The herald., 1895-04-25

that no di ect tax shall be laid Otherwise
than by pportionment-the prohibition
is not against direct taxes on land from
which the implication is sought to be
drawn that indirect taxes on land would
be unconstitutional, but it is against all
direct taxes-and it is admitted tax on
real estate is direct tax. Unless. there
fore. tax upon rents or income issuing
out OF lands is intrinsically so different
from a tax on the land itself that it be.
longs to a wholly different class of taxes,
such taxes must be regarded as falling
within the same category as tax on real
estate, co nomine. The name of the tax
is unimportant. The real question IS. is
there any basis upon which to rest the
contention that real estate belongs to one
of the two great classes OF taxes, and the
rent or income, which is the incident of
its ownership, belongs to the other?
I'VE are unable to perceive any ground
for the alleged distinction. An annual
tax upon the annual value of real estate
appears to us the same in substance as an
annual tax on real estate which would
be paid out of the rent or income. This
law taxes the income received from land
and the growth or produce of the land.
Justice Patterson observed in Hiltons
case; Land, independently of its pro-
ducts is OF no value. and certainly had
no thought that direct taxes were con-
fined to unproductive land.
''1f it be true that by varying the form
the substance may be changed. it is not
easy to see that anything would remain
OF the limitations OF the constitution
or Of the rule of representation so carefully
recognized and guarded in favor of the citi-
Zens of each state. But constitutional
provisions cannot be thus evaded. 1t is
the substance and not the form which
controls. as has, indeed, been estabishe
by repeated decisions OF this court.
t'It 9 not dor htpI tb q Or,p
ought to contribute in just measure to
the expenses of the government. AS to
the states and their municipalities that
is reached largely through the imposition
of direct taxes. AS to the federal govern
ment, it is attained in part through ex
cises and indirect taxes upon Injuries
and consumption generally, to which
direct taxes may be added TO the eXetnt
the rule OF apportionment allows. And
through one mode or the other the entire
wealth of the country real or personal.
may be made. as 1T should be. to con trib-
ute to the common defense and general
welfare. But the acceptance of the rule OF
apportionment was one of the compro-
misses which made the adoption of the
constitution possible and secured the crea-
ton of that dual torn OF government so
elastic aAd so strong which has thus far
survived in undated vigor. If by calling
a tax indirect when 1T is essentially di-
rect. one of the great landmarks defining
the boundary between the nation and the
states OF which it is composed would have
disappeared and with it one of the bull
warks of private tights and private prop
erty.
1--WE are OF the opinion that the law in
question. so far as it levies a tax on rents
or incomes of real estate, is in violation of
the constitution and is invalid"
Comparatively brief space is devoted to
the question of a tax on the income de-
rived from municipal bonds.
The constitution says the opinion,
"contemplates the independent exercise
by the nation and the states severally of
our contitutional powers. AS the state
cannot tax the powers the operations or
the property of the United States nor the
means which they employ TO carry their
powers into execution. SO it has been
held the United States have no power I'M
der the constitution to tax either the in
strumentalities OF the property of state.
A municipal corporation is the represent
alive of the state and one of the instru-
mentalities of the state government. 1t
was long ago determined that property
and revenues of municipal corporations
are not subjects of federal taxation"
After reference to the decision. the
opinion proceeds, concluding as follows:
1.-THE law under consideration provides,
that nothing herein contained shall APP
ply to states. counties or municipalities.
1t is contended that, although the prop.
erty or revenues of the states or their in
strumentalities cannot be taxed neverthe-