from land but
on property of all kinds, accruing TO the
owner within the year irrespective of its
source. In the question OF uniformity,
not been given in the original hearing,
but he repeated some OF these. for the
purpose, he said, of setting the opposi-
ton 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 concernal, 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 business; yet
corporations paid salaries to their officers
for managing their 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 declare that Congress
had in any case exercised its discretion
in any manner unreasonable, and estim-
ated it never would go to that length. 1t
appeared to be the under-current OF Mr..
Whitney's remarks that the Govern
ment did not contend that the ex-
emptions of certain classes of corpor-
ations were just. He referred to author
tiles, however, to show that the Supreme
Court had held that individual cor
porations might be exempted by name
even from taxation.
Mr.. Whitney finished at 2:20 with q
eral 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
argument. l realize at the same time
that it 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 important, but
which, SO far as the Government is
concerned, has thus far been practically
untouched.
The present posture of the case 1 con-
ceive to be this: The contention of the
government at the former hearing was
that the validity of the general income
tax law could not now be drawn into
question, being conclusively settled by
repeated adjudications of this court, as
well as by the uniform and long con-
tinued practice OF the other departments
of the Government. The contention has
been sustained. though by an equally di-
vided court, with two exceptions. One
relates to the income of State and muni-
cipal securities, and presents a question
which do not ask to be reheard at this
time. The other relates to rents on real
estate, in respect OF which the position of
the court is that they are not embraced
within the high scope of previous de-
cisions. This conclusion is one of which
/ am unable to feel the force or appreciate
the justice. and as the question is of inl-
mense importance to the Government,
politically and pecuniarily, 1 shall con-
sume a few moments in respectfully urg-
ing its reconsideration.
ut is important to bear in mind the
precise question. It is not whether there
may not be q tax or rents, which must
not be deemed to be a tax on the land
producing them; 1t is not whether a land
tax measured by rents or rented value
may not be the most efficient and most
scientific method of taxing land. The
question is. does this income tax law cre-