Evening star. [volume] (Washington, D.C.) 1854-1972, 1895-04-08
DECIDED TODAY
Judgment Of the Supreme Court on
the Income Tax Case.
OPINION READ BY TEE CHIEF JUSTICE
Parts of the Law Declared to Be
Unconstitutional.
T HE REST USTAINED

THE RE ST STAINED
The anxiously awaited decision Of the
| United States Supreme Court in the income
! tax case was rendered today byChief Justice
Fuller. The court knocked out the law 20
| far as 1t taxed incomes derived from rents
and also from state. county and municipal
bonds. BY tie vote of the court the law
Is sustained in other respects. The courts
| opinion was as follows:
In Charles Pollock agt the Farmers
Loan and Trust Company ct al, 1t is estab.
| lished:
Il. That by the Constitution, federal tax,
| alton Is divided into two great classes-dis
| rect taxes and duties, imposts and excises
| y That the imposition Of direct taxes n
| governed by the rule Of apportionment
among the several states. according to
numbers. and the imposition of duties. I'M.
posts and excises by the rule Of uniformity
| throughout the United States.
| %. That the principle that taxation and
representation go together was intended to
| be and was preserved in the Constitution
| by the establishment Of the rule of appor-
| uonment among the several states, SO that
such apportionment should be according to
numbers in each state
| a. That the states surrendered their
power to levy imposts and to regulate
commerce to the general government and
| gave 1t the concurrent power to levy direct
taxes in reliance on the protection afforded
by the rules prescribed. and that the COM
| promises of the Constitution cannot be dis
turbed by legislative action.
| ''5. That these conclusions result from
the text Of the Constitution, and are sup.
ported by the historical evidence furnished
by the circumstances surrounding thS
framing and adoption of that instrument,
| and the views of those who framed and
| adopted 1t.
| &c, That the understanding and expecta-
tion at the time of the adoption Of the
Constitution was that direct taxes would
not be levied by the general government
except under the pressure of extraordinary
| exigency. and such has been the practice
| down to August Is, 1894. If the power to
do so is to be exercised as an ordinary and
usual means of supply, that fact furnishes
| an additional reason for circumspection In
disposing of the present case.
20. That taxes real estate belong to
the class of direct taxes and that the
taxes on the rent or income of real estate,
which Is the incident Of its ownership, be-
| long to the same class.
|
| court has this question been adjudicated
| to the contrary of the conclusions now an.
| nounced.
80. That so much Of the act of August
15,1S94. as attempts to impose a tax upon
the rent or income of real estate without
| apportionment is invalid.
Portions Declared Invalid.
''The court is further of opinion that the
| act of August II, 1894, is Invalid, so far as
1t attempts to levy a tax upon the income
derived from municipal bonds. As a mu.
| uicipal corporation is the representative Of
the state and one OF the instrumeutalities
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 mlI,
nicipal securities, since taxation on the In.
terest therefrom operates on the power to
borrow before 1t Is exercised and has q
sensible influence OH the contract and.
therefore, such a tax is tax On the power
of the states and their instrumentalities to
borrow money, and consequently repugnant
to the Constitution.
Upon each of the other questions argued
at the bar, to wit: /. Whether the void
provisions as to rents and income from real
estate invalidates the whole act? 2
Whether as to the income from personal
property as such the act is unconstitu-
tional laying direct taxes? B. Whether
any part Of the tax, If not considered as
a direct tax, is invalid for want of uni.
fornlity on either of the grounds suggest,
ed?--the justices who heard the argument
are equally divided, and, therefore, no
opinion is expressed.
THE result is that the decree of the cir.
cult court is reversed and the cause re.
manded with directions 10 enter a decree
in favor of complainant in respect only Of
the voluntary payment of the tax on the
rents and income of its real estate and that
which it holds in trust, and on the income
from the municipal bonds owned or SO held
by it
Close Attention Paid the Reading.
The reading of the opinion and the 'rea-
sons upon which it is based occupied nearly
one hour and received the closest attention
from the large audience which crowded the
court room. A full bench was present.
with the exception OF, Mr.. Justice Jackson
who is i'll at his home in Tennessee.
Attorney Gen ,ral Olney and Solicitor
General Whitney were attentive listeners
to the reading of the opinion. and Senators
Hill. Lodge and Hunton- ex-ht.orney Cen
eral Garland, ex-SecretaS~ .soss-su and
ex-Representative Syringe 49, soaong the
court.
Exceptions Taken BY COanseL
Chief Justice Fuller began b. EsAsfnG the
exceptions to the law made b. counsel for
the appellant as follows:
Q.-That the act imposes direct tax IN
respect of the real estate, rents. issues and
profits, as well as of the income and profits
of personal property, and, not being ap-
portioned, is in violation of section OF
article 1 of the Constitution.
(2.-That the law, If not imposing a di-
rect tax, is, nevertheless, unconstitutional
in that its provisions are not uniform
throughout the United States and do not
operate with thebsame force and effect
upon the subject CT the tax wherever
found, and in that 1t provides exemptions
in favor of individuals and co-partnerships
while denying all exemptions to corpora
tions having similar income derived from
like property and values and provides for
other exemptions and Inequalities in viola.
ton of section of article l Of the Constt.
tuition.
8. That the act provides no exemption Of
tho tax upon incomes derived from the