Warren sheaf., 1895-04-11
VITALITY CHANGED. C!!:!.Hl3[:A!
ff.The moo ore Tax Law Suffers In
{ II tha Supreme Court.
EE1t !. Sid rhat the Coming Decision E1-
e." emrpts Iaiidlords- Bondholders
from Payment on Rents and
Interest In Securities.

G.1t 10 SSid Thnt the ComNS Declsion f1-
e." empts Eandlords- aid Bondholders
from Payment on Rents and
Interest In Securities.
CHICAGO, April 6,-The- Tribune this
morning publishes Washington spe-
cial over five<columns in length giving
!! what purports to be All authentic out
t1ine IT tic coming supreme Court de-
cision with reference to the income tax
Elaw;,.=and theae Bates of thez3HStfees in
the case. Tie special says: ss Il
| l. :E.1aa:i Il aa*:i .=1Rends the Law. s+ 4: ~,.r,
THE United States supreme court has shot
the income tax law full OF holes. The de-
l-cision has been completed and put into type,
and only awaits formal ratficathoRsat 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 a whole is upheld, but only byla
divided court.
1.-Two important portions OF the law, how
ever have been decided tobe nnconst titutional,
] and they are so serious 10 affect materially
! not, ,on1yzthe revenues of'Athe government. but
the estimation in which the income tax will be
held by the people.
+ s j r.; The Important Changes.
Under the decision to be handed down by
the court, probably next Monday, but possibly
| later all incomes. derived from rents are
I exempted from taxation by the federal gov
ernment and all incomes derived from state
and municipal bonds are similarly tex-
empted. In other respects the income Stax
| 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 it comes up.
( 1T Is u curious fact but none the less true,
! that the law which was passed at the dictation
of the populistic wing OF democratic con-
! gress has been distorted by the decision Of
1 the United States supreme court clearly sh
| constitutional srounds1in such way that 1t
I Enthusiastically protect the class OF capitalists
| most offensive to the populistic element.
! Landlords and I;ondhoiders Exempt.
| Tho landlords OF the country Will pay no
| income tax. The owners OF bonds OF almost
! any kind; either federal, state, county OR
| municipal, wilEalso:be free while the business
| man, the manufacturer and the Salarieu en-
ploye will, for the present, at least, be COM
PEELED to contribute to the treasury OF the
| United States government per cent. Of all in
| comes in excess OF 81. .OU0 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
I country Will hardly care to see the large capi
tallsts and trust companies absolutely pro-
teetedA the poor men" comparatively
speaking. 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 lrl,the balance for two weeks and
H noW will @be+sconstrued3 rs constitutionaa
statute only because the supreme court.of thb
| United States, while upsetting two portions OF
the law, is evenly divided on the general
t principle OF the constitutionality Of the whole
.EenaGtments :; --.-.-.... ,s1-
!. EEisiIed AS to ConstitutlonaIity.
| when the first vote was taken as to the
| general principle Of the constitutionGlity OF a
law Of congress. ia king inc eomes, it found
| that the court was 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
| Brew or were opposed TO the la in toto. They
| believed it was unconstitutional Is passed by
congress. and that.it was direct tax which
| according to the constitution must be leyied
among the states according to the population
as returned by the census. 80.
| "JuStices Harlan, Brown, ShiraS and White
voted to sustain the law as Whole. They be
lieved and supported their opinions by Il con-
vincing argument that while particular pOr-
tions 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.
| ''On this proposition as TO the constitution
ality OF the law in so far as it related te rents
| derives. from real estate the chief justice anu
| Judges Field, Gray ANA Brewer. who believed
the whole law was unconstitutional, voted
i With Justice Brown. thus deciding this par
tiru!ar portion OF the law unconstitutional by
| a vote OF TO 3 This was the 1irSt and most
serious break for the entire income tax law. .
J. The question then came up,-of course, ,Tas tC
+ Iwhether the ruling out OF incomes derived from
rents would make the Whole lusr llnoonstiiu
! tiona On this point Justice Brown promptly
| deserted his four allleS--and the court was
again evenly divided They: had decided the
| tax on rents Unconstitutional but the question
! OF whether that invuldated the whole law OF
not m,ts7s,ilfsss far troinset tt1einent as eSer.
! :s'fne break came finally from the place
! where it was least expec ted Chief Justice
] Fuller who believed that the Whole law yes
I bgd and u direct-violation ottheconsti nal
] Limitation upon the POKER oiEcong ress I'd levy
! taxes was persuadeui finally sthat3 rent
cuu In be Kemp 4 from alton y'the c0ur,
without interfering with the constitutionality
! OF the statute as,a whole. leaving that to be
4 affirmed by. the doubtful process OF divided
! court The deadlock was broken to certain
. extent by this proceeding and the court was
| the law, leaving the remainder Of the income
| tax to be practically affirmed. because di-
| vided court can neither affirm nor reverse the
| decision OF the court below, which accordingly
| stands
| ~ Field Sternly Against tho Law.
/ 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.
| sultations in the most vigorous and able
! manner. 1t IS entirely probable that he will
write and submit a strong dissenting opinion
holding that the law IS uncoastitutlonal:in It
t self and limiting at the. compromises which has
been reached by which hcertan classes. Of cap.
! isnlists will be unduly favored While Others
fswNi have to pay the tax. .:. NJ =:
r ~: - 1.-THE Opinion. r cs-=:i s:y
IS-,:"1he opinion Of the court, SONAR as II was
| agreed upon, turned over TO the cKte1
Justice, and he. Ia bored on it for four days sc
| 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-
4 lowin the cases Of sCharles Pollock against
+ the Farmers Loan and Trust company, 'oi
Louis H. Hyde against the Continental
Trust company, and OF John G. Moore
against the commissioner OF internal
I revenue, is reversed, and then goes on to
state that the trust companies are re-
strained from paying any income tax on reve-
nues received from the rents Of real estate OF
from interest paid on state and municipal
bonds of all descriptions, The-fac is also
stated that the supreme court is evenly divided
| on the question Of the constitutionahtE OF, the
+ income tax, and hence that that portion of the
! decision of the court below, is, neither affirmed
nor revetsed:., ~f' ! -! : -
The expectation among members OF the
| court Is that the decision will be rendered
Monday in open court, but the justices have
been so evenly divided ever since the argu.
ments were concluded that the decision as Ii
now stands is so much matter Of compro.
mise and patchwork that there is bare posi-.
bility that at the final gathering to-day the
court may again split up into Irreconcilable
sections and hold up the decision until they
are able to come together again.
| Entire, Law May BE Declared Void.
The situation in the: supreme court4is evi.
IDENTIFY such that new suits will be Instituted
based on particular issues, and If these ale
pressed with SUFFICIENT vgor 1t is quite likely
that the law may be knocked TO pieces para
graph by paragraph. The*dectsiont just writ.
| ten by Chief justice Fuller while essentially