Abilene weekly reflector. [volume] (Abilene, Kan.) 1888-1935, 1895-04-11
THE INCOME TAX.
The Supreme Court Upholds a Part
Of the Law.
TIE TAXES on RENTS and BONDS


lar Nsde That Because These Two
Were Unlawful Did Not Invalid
ste tn Whole Law.
WARRINGTON. April s.-Ohief Justice Fuller
himself read the decision Of the United STATES
supreme court In the income tax cases yester'
DAY. 10 began BY stating the exceptions 70
tho law - made By counsel fof the appellant
- follows
L That the ~ imposes direct tax In re.
spect Of the resl estate. rents issues snd
pfonU q we'll o the income and profits OF per-
sonal property and not being apportioned is In
violation Of section article | Of the consti-
tuition
1 That the law, II not imposing direct ta1,
ID nevertheless unconstitutional In that ltS
provisions ere not uniform throughout the
Uplted States and DO not operate with the same
force end effect upon the subject OF the tax,
wherever found. or 10 that II provides cxemp-
tions IN favor Of individuals and co-partner-
ships while denying oil exemptions to corpora
tions having similar Income derived from
like property and values. and provides for
other exemptions and inequalities In violation
Of section . Of article Of the constitution.
4 That the ~ provides no exemption OF 'he
iAs upon incomes derived from the stocks and
bonds OF states Of the United states and coun-
ties and municipalities therein, which stocks
and bonds are not proper subjects for the tax
Ing power Of congress-. Tho income from these
securities In the United States amounts TO over
~ ,ooo,o 900 per annum, on which the total an
nual income tax would be u 100000
The chief justice then took up the constllu-
tional points involved. dwelling upon the
fact that the constitution required the appor-
tlonment Of direct taxes and uniformity In eS-
cises and imports. Flo also dwelt upon
tho question Of representation and taxation
which was, be said, foremost one when
the constitution was adopted. The question
Of the tax on rents was next discussed,
and In 20 doing the Issue Of direct taxes
O. considered Ut tho time Of the ram
linz Of the constitution was considered.
The trainers Of the constitution were, he
said, we'll versod In the government OF the col
onies and European countries and were wen
yersed In the literature Of tho period, including
works on political economy and well calcu-
lated TO pass intelligenty on this question
Coming down TO the present tarlr act the
chief Justice said that the law was passed IN u
time Of profound peace and II was TO DO taken
10 evidence that the congress had sought IN
this mstter 70 form precedent ind establish
departure from established lines, and II there
fore became important TO inquire into the cir
cumstances with some attention to detail
For the purpose Of comparison, he went back
70 the enactment Of an Income tax during the
civil wsr. lie quoted from tho decision In the
Springer case, giving history OF the case and
devoting much attention To II.
It was, the chief justice went on, conceded In
oil the cases from Hilton to Springer that taxes
on land were direct taxes, while In some Of
them II was determined that taxes on rents de-
rived from lands were indirect taxes Was
there, he asked. any distinction between q tax
on the land and on the income derived from
the landsi What In other words, was the
land but tho profit on w The namo Of the tax
Is unimportant, and tho court has been unable
to soc any distinction, He closed by saying;
THE court cau lind no difference between
tax on land itself and o tax on rents or income
derived from land. The court therefore Is Of
the opinion that tax on rents or landed IN
vestmonts Is direct taxatlon and unconsll'u-
tional"
The court next decided that the tax was I'M
constitutional SO for Us II related to incomes
from state, county or municipal bonds. 1t was
next ruled that the fact that the law was pro
nounccd unconstitutional In these two partIcu-
KRIS did not invalidatc the law as whole II
was announced that In this latter conclusion
the court was equally divided, md therefore
rendered no opinion 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 II was directed that the judy
ment below be reversed.
TIE syllabus OF the courts opinion Is Us fol-
lows;
Trust Co o. al. 1t 10 established.
|. That, by the constitution, federal taxation
Is divided Into two great classes direct taxes
and duties lmposts md exoises
= The imposition Of direct taxes Is governed
By the rule Of apportionment among the sew
eral states according 10 numbers and the I'M
position Of duties, imposts md excuses by the
rule Of uniformity throughout the United
States
I That the principle that taxation and rep
10 together WAS intended TO be and
Was preserved In the constitution by tho estab-
lIshmcnt Of the rule Of apportonmcnt among
the several states, so that such apportionmeut
should be according to the numbers In each
state.
That the states surrendered their power 10
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 tho rules prescribed and
that the compromises OF the constitution can
not DO disturbed by legislative action.
g. That these conclusions result from the
text Of the constitution md are supported by
the historical evidence furnished by the cir
surrounding the framing and adop-
ton Of that instrument, and the Views Of those
who framed ind adoptod it.
O. That the understanding and expectation ut
The time Of tho adoption Of the constitution
WAS Tint direct taxes would not be levied upon
The general government except under the pres
sure Of extraordinary exigency, mud such has
been the practice down 10 August Is, 1891 II
the power 10 do so Is 10 be exercised US an Or
binary and usual means OF supply, that fact
furnishes On additional reason for circumspcc-
llon In disposing Of the present case
T. That taxes on reul estate belong u the
class Of direct taxes, and that the taxes on the
rent or income Of real estate which is the incl
dent Of Its ownership, belong to the same
class.
!. That by no previous decision OF this court
has this question been adIudlcatcd to the con
trary Of the conclusions now pronounced.
O. That so much Of the act Of August 10, 1871,
ns attempts to impose tax upon the rent OF
income Of real estate without apportonment
Is valid
The court IL further Of the opinion that iht
act Of August Is, 1891 Is invalid 80 far as It al
tempts 10 levy tax upon the income derived
from municipal bonds. As municipal cor
poration is the representative Of the state
and one Of the instrumentalitles Of the
state government the property ind rev.
enues Of municipal corporations are
not subjects Of federal taxation, nor is
the income derived from state, county ana
municipal securities, since taxation on the In
Interest therefrom operates on the power To
borrow before II Ia exercised and has sensible
influence on the contract. md therefore such
tax is tux on the power OF the states und
their instrumentallties to borrow money, and
consequently repugnsnt TO the constitution.
Upon each Of the other petitions argued a.
the bar, to-wit First whether the void pro-
visions as TO rents and Incomes from real es-
tato invalidates the whole act; second, whether
Is TO the income from personal property
- such the act is unconstitutional
IS laying direct taxes third, whether
any part Of the tax, II not considered AZ
. direct tax, Is invalid for want Of uniformity
No. A.. A. t.I 4 Ia