The Scranton tribune. [volume] (Scranton, Pa.) 1891-1910, 1895-04-09
DECISION ON INCOME TAX
Opinion Of United States Supreme
Court on the Measure.
THE JUSTICES ARE DIVIDED
Their Decision Leaves the Constitution.
ality Of tho Law Still Open-On Impor.
tant Points the Count Stands
Four Against Four.


Washington, April S.-The supreme
court of the United States today handed
down its decision on the constitution
allty of the income tax.
The decision leaves the question Of
the constitutionality of the law still
open. 1t Is expected that the payment
of the tax will be respected, and that
suits will result in United States cir
cult and district courts. and that what
ever may be the decision of these courts
an appeal will again be taken to the
United States supreme court, when a
full bench can hear arguments.
On the question of the constitution
ality of the tax on rents, the court by
a vote of six to two holds that 1t Is n
direct tax, and not being laid propor-
tionately among the states on the basis
of the last census is unconstitutional.
As to the tax on interests from state
and municipal bonds the court Is re-
ported to have stood five to three
against constitutionality of the tax.
the majority holding that such tax
Is an imposition upon the revenues of
the municipality which authorized the
bonds, and unconstitutional. On all
other points the court divided evenly,
Justices Harlan, Shiras and Brown Gre
publcans), and Justice White Demo-
craft, holding the law to be constitu-
tional, or rather that it had not been
invalidated as a whole by the constitu-
tional defect contained in the tax on
rents and bonds. Four justices, Fuller
and Field Democrats), and Grey and
Brewer (Republicans), held the law to
be unconstitutional in every particu-
lar Justice Fuller began reading the
decision at 12.10 and finished at l
O'Clock, reading the decision of the
question whether or not the tax on
rents from real estate is tax on real
estate and therefore a direct tax. and
announced that the court has decided
It is tax on real estate, therefore
direct tax, and, as provided for in the
present law, unconstitutional. The
opinion of the chief justice also de-
clares that the tax on municipal and
state bonds Is unconstitutional. On all
other points the court is equally di-
vided. The decision of the court below
on these points is reversed, and SIM
liar entry made in the case of Hyde VS..
Continental Trust company.
Main Points of the opinion.
The conclusions of the court were
stated as follows:
First-That by the constitution federal
taxation is divided into two great classes,
direct taxes and duties, imports and ex-
cises.
Second-That the imposition OF direct
taxes IL governed by the rule of apportion-
ment among the several states, according
to numbers, and the imposition of duties,
imports and excises by the rule OF uni
formity throughout the United States.
Third-That the principle that taxation
and representation go together was in
tended to be and was preserved in the con-
stitution by the establishment of the rule
of apportionment among the several
states, sa that such apportionment should
be according to numbers in each state.
! sTourth-That the states surrendered
their power to levy imports and to regu-
late commerce to the general government,
and gave 1t the concurrent power to levy
direct taxes in reliance on the protec-
tion afforded by the rules prescribed. and
that the compromises of the constitution
cannot be disturbed by legislative action.
Z, Fifth-That these conclusions result
supported by the historical evidence fur
nished by the circumstances surrounding
the framing and adoption Of that instru-
ment and the views Of those who framed
and adopted 1t.
Sixth-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 gov
ernment except under the pressure of ex-
traordinary exigency. and such has been
the practice down to Aug. Is, 1894 If the
power to do so is to be exercised as an or
dinary 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 be-
long 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.
Eighth-That by no previous decision of
this court has this question been ad-
judicated to the contrary of the conclu-
sions now and announced.
That SO much of the act of Aug. Is,
1894, as attempts to impose a tax upon
the rent or income of real estate with
put apportionment is invalid.
The Act of August IS.
The court Is further of opinion that
the act Of August Is, 1894, is invalid so
far as 1t attempts to levy tax upon
the income derived from municipal
bonds. AS the municipal corporation
Is the representative of the state and
one of the instrumentalhies 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 municipal securities, since
taxation on the interest thereon oper-
Htes the power to borrow before 1t Is
exercised and has sensible influence
on 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 coititution.
Upon each of the other questions ar
Jed at the bar, to wit:
rst-Whether the void provisions as
ats and income from real estate in
tes the whole act.
Rd-Whether as to the income from
property as such, the act is un-
ional as laying direct taxes.
Whether any part of the tax, If
cred as direct tax, is invalid,
uniformity on either of the
gested-the justices who heard
hts are equally divided and
opinion is expressed.
I is that the decree of the
It Is reversed and the cause
with directions to enter a
favor Of complainant in re-
of the voluntary payment Of
bn the rents and income Of its
lite and that which 1t holds in
And on the income from the
lIIcipal bonds owned or so held by it.
The chief justice said that the juris-
aiction Of courts of equity to prevent
Aversion of. funds by breach Of trust