The diamond drill., 1895-04-13

Municipal Securities,
WASHINGTON, April 0.--As forecasted
by the newspapers for several days, the
supreme court has decided that
the income tax law Is uncon-
etitutional so far as IL affects
incomes derived from rents and real
estate or from state, county and mu-
nicipal bonds. The court was divided
as 20 the remainder OF the law, and as
the decision of the court below was in
favor of its constitutionality that de-
cision must stand.
An Accurate Forecast.
Chief Justice Fuller read the decision
before one OF the largest audi
ences that ever crowded into the
courtroom. The closest attention
was accorded him. but 1t was soon
evident that tho press forecast had
been an accurate one, and hence there
was less interest taken in the decision
than would have been the case had IL
not already been discounted In the
newspapers.
now the justices stood.
Upon the question OF the constitu-
tionality OF the taxation of incomes
from state and municipal bonds the
court was unanimously in the mega
tive.
Upon the question of taxation of
rents the court stood as follows:
Anirming the law - Justices Harlan and
White.
Against the law-Chlef Justice Fuller. JUS
sices Field. Gray. Brewer, Brown and Shiras.
Upon the general question OF the
constitutionality Of the law, the court
Is said 20 be divided as follows:
For the law--Justices Harlan, Brewer,
Brown and White.
Against the law--Chief Justice Fuller, JUS
tices Field, Gray and Shras
Synopsis OF the Decision.
The conclusions of the court were
stated to be as follows:
l. That by the constitution federal taxation
"a divided into two great classes Direct taxes
and duties. imports and excisea
. That the Imposition OF direct taxes Is
governed by the rule OF apporLionment among
the several states. according 10 numbers, aud
the Imposition OF duties, imposts aud oxcises
by the rule OF uniformity throughout the
United States
g That tho principle that taxation and rep
reeentation 20 together was Intended to DO
aud was prescribed Ia the constitution by the
among the several states. SO that such nppor-
tionment should DO according to numbers In
each state.
That the states surrendered their power
90 levy lmpOsts and 70 regulate commerce TO
the general government and gave II the con-
current power 70 levy direct taxes IN reliance
on tho protection Afforded by tho rules pre-
scribed, and that the compromises of the con-
stitution cannot be disturbed by legislative
action
O. That these conclusions result from the
text OF the constitution. and are supported py
she historical evidence furnished by the clr-
cumstanccs surrounding tho framing and
adoption oi that instrument, and the Views Of
those who framed and adopted IL
That tho understanding aud expectation
at the time OF the Adoption OF tho con-
etltution was that direct taxes would
not DO levied by tho general govern
nent except under tho pressure OF ex-
traorainnry exigoncy, and such has boen tho
practice down 20 August lo 1854 IL the power
10 do so Is 70 DO exercised MS an ordinary and
usual means OF supply, that fact furnishes an
additional reason for circumspcction IA dis
posing OF tho present case.
= That taxes on real estate belong 10 tho
class OF dircct taxes aud that the taxes on tho
rent or income OF real estate, which Is the In
cident Of It's ownership belong to the same
class
q That by no previous decision OF this court
has this question been adjudicated 20 tho con-
trary OF the conclusions now announced.
That so much OF tho act OF August -. 1894,
A. attempts TO impose n tax upon the rent or
income OF real estate without apportionnont
rs invalid
The court is further OF opinion that the act
OF August Is, 1894. Is invalid so far as Il at
tempts 10 levy a tax upon the income
derived from municipal bonds. As n mu-
pioipal corporation II the representative OF tho
state and one OF tho instrumentalltes OF the
state government, the property and revenues
OF municipal corporations are not the subjects
OF federal taxation, nor IL the income
derived from state, county and municipal
securities. since taxation on the interest
thercfrom operates on tho power TO borrow
before 10 Is exercised and has a sensible infiu-
enco on the conlraos. and therefore such . tax
Is tax on the power of the states aud their
instrumcntalitics 70 borrow money. and conse-
quontly ycrpgnant TO the constitution.
Justices Arc Divided in Opinion.
Upon ench OF tho other questions argued az
the bar. to-wit; l. Whether tho void provi-
sions ns 20 rents ana income from real estate
invalldates the whole nctl . Whether rs 70
the income OF the personal property as such. the
act - unconstitutional as laying direct taxcs'
Q Whether any part OF the tax, II not con-
eidcred as direct tax, Il invalid for want OF
uniformity on either OF the grounds sugaestodg
the justices who heard the argument are
equally divided and therefore, opinion is
expressed.
the result Is that tho decree OF tho circuit
court Is reversed and tho cause remanded with
directions 20 entor decree IA favor OF COM
plalnaut Ia respect only of the voluntary pay
mont OF the lax on tho rents and income OF its
real estate and that which IL holds IN trust.
aud on the income from the municipal bonds
owned or 80 held b. IL
The Line of Argument.
The power 10 decide law unconstitutional.
the chief justice said, was used with rciuc-
tanco. but the responsibility could not DO
eyaded when the necessity arose Tho con-
tentions respecting this law we're;
l. That tax on rents was % tax on real es-
Kate, and that not beng laid according b. APP
pOrtl0nmcnt IL was invalid.
That Il was not uniform. and violation
OF the constitutional requirements that such
tAHeA Ahnl bn laid with Uniformity. UnAor