The National tribune. [volume] (Washington, D.C.) 1877-1917, 1895-04-11
THE INCOME TAX DECISION.
Last Monday the Supreme Cou

cision upon the Income Tax. The con-
illusions are as follows:
/. That by the Constitution Federal taxa
ton is divided into two great classes: Direct
taxes and duties, imposts and excises
9. That the imposition of direct taxes Is
governed by the rule Of apportionment
among the several States, according TO num-
bers, and the imposition of duties, impos's,
and excuses by the rule of uniformity
throughout the United States.
8. That the principle that taxation and
representation 90 together was intended 10
| be, and was prescribed in the Constitution
by the establishment of the rule OF appor-
| tonment among the several States, so that
such appOrtionment should be according to
numbers in each State.
d. That the States surrendered their power
| to levy imposts and to regulate commerce TO
the General Government, and gave it the
concurrent power to levy direct taxes In
reliance on the protection afforded by the
rules prescribed, and that the compro-
misses of the Constitution cannot be dis
| turbed by Legislative action.
5. That these conclusions result from the
| text of the Constitution, and are supported
by the historical evidence furnished by the
circumstances surrounding the framing and
adoption of that instrument, and the views
of those who framed and adopted it.
6. That the understanding and expecta-
ton at the time of the adoption of the Con-
stitution was that direct taxes would not be
levied by 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 to do so is
IN no cd
means of supply, that fact furnishes an
| additional reason for circumspection i'll dis
posing of the present case.
Z. That taxes on real estate belong to
the class of direct taxes, and that the taxes
on the rent or income of real estate, which is
the incident of its ownership, belong TO the
same class.
8. That by no previous decision of this
court has this question been adiudicated 10
the contrary of the conclusions now an
nouced.
That so much Of the act of Aug. 10, 1894,
rs attempts 10 impose IL tax upon the rent or
income of real estate without apportlon-
ment is invalid.
1t is not difficult to follow the course
of reasoning which leads to these con-
illusions At the formation of our Gov
eminent jealousy of the larger States
by the smaller ones was an intense,
almost dominant feeling. Nothing but
fear of foreign conquest induced Della
ware, Georgia, New Hampshire, and
Rhode Island to place themselves where
they might be nduly dominated by the
then great States'of Connecticut, Mary
land, Massachusetts,, New Jersey, New
York, North Carolina, Pennsylvania,
South Carolina, and Virginia. To this
feeling we owe the provisions of two
Senators from each State, and that all
direct taxation must be levied per capita.
This principle of direct taxation per
capita was thoroughly discussed some
years ago in THE NATIONAL TRIBUNE,
as our readers will remember
The Court next decides that the Gov
eminent cannot tax the income deriva-
BILE from State and municipal bonds.
As municipal corporation is the repre-
sentative of the State and one of the in
strumentalities of the State Government the
property and revenues of municipal corpora
tons are not the subjects of Federal taxation,
nor is The income derived from State, County
and municipal securities, since taxation on
the interest tlierefrom operates on the power
to borrow before it is exercised and has
sensible influence on the contract, and there
fore such tax is a tax on the power of the
States and their insfrumentalties to borrow
money, and consequently repugnant to the
Constitution.
This reasoning is also impregnable.
The question of taxation enters into
every money-lending transaction. If
bonds are to be taxed by the Govern
ment, then the men who lend money to
cities, Counties, and States will simply
add the taxation to the interest de-
manded, and the cities, Counties, and
States will in the end pay the tax. Any
man can see this.
Upon the other questions, to wit:
l. Whether the void provisions az to rents
and income from real estate invalidates the
whole act?
9. Whether as to the income from per-
sonal property rs such the act is uncon-
slitutional as laying direct taxes?
3. Whether any part of the tax, if not con-
sidereG rs a direct tax, is invalid for want of
uniformity on either of the grounds sug-
gested?
the Court was equally divided. Chief
Justice Fuller and Justices Field, Gray,
and Shiras being opposed to the tax, and
Justices Harlan, Brewer, Brown, and
White favoring it.
While this equal division of the Court
upon the constitutionality of the law as
whole leaves it upon the Statute books,
! it is practically dead. There is SO little
value left in it-and that little is SUBJ
| ject to new contentious it will
I