The Washburn leader., 1895-04-13
INCOME TAX CASE
DECISION RENDERED. HY THE U. S.
SUPREME COURT.
The Court knocks Out the I.nv So
Far Rs 1t Taxed Inco.icS De-
rived From Rc nts, and Also
From State, County and
Municipal Bonds.
THE REST OF THE LAW IS o.. X.
The Court So Decides by IL Tic Vote
Dissenting Opinions
Read.
THE REST OF THE LAW IS o. X.

First-That by the constitution fed
erll taxation is divided into two great
classes-direct taxes and duties, i'm
ports and excuses.
Second - The imposition of direct
taxes is governed by the rule of ap-
portionment among the several states,
according to numbers and the imposi-
tion Of duties, imposts and excuses by
the rule of uniformity throughout the
United States.
Third-That the principle that tax
alton and representation together was
Intended to be and was preserved in
the constitution by the establishment
of the rule of apportionment among
the several states, so that such appor-
tiOnment should be according to num-
bers in each state.
Fourth-That the states surrendered
their power to levy imposts and to
regulate commerce to the general gov
ernment and gave it the concurrent
power to levy direct taxes in reliance
on the protection afforded by the rules
prescribed, and that the compromises
of the constitution cannot be disturbed
by legislative action.
Fifth-That these conclusions result
from the text of the constitution, and
are supported by the historical evi-
dence furnished by the circumstances,
surrounding and framing and adop-
tiOn of that instrument and the views
of those who framed and adopted it.
SiXtE-that the understanding and
expectation at the time of the adop-
tion of the constitution was that di-
rect taxes would not be levied upon
the general government, except under
the pressure of extraordinary exi-
gency. and such has been the practice
down to Aug. Is, 1894. If the power
to do so is to be exercised as an ordi-
nary and usual means of supply, that
fact furnishes an additional reason
for circumSpectiOn in disposing Of the
present case.
Seventh-That taxes on real estate
belong to the class OF direct taxes,
and that the taxes on the rent or in
come of real estate, which is the in
cident Of it's ownership, belong to- the
same class.
Eighth-That by no previous decis-
ion OF this court has this question been
adjudicated to the contrary of the
conclusions now announced.
NiDth-That so much of the act of
Aug. Is, 1894, as attempts to impose
Il tax upon the rent or income Of real
estate without apportionment is in
valid.
Some Bonds Ex cmpt.
The court is further of the opinion
that the act of Aug. Is, 1894, is invalid
so far as it attempts to levy q tax
upor the income derived from mu-
Dicipal bonds. AS IL municipal .or-
poration is the representative Of the
state and one of the instrumcptalities
of the state government, thu property
and revenues OF municipal corpora
tions are not subjects of federal tax
alton, nor is the income derived from
state, county and municipal securities,
since taxation on the interest there
from operates on the power to bor-
row before it is exercised and has a
sensible influence on the contract,
and, therefore, such a tax is a tax on
the power of the states and their in
strumentalities to borrow money, and
consequently repugnant to the con-
stitutiOn.
Upon each of the other petitions ar
gued at bar, to wit: First, whether
the void provisions as to rents and in
comes from real estate invalidates the
whole act; second. whether as to the
income from personal property as
such, the act is unconstitutional, as
laying direct taxes; third, whether any
part of the tax if not considered as q
direct tax, is invalid for want of uni
forlnity on either of the grounds sug-
gested, the justices who heard the
arguments are equally divided and,
therefore, no opinion is expressed.
The result is that the decree of the
circuit court is reversed, and the case
remanded with directions to enter q
decree in favor of complainant in re-
spect only of the voluntary payment
Of the tax on rents and incomes of its
real estate, and that which it holds in
trust, and on the income from munich
pal bonds owned or SO held by it.
The announcement of the foregoing
conclusions Of the court was preceded
by review of many opinions Of the
supreme court from the time of Chief
Justice Marshall down to the celebrat-
ed Springer case, brought by ex-Rep-
resentative Springer Of Illinois, and
by an exhaustive review of the nature
of the direct and indirect taxation In
the course of which the chief Justice
reviewed the debates .eading up to
the framing OF the federal constitu-
ton. In conclusion the chief Justice
stated that his opinion upon the Pol
lock case covered the two other cases.
The delivery of the opinion con-
sumed just one hour. The chief JUS
tice was followed by Justice Field,
who read the first dissenting opinion,
speaking in low tone that contrasted
noticeably with the loud delivery Of
the chief justice.
Applies to Three Cases.
The decision applies to three cases,
the first of which was brought into
courts of the District of Columbia by
John G. Moore, to enjoin the commits
sioner of internal revenue from the
collection Of the income tax. while the
two others were those of Charles Pol
lock versus The Farmers Loan and
Trust Company, and Lewis H. Hyde
versus The Continental Trust Com
pany. Doth appealed from the decis-