The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1895-04-12
THE INCOME TAX DECISION.

L
the supreme court of the United States
on the income tax is the beginning OF
the end of that system of revenue The
annulment of the law, so far as regards
incomes derived from rents of land and
interest on state, county and municipal
bonds. strikes to the very vitals the sys-
tenn which the last congress undertook
to inaugurate, For its central purpose
grew out OF a popular feeling in wide
areas that the wealthy classes were un-
duly Sinking taxation, and that they
should be singled out to make special
contribution to the state. The supreme
court utterly annihilates this purpose
by annulling the law as to mammoth
country.
Great landed estates like those Of the
Astors and the Goelets and classes that
put their wealth into bonds, go scott
free under the decision. Not only so,
but it practically places it beyond the
power OF congress to reach them by any
application of the income tax system.
In other words the effect of the system
as applied by the last congress, or as it
is possible constitutionally to apply it at
all, is to enhance the advantages of the
capitalistic classes and correspondingly
to heap up burdens upon the shoulders,
already sufficiently burdened, of the
classes actually and directly engaged in
industry, in commerce. in the profess
sions and in all manner of salaried SER
vices. The income tax system, which
was enacted on the plea OF equity, thus
operates under the decision directly to
eNaggerate the inequities which excited
complaint. The effect of the income
tax system, if it should be continued af-
ter this decision, would be simply to add
to the bondholder and the landlord the
capitalized value of The income tax: or.
to put it another way, it would be to
subtract the capitalized value of the
amount OF the income tax from the pro-
| duclng classes. Or, to put it in still
another form, it is potentially contri-
button by manufacturers, merchants
and all who directly touch sweaty hands
in the great labors of production, to the
already swelled estates of the bond hold-
er, the landlord and many forms of
| trusts.
This situation definitely arises out of
the supreme court decision, whatever
else may be said of it. So preposterous
result necessarily destroys the moral
support of the income tax system. 1t
must kill it in the very house of its
friends. 1t very likely involves It's
speedy repeal, possibly by the Fifty
lourth congress, and that; too, by the
cooperation of many of those who
chiefly supported it for the very ends
against which the supreme court has
now interposed its irreversible veto.
But in any event repeal in all probabil-
lty Is only question of time. Nothing
but public anticipation OF repeal can
countervail against the appreciation OF
precisely those forms of wealth, ex-
tremely capitalistic, such as rentals
from real estate and interest on bonds.
which it was the central purpose of the
income tax system to mulct.
So much follows 'indisputably from
the decision. Tt is to be said that its
general effect must be to undermine
ana prejudice the whole income tax sys
tenn The action OF the court turns on
an equal division of the members sittin O
in the case, one member. Justice Jack.
son. being incapacitated by illness
That is to say, the determining fact is
the decision of the lower court, which
stands because of the equal division OF
the supreme court. If the inferior
court had held the other way, not only
the tax on rents and bonds, but the en-
tire income tax system would have been
swept away by exactly the same opin-
ions OF the members of the supreme
court. Even as it is the life of the sys-
TEN is cut out and a strong influence is
set IN motion to create an impression
that any income tax system may be
tiually obliterated by full or
a changed court.
The action OF the court, in short,
must be regarded as a monumental fact
pointing to the elimination of the in
come tax system as an important means
OF revenue under our form of govern
ment, a fact which will enter potentially
into the legislation of the future. The
income tax devised by the last congress
in time of profound peace was radi-
cal departure and innovation in Ameri-
can history, and the effect of the action
of the court Of last resort will very
likely be to dispose of it finally.
Whether there will be an extra sos