The Princeton union. [volume] (Princeton, Minn.) 1876-1976, 1895-04-11
INCOME TAX CASE.
DECISION RENDERED. NY THE u. s.
SUPREME OOUT,T.
The Court Knocks Out tho LAW So
Fur as 1t Taxe"d Incomes Derived
FroHn Rents and ALSO From Stnte
County nnd Municipal Bonds, -.-

Fur as 1t Tnxesd Incomes Derived
From Rents and ALSO From Stnte
County and Municipal Bonds.
Washington, April lO.-The supreme
court has decided the income tax
cases. The court knocked out the law
so far as 1t taxed incomes derived
from rents, and also from state, cOun-
ty and municipal bonds. BY a tie
vote Of the court the law was sus-
tanned In other respects.
The courts conclusions, after re-
viewing the historical and other
phases of the question, were as fol-
lows:
First-That by the constitution fed
eral taxation is divided into two great
clasSes-direct taxes and duties. i'm
ports and excuses.
Second - The imposition Of direct
taxes is governed by the rule of ap-
portlonment among the several states,
according to numbers and the imposi-
ton of duties, imposts and excuses by
the rule of uniformity throughout the
United States.
Third-That the principle that tax
alton and representation together was
intended to be and was preserved in
the constitution by the establishment
OF. the rule of apportionment among
the several states, so that such appor-
tlonment should be according to num-
bers in each state.
FOurth-That the states surrendered
their power to levy imposts and to
regulate commerce to the general gov
eminent and gave it the concurrent
power to levy direct taxes in reliance
on the protection afforded by the rules
prescribed, and that the compromises
OF the constitution cannot be disturbed
by legislative action.
Fifth-That these conclusions result
from the text of the constitution, and
are supported by the historical evil
dence furnished by the circumstances,
surrounding and framing and adop-
ton of that instrument and the views
of those who framed and adopted it.
SlAth-that the understanding and
expectation at the time Of the adop-
ton of the constitution was that d.
rect taxes would not be levied upon
the general government, except under
the pressure of extraordinary ext
gency, and such has been the practice
doWn to Aug. Is, 1894. If the power
10 90 so Is to be exercised as an ordi-
nary and usual means of supply, that
TACT furnishes an additional reason
Tor c1rcumspection in disposing of the
present case.
Seventh-That taxes on real estate
belong to the class OF dire>t taxes
ana that the taxes on the rent or in
come OF real estate, which is the in
cident of it's ownership, belong to the
same class.
-Eiglth-That by no previous decis-
ion OF this court has this question been
adjudicated to the contrary of the
conclusions now announced.
Nlnth-That so much Of the act Of
Aug. Is, 1894, as attempts to impose
q tax upon the rent or income of real
estate without apportionment is in
valid.
Some Bonds Exempt.
The court is further of the opinion
that the act of Aug. Is, 1894, is invalid
so far as it attempts to levy a tax
upon the income derived from mu-
Dlcipal bonds. AS Il municipal cor
poratlon is the representative Of the
state and one of the inStrumentalities
OF the state government, the property
ana revenues OF municipal corpora
tlons are not subjects of federal tax
atlOn, nor is the income derived from
state, county and municipal securities.
since taxation on the interest there
IRON operates on the power to bor-
row before 1t is exercised and has q
sensible influence on the contract
ana, therefore, such tax is q tax on
the power Of the states and their in
strumentalltleS to borrow money. and
consequently repugnant to the con-
stitution.
Upon each of the other petitions ar
gued at bar, to wit: First, whether
the void provisions as to rents and in
comes from real estate invaIidates the
whole act; second, whether as to the
income from personal property as
such, the act is unconstitutional. as
laying direct taxes; third, whether anv
part of the tax if:not considered as d
direct tax, is invalid for want of mi
forInity on either of the grounds sug-
gested, the justices who heard the
arguments are equally divided and.
therefore, no opinion is expressed.
Inc result is that the decree Of the
circuit court is reversed, and the case
remanded with directions to enter n
decree In favor of complainant in re-
spect only of the voluntary payment
or the tax on rents and incomes of its
real estate, and that which it holds in
trust, and on the income from munich
pal bonds owned or so held by it.
The announcement of the foregoing
conclusions Of the court was preceded
by review of many opinions of the
supreme court from the time of Chief
Justice Marshall down to the celebrat-
ed Springer case, brought by ex-Rep-
resentative Springer Of Illinois. and
by an exhaustive review of the nature
OF the direct and indirect taxation in
the course of which the chief Justice
reviewed the debates leading up to
the framing of the federal constitu-
ton. In conclusion the chief Justice
stated that his opinion upon the Pol
lock case covered the two other cases
The delivery Of the opinion con-
sumed just one hour The chief JUS
tice was followed by Justice Field.
who read the first dissenting opinion.
speaking in a low tone that contrasted
notceably with the loud delivery of
the chief Justice
'-. Applies to Three Cases.
The decision applies to three cases,
the first of which was brought into