The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-05-21

tons writings except the Federalfst. Afser
legal meaning of the respective terms, .di-
rect and indirect laXes. and after torclply
stating the impossibility of collecting the
tax IL IL is to be considered as direct TAX
he says, doubtirgly:
The following are presumed the only
IreGa Iands taxes nd cSpta adn or poe assess
ments. whether on the whole property OF
individuals or on. their whole real or per-
sonal estate: all else must OF necessity be
considered as indirect taxes. Duties, inn
posts and excses appear 10 be contradis-
tinguished from taxes) If the meaning OF
British statutes il will be found 10 include
the duty on carriages. which Is there con-
sldered as an excise W mere SO important
distinction in the Constitution is 10 ne re-
allied it is fair TO seek the meaning of the
terms in the statutory language of that
country from which our Jurisprudence is de-
rived
HAMILTON SUPPORTED THE LAW.
"Mr. Hamilton. therefore, clearly sup
ported the law which Mr.. Madison opposed.
for the same reason that his friend Fisher
Ames did, because it was an excise and as
such was specifically comprehended by the
Constitution. Any loose expressions in def
inition of the word direct so far con-
fiicting with his well-conceived views in the
Federalist must be regarded as the liberty
which the advocate usually considers HIM
self entitled TO take with his subject. He
gives, however. its seems to the United
States, definition which covers the ques-
ton before us. tax on ones whole in
come is a tax on the annual receipts from
his whole property, and as such it is tax
on that property, and a direct tax in the
meaning of the Constitution. And Mr.. Ham,
iton. in his report on the public credit, in
referring to contracts with citizens of a
foreign country, said: This principle
which seems critically correct, would eX-
empt as we'll the income as the capital
effectually as the thing. What, in fact,
is property but fiction without the bene-
fetal use of it? In many cases. indeed, the
income or annuity is the property itself
We think there is nothing in the Hylton
case in conflict with the foregoing. The
case is badly reported.
What was decided in the Hylton case
is that tax on carriages was an excise,
and therefore an indirect tax. The conten-
tion OF Mr.. Madison in the House was only
so far disturbed by it that the court clas-
sified it where he himself would have held
II unconstitutional, and he subsequently. as
President, approved a similar act. The
contention of Mr. Hamilton in the Feder-
alist was not disturbed by ii in the least.
In our judgment the construction given to
the Constitution by the authors of the Fed
eralist the five numbers contributed by
Chlef Justice Jay) relating to the danger
from foreign force and influence and 10
the treatymaking powers, should not and
cannot be disregarded."
The opinion next takes up the argument
that tax on property is not direct tax
and on this point it says: 1.-The Constitution
prohibits any direct tax, unless i'm propor-.
ton to numbers as ascertained by the
census; and in the light of the crcum-
stances TO which we have referred il is
not an evasion of that prohibition to hold
that a general unapportioned tax i'm
posed on all property owners as a body
Tor or in respect of their property is not
direct in the meaning of the Constitution
because confined TO the income therefrom.
Whatever the speculative views of polit-
rpfOrnprS
be- can il be properly held that the Con-
stitution. taken in its plain and obvious
stances attending the formation of the
government, authorizes general unappor-
toned tax on the products of the farm
and the rents of real estate, although inn
posed merely because of ownership. and
with no possible means of escape from
payment, as belonging to a totally different
class from that which includes the prop
erty from whence the income proceeds?
There be only one answer. Unless the
constitutional restriction is to be
futile. and the object of its
trainers defeated we find it impossi-
bic to hold that a fundamental requsition,
two provisions, one affirmative and one
negative can be reasoned away by forced
distinctions between that which gives value
10 property and the property. itself. Nor
can we perceive any ground why the same
reasoning does not apply TO capital In
personality for the purpose of income
ordinarily yielding income, and 10 the in
come therefrom.
WHAT THE CONSTITUTION PERMITS.
"All the real estate Of the country and
all its invested personal property are open
to the direct operation of the taxing power
If an apportionment be made according TO
the Constitution. The Constitution does not
say that no direct tax shall be laid by
apportionment on any other property than
land-on the contrary it iorbids all unap-
portioned direct taxes; and we know of
no warrant for excepting personal property
from the exercise of the power or any rea-
son why an apportioned direct tax cannot
be laid and assessed as Mr. Gallatin said
in his report when Secretary of the Treas
ury in 1872, upon the same objects of taxa
tion on which the direct taxes levied under
the authority OF the State laid and
assessed Nor are we impressed with the
argument that because in the four instances
in which the power of direct taxation has
been exercised, Congress did not fit,
for reasons of eXpediency, TO levy d tax
on personality. that this amounts to such
a pratical construction of the Constitution
that the power did not exist that we must
regard ourselves bound by it. We should
regret to be compelled to hold the powers
of the general government thus restricted
and certainly cannot accede to the idea that
the Constitution has become weakened by a
particular course of inaction under it,
THE stress of the argument is thrown,
however, on the assertion that an income
tax is not a property tax at all: that it is
not a real-estate tax, or crop tax or a
bond tax; that ii is an assessment upon
the taxpayer on account of his money
spending power. as shown by his revenue
for the year preceding the assessment; that
rents received. crops harvested, interest
collected. have lost all connection with their
origin, and although once not taxable have
become transmitted in their new form into
taxable subject matter; in other words,
that income is taxable irrespective of the
source from whence it is derived"
This was the view entertained by
Mr.. Pitt, as expressed in his celebrated
speech on introducing his income tax law
to it's logical conclusion. The English loan
acts provided that public dividends should
be paid free of all taxes and charges
Whatsoever but MIR Pitt successfully con-
| tended that the dividends for the purposes
OF the income tax were TO be considered
| simply in relation to the recipient SO
much income and that the fundholder had
| no reason to complain. And this. said Mr.
| Gladstone. fifty-fve years after. was the
national construction of the pledge. The dis
senting justices proceeded in effect upon
| this ground in Weston Charleston, but
the court rejected Ii. That was Il State
| tax, it is true, but the States have power
| TO lay income taxes, and If the source is
not open to inquiry, constitutional safe
| guards might be easily eluded.
THE TAX ON BONDS.
Eve have unanimously held. in this case
| that so far as this law operates on the
| receipts from municipal bonds. it cannot bs
| sustained because il is tax on the powel
| of the States and their instrumentalities tC
| borrow money, and. consequently, repug
| nant to the Constitution. But if, as con