The Madisonian. (Virginia City, Mont.) 1873-1915, 1895-04-20
IS MUCH DISFIGURED
INCOME TAX PARTIALLY KNOCKED
OUT BY A DECISION.

Supreme Court Holds That Incomes From
Rents, State, County and Municipal
Bonds Cannot Be Taxed by the Federal
Government Otherwise the Law Is
Coco
WASHINGTON. April 9.-After almost
a month of deliberation the United
States supreme court rendered its de-
cision in the income tax cases, deciding
by a divided court the law to be valid,
except regarding the incomes derived
from rents and from municipal bonds,
OF which point the decision was that
the tax was unconstitutional.
The courts conclusions after review
ing the historical and other phases OF
the question were as follows:
/. 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 several states, according to
numbers and the imposition of duties,
imposts and excuses by the rule of uni.
formity throughout the United States.
3. That the principle that taxation
and representation together was in
tended to be and was preserved in the
constitution by the establishment OF the
rule of apportionment among the sew
eral states, so that such apportlonment
should be according to numbers i'll each
etate.
4. That the states surrendered their
power to levy imposts INC to regulate
commerce to the general government
and gave it the concurrent power to
lew direct taxes in reliance on the pro-
lection afforded by the rules prescribed,
and that the compromises OF the constl-
tuition cannot 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 circumstances sur
| rounding the framing and adoption OF
that instrument and the views OF those
who framed and adop tedlt.
6. That the understanding and ex-
mediation at the time Of the adoption OF
the constitution was that direct taxes
vould not be levied upon the general
government, except under the pressure
of extraordinary exigency and such has
been the practice down to Aug. 10,
| 1894. If the power to do SO is to be eX-
ercised as an ordinary and usual means
of supply, that fact furnishes an addl-
| tional reason for circumspectlon III dis
posing Of the present case.
Z. That taxes on real estate belong
10 the class of direct taxes, II that the
| taxes on the rent Or income OF real es'
tate, which is the incident OF its own
ership, belong to the same class.
s. That by no previous decision OF
this court has this question been adju'
dictated to the contrary OF the conclu'
sions now announced.
9. That so much of the act Of Aug.
Is. 1894, as attempts to impose a tax
mon the rent or income of real estate
without apportionment is invalid.
The court is further of opinion that
the act of Aug. Is, 1894, is invalid sc
far as it attempts to levy a tax upon
the income derived from municipal
bonds. AS a municipal corporation is
the representative of the state and on
Of the instrumentalities OF the state
government, the property and venue
of municipal corporations are not sub
iects of federal taxation, nor is the in
come derived from state, county and
municipal securities, since taxation OF
the interest therefrom operates on thu
mower to borrow before it is exercised ane
has a sensible influence on the contract
and therefore such q tax is a tax OF
the mower of the states and their instru
mentatalities to borrow money, ant
consequently repugnant to the constl
tuition.
Upon each Of the other petition
argued at bar, to wit:
First-Whether the void provision
as to rents and incomes from real estat
invalidates the whole act.
Second-Whether as to the incom
from personal property as such, the &C
is unconstitutional, as laying dlrec
taxes.
Third-Whether any part OF the tax
if not considered as a direct tax, is IN
valid for want of uniformity on eithe
of the grounds suggested.
The justices who heard the argu
ments are equally divided and there
fore no opinion is expressed.
The result is that the decree OF tn
circuit court is reversed, and the cas-
remanded with directions to enter
decree in favor of complainant in re
sncct only Of the voluntary payment c