The Providence news. (Providence [R.I.]) 1891-1906, 1895-04-08
Action of Supreme Court on
Income Tax.
Decision Rendered Today by Chief
Justice Fuller.
Law Unconstitutional so Far as In
come From Rents and Bonds Goes.

WASHINGTON, April S.-The anxiously
awaited decision of the United States Su-
preme Court on the income tax was rem
dered today by Chief Justice Fuller.
The court knocked out the law
SO far as IL applies to the income derived
from rents, and also from State, county
and municipal bonds. BY tie vote Of
the court, the law was sustained in other
respects.
The courts conclusions are as follows:
(Charles Pollock vs.. the Farmers Loan
and Trust Company)-It is established:
i. That by the constitution federal
taxation Is divided INTO two great classes; (;
direct taxes and duties, imports and ex
cises.
2. That the imposition OF direct tax is
governed by the rule of apnortionment
among the several States according to
number, and the imposition of duties,
imports and excises, by the rule Of uni
formity throughout the United States.
3. That the special taxation and repre-
sentation TO either was intended to be and
was preserved in the constitution by the
establishment OF the rule OF apportion-
ment among the several States, that such
apportionment should be according to the
numbers in each State.
4. That the States surrendered their
power to levy imports aud to regulate
commerce to the general govern
ment and gave 1T the con-
current power to levy direct taxes
in reliance on the protection afforded by
the rules prescribed and that the compro-
mises of the constitution cannot be dis
turbed by legislative action.
B. That these conclusions result from
the text Of the constitution, and are sup
ported by the historical evidence fur
nished by the circumstances surrounding
the framing and adoption OF that instru-
ment, and the views OF those W no framed
and adopted IL.
@. That the understanding and expec-
tation at the time OF the adoption of the
constitution was that direct tax would
not be levied by the general government,
except under the pressure of
extraordinary exigency and such
had been the practice down to August Is,
1894. IL this power to do SO is to be exer-
cised as an ordinary and usual means of
supply, that fact furnishes an additional
reason for circumspection in disposing Of
the present case.
Z. That the tax on real estate belongs
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,
belong to the same class.
8. That by no previous decision of this
court has this question been adjudicated
to the contrary of the convictions now
announced.
8. That go much OF the act of August
10, 1914, as attempts 10 impose tax upon
the rent or income OF real estate
without pportionment, is in
valid. The court is further Of
opinion that the act of Aug. 10, 1894, is in-
valid so far as ii attempts tax upon
the income derived from muni-
cipal bonds. As q mucipal
corporation is the representa-
tive of the State and \ one of the in
struments OF the State government in
the proportion of the municipal corpora
tion are not the subjects OF Federal
taxation, nor is the income levied from
county and municipal! corporations
are not the subjects OF fede-
raj taxation, nor is the in
come derived from State, county
and municipal taxation securities, since
taxation on the interest therefrom
operates on the power to borrow before it
is exercised and has sensible force
on the contract, and therefore
influence on the contract and therefore
such tax is tax on the power of ftheStates
and their instrumentalities to borrow
money, and consequently repugnant to the
constitution. Upon each OF the other
questions argued the bar, to wit:
First--W her the provens as to rents
and to incomes from real estate invalid
ates the whole act.
from personal property as such the act is
unconstitutional taxes.
Third-Whethera any part Of the tax, il
Continued on Page 81