The Yale expositor., 1895-04-12
AGAINST INCOME TAX.
FEDERAL SUPREME COURT
GIVES ITS DECISION.
Two Sections of the Law Upset-Rents
from Lands Exempt-AIso Incomes
from State, County and Municipal
Bonds-Justlce Field Dlssents.

Fuller this morning announced the de-
cislon of the United States supreme
court in the income tax cases. He be-
gan by stating the exceptions to the
law as made by counsel for the appel
liant as follows:
L. That the act imposes a 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 apportioned is in violation of sec
ton of article l Of the constitution.
2. That the law, If not imposing di-
rect tax, is nevertheless unconstitu-
tional in that its provisions 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. or in that ii provides
exemptions in favor of individuals and
copartnerships, while denying all ex-
emptlons to corporations having SINH
lar income derived from like property
and values. and provides for other eX-
emptions and inequalities in violation
Of section of article / of the constitu-
ton.
3. That the act provides no eXemp-
ton OF the tax upon incomes derived
from the stocks and bonds of states of
the United States, and counties and
municipalities therein, which stocks
and bonds are not proper subjects for
the taxing power of congress. The in
come from these securities in the United
States amounts to over S65, 900 per
annum, on which the total annual in
come tax would be $1,300,0 900.
He then took up the constitutional
points involved, dwelling upon the fact
that the constitution required the APP
portionment of direct taxes and uni
formity in excuses and imports. He
quoted various supreme court decisions
and sought to show that while the in
come tax question had been before the
court the question had only been con-
sidered as applying to the point at
issue in the particular cases. Coming
down to the present tariff act, he said
that the law was passed in time Of
profound peace and IL was to be taken
as evidence that congress had sought
in this matter to form a precedent and
establish a departure from established
lines. and 1t therefore became important
to inquire into the circumstances with
some attention TO detail, and, for the
purpose OF comparison, he went back
to the enactment of an income tax dur
ing the civil war. He quoted the de-
cision in the Springer case, giving a
history Of the case and devoting much
attention to ii, as he said IL was upon
this case that the defense had appar-
entity relied more generally than upon
any precedent.
1t is. nc said conceded in all the cases,
from Hylton to Springer. that taxes on
land are direct taxes, while in some of
them 1t is determined that taxes on
rents derived from lands are indirect
taxes. Was there, he asked, any dis
tinction between a tax on the land or
one on the income derived from the
land? What, in other words was the
land but the profit on It? The name of
the tax is unimportant and the court
has been unable to see any distinction.
He closed by saying that the court had
reached the conclusion that the tax on
rents was involved.
The chief justice then took up the
question of the taxation of municipal
and state bonds. The decision was also
adverse to this part Of the law as repug-
nant to the constitution. On the other
points the court was divided, and there
fore no opinion could be given.
The lower court having ruled in favor
of the law by divided court. the law
would stand, except as to rents and
state, county and municipal bonds, and
on these two points 1t was directed that
the judgment below be reversed.
The conclusions of the court are as
follows:
I'm Charles Pollock VS.. the Farmers
Loan e. Trust Co. ct al. it is established:
81. That by the constitution federal
taxation is divided into two great class
es: direct taxes and duties, imposts and
excuses.
"2. The imposition of the direct tax is
governed by the rule of apportionment
among the several states, according TO
imposition of duties, imposts and ex-
cises by the rule of uniformity through
out the United States.
''3. That the principle that taxation
and representation go together was in
tended to be and was preserved in the
constitution by the establishment of
the rule of apportionment among the
several states, so that such apportion-
ment 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 II the concurrent power to
levy direct taxes in reliance on the pro-
lection afforded by the rules prescribed,
and that the compromises of the con-
stitution cannot be disturbed by legsla-
tive action.
'5. That these conclusions result from
the text of the constitution and are sup
ported by the historical evidence fur
nished by the circumstances surround
ing the framing and adoption of that
instrument and the views of those who
framed and adopted It.
sc. That the understanding and ex-
pectation 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 10,
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.
80. The taxes on real estate belong
to the class of direct taxes, and that the
taxes on the rent or income Of real es-
tate, which is the incident of its owner
ship, belong to the same class.
IS. That by no previous decision OF
this court has this question been adj
Indicated TO the contrary of the concIu-