Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1895-04-18
INCOME TAX CASE.
DECISION RENDERED HY THE O. g..
SUPREME COURT.


The Court Knocks Out the Inv SO
Far ms 1t TRxesd Incomes Derived
From Rents and AisO From Stnte
County and Municipal Bonds.
Washington, April 1O-The supreme
court has decided the income tax
cases. The court knocked out the law
so far as it taxed incomes derived
from rents. and also from state. coun-
ty and municipal bonds. BY 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, We're 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 APP
portionment 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 representa- 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-
tionment should be according to num-
bers in each state.
Fourth-That th,. states surrendered
their power to levy imposts and to
regulate commerce to the general gov
ernlnent 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.
SiXth-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
to do so is to be exercised as an ordi-
nary ana usual means of supply. that
fact furnishes an additional reason
for circumspection IN disposing of the
present case
Se,enth-1'hat taxes on real estate
belong to the class of direct taxes,
and that the taxes on the rent or in
come of real estate. which is the in
cident Of its ownership, belong to the
same class.
Eighth-That by no previous decis-
ion OF this court has this question been
adjUdicated to the contrary of the
conclusions now announced
Ninth-That so much of the act of
Aug. -, 1894, as attempts to impose
n 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. 10, 1894. is invalid
SO far as it attempts to levy tax
upon the income derived from NIL
Dlclpal bonds. AS Il municipal cor.
poratlon is the representative of the
state and one of the instrumentalities
OF me state government. I'll, property
and revenues OF municipal corpora
lions are not subjects of federal tax
alton, nor is the income derived from
state, county and municipal securities.
since taxation on the interest there
from operates on the power to bor-
row before it is exercised and has a
sensible influence on the contract,
and, therefore, such tax is q tax on
the power of the states and their in
strulnentalities 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 invaldates 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 of the tax if not considered as a
direct tax, is invalid for want of uni
forInity on either of the grounds suy-
gested, the justices who heard the
arguments are equally divided and
therefore, no opinion is expressed.
The result is that the decree of the
circuit court is reversed. and the case
remanded with directions to enter a
decree in favor of complainant in re-
spect only OF the voluntary payment
! of the tax on rents and incomes of ITS
ASsaA SN'eotS, saAu lAIktl w llCu IL uOluS 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,