The Iola register. [volume] (Iola, Allen County, Kansas) 1875-1902, 1895-04-12
THE INCOME TAX.
The Supreme Court Overthrows
Fart of the Law.
Taxes on Rents and Municipal and State
Bonds OBSERVATION-DISCLOSURES JUS
tice Fuller Delivers the Opln-
ion of the Court.

|
WASHINGTON, April s.-Chief Justice Fuller
himself read the decision OF the United States
supreme court in the income tax cases yester-
day. He began by stating the exceptions Ia
the law as made by counsel for the appellant
J as follows:
l. That the act imposes a direct tax in re-
spect Of the real estate. rents, issues and
profits as well as the income and profits OF per-
sonal property and not being apportioned is in
violation Of section article Of the consti-
tuition.
= That the Law. II not imposing direct tax,
is nevertheless unconstitutional in that its
provisions are not uniform throughout the
United States and do not operate with the same
force and effect upon the subject Of the tax,
wherever found, or in that il provides exemp-
tons in favor of individuals and co-partner-
ships while denying all exemptions TO corpora
siOns having similar income derived from
Ike property and values, and provides for
other exemptions and inequalities in violation
Of section of article of the constitution.
B. That the act provides no exemption Of the
tax upon incomes derived from the stocks and
bonds OF states OF the United States and coun-
ties and municipalities therein. which stocks
and bonds are not proper subjects for the tax
ing power OF congress. The income from these
securities in the United States amounts to over
h6i.00J,0OO per anuum, on which the total an
nual income tax would be 81 10000.
The chief justice then took up the constitu-
tional points involved, dwelling upon the
fact that the constitution required the appor-
tionment Of direct taxes and uniformity in ex-
.ises and imports.
Coming down to the present tariff act the
.hief justice said that the law was passed in a
| time Of profound peace and IL was to be taken
| as evidence that the congress had sought in
This matter to form precedent and establish q
| departure from established lines, and it there
lore became important TO inquire into the cir
sumstances with some attention to detail.
For the purpose OF comparison. he went back
to the enactment o. an income tax during the
civil war He quoted from the decision in the
| Springer case. giving a history Of the case and
| ievoting much attention to it.
| 1t was, the chief justice went on. conceded in
all the cases from Hilton to Springer that taxes
on land were direct taxes, while in some Of
them it was determined that taxes on r. ats de-
| rived from lands were indirect taxes. Was
there, lie asked, any distinction between a tax
on the land and on the income derived from
the lands? What, in other words, was the
land but the profit on IL: The name Of the tax
Is unimportant and the court has been unable
TO see any distinction. He closed by saying:
The court can find no difference between a
tax on land itself and a tax on rents or income
| derived from land. The court therefore is Of
| the opinion that a tax on rents or landed in
| tional"
The court next decided that the tax was IN
constitutional so far as II related to incomes
from state, county or municipal bonds. 1t was
| next ruled that the fact that the law was pro-
nounced unconstitutional in these two particu-
lars did not invalidate the law as a whole. II
was announced that in this latter conclusion
| the court was equally divided. and therefore
rendered no opinion. The lower court having
ruled in favor OF the law by a divided court.
the law would stand except as to rents and
state, county and municipal bonds, and on
these two points it was directed that the judg-
ment below be reversed.
The syllabus of the courts opinion is as fol-
lows:
In Charles Pollock VS.. the Farmers Loan
Trust Co. ct al it is established:
/. That, by the constitution. federal taxation
is divided into two great classes-direct taxes
and duties. imposts and excuses.
2 The imposition OF direct taxes is governed
By the rule of apportionment among the sew
eral states, according TO numbers and the i'm
position OF duties, imposts and excuses by the
rule Of uniformity throughout the United
States.
8 That the principle that taxation and rep
resentation go together was intended to be and
was preserved in the constitution by the estab-
lishment OF the rule OF apportionment among
the several states so that such apportionment
should be according to the numbers in each
state
l. 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, aud
that the compromises OF the constitution can
not be disturbed by legislative action.
5. That these conclusions result from the
text OF the constitution and are supported BY
the historical evidence furnished by the cir
ton OF that instrument, and the views OF those
who framed and adopted IL.
6. That the understanding and expectation at
the time of the adoption OF the constitution
was that direct taxes would not be levied upon
the general government except under the pres
sure Of extraordinary eXigelcy, and such has
been the practice down TO August Is, 1894. II
the power to do so is to be exercised as an or
binary and usual means OF supply, that fact
furnishes an additional reason for circumSpec-
ton in disposing of the present case.
= 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 Incl
dent Of its ownership, belong TO the same
class.
g. That by no previous decision Of this court |
has this question been Gdjudicated to the con-
trary of the conclusions now pronounced.
O. That so much Of the act OF August ID 1894, |
as attempts TO impose a tax upon the rent OF
income OF real estate without appOrtionmeni |
is valid.
The court is further OF the opinion that the |
act Of August Is. 1894 is invalid far as it at
tempts to levy tax upon the income derived |
from municipal bonds As a municipal cor |
poration Is the representative Of the state |
and one OF the instrumentalitieS OF the |
state government. the property and rev. |
enues Of municipal corporations are |
not subjects of federal taxation, nor Is 1
the income derived from state, county and /
municipal securities. since taxation on the in /
interest therefron operates on the power &c /
borrow before il is exercised and has 4 sensible |
influence on the contract, and therefore such |
tax is a tax on the power OF the states and |
their inStrunentalitieS to borrow mOney. and |
consequently repugnant to the constitution.
Upon each OF the other petitions argIcc al |
the bar, to-wit: First. whether the void pro-
visions TO rents and incomes from real es-
tate invalidates the whole act; second. whether
as TO the income from personal property
as such the act is unconstitutional
as laying direct taxes: third. whether
any part Cf the tax. if not considered as
direct tax, is Invalid for want OF uniformity
on either OF the grounds suggested. the justices
who heard the arguments are equally divided.
and therefore no opinion Is expressed.
Justice Field read dissenting opinion. say
ing: Il an Of the opinion that the whole law
OF 1894 II null and void"
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