Barton County democrat. [volume] (Great Bend, Kan.) 1885-1915, 1895-04-11
THE INCOME TAX.
The Supreme Court Overthrows
Fart Of the Law.
Faxes on Rents and Municipal and State
Bonds UncOnstitutional-Chief JUS
tlce Fuller Delivers the Opln-
Ion of the Court.

day. He began by stating the exceptions to
the law as made by counsel for the appellant
as follows:
l. That the act imposes direct tax in re-
spect of the real estate, rents, issues and
profits well as the income and profits of per-
sonal property and not being apportioned is in
violation of section article of the conSti-
Tuition.
q That the law, if 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, in that it provides exemp-
lions in favor of individuals and co-partner-
ships while denying all exemptions to corpora
lions having similar income derived from
like property and values and provides for
other exemptions and inequalities in violation
Of section of article of the constitution.
3. 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
e65.00oO00 per annum, on which the total an
.aual income tax would be 81 100000
The chief justice then took up the constitu-
etional points involved, dwelling upon the
dact that the constitution required the appor-
rtionment of direct taxes and uniformity in ex-
~eiseS and imports.
Coming down to the present tariff act the
cchfef justice said that the law was passed in a
time OF profound peace and it was to be taken
rs evidence that the congress had sought in
this matter to form precedent and establish a
departure from established lines, and it there
fore became important to inquire into the cir
cumstances with some attention to detail
For the purpose OF comparison, he went back
10 the enactment OF an income tax during the
Evil war. He quoted from the decision in the
Springer case. giving a history of the case and
devoting much attention to it.
It 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 rents de-
rived from lands were indirect taxes. Was
there, he 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 it? The name OF the tax
is unimportant, and the court has been unable
70 see any distinction. He closed by saying:
1.-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
VeStmentS is direct taxation and unconStitu-
asional.''
The court next decided that the tax was I'M
constitutional SO far as 1t related to incomes
from state, county or municipal bonds. 1t was
next ruled that the fact that the law was pro-
anounced unconstitutional in these two particu-
lars did not inyalidate the law whole. It
was announced that in this latter conclusion
~ehe court was equally divided, and therefore
rendered no opinion. The lower court having
ruled in favor Of the law by divided court,
athe law would stand except as to rents and
these two points it was directed that the judg-
-fnent below be reversed.
The syllabus of the courts opinion is as fol-
lows:
In Charles Pollock VS.. the Farmers Loan s.
Trust Co. ct al. it is established:
l. That, by the constitution, federal taxation
rs divided into two great classeS-direct taxes
land duties imposts and excuses.
2 The imposition of direct taxes is governed
10y the rule of apportiOnment among the sew
aeral states, according to numbers and the i'm
F1OSitiOn n inn nv a
4rule OF uniformity throughout the United
States.
g. That the principle that taxation and rep
sreSentation go together was intended to be and
was preserved in the constitution by the estab-
iishment OF the rule of apportionment among
1the several states, that such apportionment
should be according to the numbers in each
state.
4. That the states surrendered their power to
ievy imposts and to regulate commerce to the
general government and gave it the concurrent
6power to levy direct taxes in reliance on the
protection afforded by the rules prescribed, and
that the compromises of the constitution can
mot be disturbed by legislative action
5. That these conclusions result from the
text of the constitution and supported by
the historical evidence furnished by the cir
cumstances surrounding the framing and adop-
ation of that instrument, and the views of those
who framed and adopted it.
6. That the understanding and expectation al
ethe time OF the adoption Of the constitution
was that direct taxes would not be levied upon
esthe general government except under the pres
sure of extraordinary exigency, and such has
been the practice down to August Is, 1891. Il
Uthe 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.
Gtion in diSpoSing 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 Incl
dent OF its ownership, belong to the same
,class
8. That by no previous decision of this cour
2has this question been adjudicated to the con
strary of the conclusions now pronounced.
9. That so much of the act of August Is. 1884
las attempts to impose a tax upon the rent o.
Income of real estate without apportionmen
Us valid.
The court is further of the opinion that tn,
sact of August 10 1894 IS invalid so far as it at
YtemptS to levy tax upon the income derives
from municipal bonds. AS municipal cor
-poration is the representative OF the stat
and one of the instrumentalities OF tn
state government, the property and rev
-enues of municipal corporations ar
not subjects of federal taxation. nor i
the income derived from state, county AM
municipal securities, since taxation on the in
interest therefrom operates on the power Z
Fborrow before it is exercised and has senSfbl
influence on the contract. and therefore such
tax is tax on the power OF the states ant
their instrumentalities to borrow money, ant
consequently repugnant to the constitution
Upon each OF the other petitions argued q
the bar, to-wit: First whether the void pro
visions as to rents and incomes from real es
tate invalidates the whole act: second. whethe
as to the income from personal propert
as such the is demonstrations
laying direct taxes; third, whethe