The Kootenai herald. [volume] (Kootenai, Idaho) 1891-1904, 1895-04-13
incomes of Corporations Escape
Assessment.
The SUPREME COURT DECIDES
Opinions on the Famous Case Involv-
ing the Constitutionaiity of
the Income Tax.

supreme court in the income tax case
was rendered today by Chief Justice |
Fuller. The court knocked out the law |
ms far as it taxes incomes derived from
rents and also from state, county and |
municipal bonds By a tie vote OF the |
court. the law was sustained in other |
respects. The courts conclusions after
reviewing the historical and other
phases of the question, were as follows;
In Charles Pollack VS.. the Farmers
Loan and Trust Company, ct al, 1t is
established:
First-Federal taxation is divided In
TO two great classes, direct taxes and
duties, imposts and excise.
Second-The imposition of direct
taxes is governed by the rule of appor-
tionment among the several states, &C
cording to numbers and imposition of
duties, imposts and excuses, by the rule
of uniformity throughout the United
States.
Third-That the principle that taxa
ton and representation go together was
intended to be and was preserved in the
constitution by the establishment of the
rule of apportionment among the sever
al states so that such apportionment
should be according to the numbers in
each state.
Fourth-That the states surrendered
their power to levy imposts and to reg
ulate commerce to the general govern
ment and gave it the concurrent power
to levy direct taxes in reliance on the
protection afforded by the rules pre-
scribed, and that the provisions of the
constitution can not be disturbed by
legislative action.
Fifth--That these conclusions result
from the text of the constitution and
are supported by the historical evidence
furnished by the circumstances, sur
rounding the framing and the adoption
of that instrument and the views Of
those who framed and adopted it.
Sixth-That the understanding and
expectation at the time of the adoption
Of the constitution was that direct
taxes would not be levied upon the gem
eral government except under the
pressure of an extraordinary exigency
and such has been the practice down TO
August. 1894. If the power to do so is
to be exercised as an ordinary and
usual means Of supply, that fact fur
nishes an additional reason for circum-
spection in disposing of the present
case.
Seventh-That taxes on real estate
belong to the class OF direct taxes, and
with the taxes on the rent or income
of real estate. which is the incident OF
its ownership belonging to the same
class
Eighth-That by no previous decision
of this court has this question been ad.
Indicated to the contrary of the con
illusions now announced.
Ninth-That so much of the act OF
August, Is, 1894. as attempts to impose
a tax upon the rent OF income of rea
estate without apportionment is in
valid.
The court is further of the opinion
that the act of August 10, 1894 is in
valid, In so far as 1t attempts to lew
a tax upon the income derived from
municipal bonds AS municipal cor
poration is the representative of tn,
state and one of the instrumentalitie
OF the state government. the propert!
and revenues of municipal corporation
are not subjects Of federal taxation
nor is the income derived from state
county and municipal securities, sine
taxation on the interest therefrom op
crates on the power to borrow befor
IL is exercised and has a sensible in
fluence on the contract and therefor
such a tax is a tax on the power o
states and their instrumentalities I
borrow money, and consequently re
pugnant to the constitution.
The justices are equally divided an
no opinion is expressed upon each of tn
other petitions argued at the bar, to
wit:
First-Whether the void provision
as to rents and incomes from real es
tate invalidate the whole act.
Second-Whether as to the incom
from personal property as such, the ac
is unconstitutional as laying direC
taxes.
Third-Whether any part of tax.
not considered as a direct tax, is invali
for want Of uniformity on either of tn
grounds suggested.
LOWER COURT REVERSED.
The result is that the decree of the CT
cult court is reversed and the case r
manded with directions to enter a d.
cree in favor of complaint in respe'
only of the voluntary payment of ia
on rents and income of its real esta
and which 1t holds in trust and on Il
income from the municipal bonds owne
or so held by It.
The announcement of the foregoir
conclusions of the court was proceed,
by a review of many opinions of Il
supreme court from the time of Chi
Justice Marshall down to the celebrate
Springer case brought by ex-Represe
tstive Springer of Illinois and by {
exhaustive review of the nature of
rect and indirect taxation In the cour
of which Chief Justice Fuller review
the debates leading up TO the framing
the federal constitution
FULLER'S OPINION.