The herald., 1895-05-08
Argument on the Tax Matter
Reopened in Court
ATTORNEY WHITNEY'S PLEA
American Taxation From Revolutionary
Times Reviewed
dividuals Discussed-Att General
Olney Opens His Argument


Assistant Attorney General Whitney in
the midst of his argument for reversal
OF the CORNER opinion OF the court on the
question of the validity OF federal tax
on incomes derived from rents. All seats
On the bench were again occupied today
rs vestcr lay. and visitors crowded the
court room. Whitney said his historical
brief, which h. had promised yesterday.
had not reached him from the printer,
but he had already gone almost as far
into the question as he should, in quoting
the English precedent. orally, and giving
the facts as to meaning of various words
and phrases used in taxation. He said
his statement OF facts would be his prin-
cipal argument. ana he believed that in
case of the character of The in ONE tax
cases facts were the best argument that
coull be made. He claimed the weight of
evidence was to the following account:
First-Tha word duty had legal de-
fnition. The phrase 'direct tax" had
none, but was borrowed from political
economy.
Second-Sps hc personal property tax,
specific real property tax and specific in
come tax were each duty within the
meaning Of the constitution. General tax
on all personal property at valuation was
not duty, impost or excise at all, nor
was it direct tay in political economy.
Third-Specitic real property tax would
probably h We. been considered indirect
tax.
Fourtll--GIncral income tax. properly
so-callej. was unknown at the time of
the constitution. but was Il duty within
its meaning.
Fifth-Spsciic personal property or
specltics sihconIe tax was u duty and not 4
direct tax.
Proceeding, and taking up the
American system of taxation at the time
Of the revolution, Mr.. Whitney said it
was devoid of uniformity and very dill
cult of classification. 1t could not be
shown thoroughly by going through the
statutes of the thirteen states as he had
gone through those of Great Britain. He
quoted frequently from the report of
Secretary of the Treasury Wolcott, made
in 1876. in which that official states that
the system was entirely different in vari-
Gus states and some of the states were
almost without any form whatever. In
North Carolina, for instance, lands were
distrces. and in Virginia by a classifica-
ton of counties. He directed especial
attention to Wolcot rs report, saying that
his explanation was clear and while he
did not use the term "direct taxes" in
the legal meaning, he gave it the mea n
ing OF the political economists. He said
there had been no income tax in any of
the states prior to the convention. unless
1t was in Delaware and concerning that
state there was apparently doubt. The
system in use in most of the states was
that of rating and for tax purposes at an
annual valuation. Summing it up, he
said the main result of the examination
of the systems in the variou, states .ad
been negative in character and had shown
first that the systems were SO different
that 1t was hard to determine how they
did pay their taxes. and secondly that
there was no settled meaning to the word
duty" The same TAX was Il duty at one
place and an excise at another.
Mr. Whitney argued at great length to
show that the present income tax i'm
posed OH land or on rents. because they
were derived from land, but on rporop-
erty of all kinds, accrung to the owner
Z q.
In the question of uniformityl he said
he had nothing to offer that had not been
given in the original hearing but he re-
p'ated some of these for the purpose.
as lie said, of setting the opposing side
right as to the position of the govern
ment.
Mr. Whitney contended against the
theory OF personal uniformity as intended
by the constitution. He argued that so
far as corporations are conce. led the
theory of individual uniformity would
not be applied to them. In estimating
the profits of an individual no account
was taken of his time, he did not pay
himself for managing his own business !;
( yet corporations paid salaries to their
officers for managing the business. In
considering the matter of fairness of in
comes below $1,000 Mr.. Whitney asserted
that the court had never assumed to de-
clare that congress ha in any case exer-
cised it's discretion in any manner un-
reasonable, and ntimated that it never
would sc to that length. 1t appeared to
be the undercurrent of Mr.. Whitney's re-
marks that the government did not con-
tend that the exemptions of certain
NiocoSc VI COI pOIdtlOuS were JuSW
~ lie referred to authorities, however to
show that the supreme court had held
that individual corporations might be ex-
emptcd by name even from taxation.
Mr.. Whitney finished at 2:2O with very
brief peroration, and Attorney General
Olney addressed the court. He said:
Il fully appreciate the liberality of the
court both in according this rehearing and
in the matter of the time allowed for ar
gument. L realize at the same time that
it cannot be fairly taken advantage of
merely to reiterate considerations already
fully presented. and that it should be
availed OF only for the new matter proven
to be important but which. so far as the
government is concerned, has been prac-
tically untouched. The present posture
of the case | conceive to be this: The
contention of the government at the for
mer hearing was that the validity of the
general income tax law could not now be
drawn in question-be ng conclusively
settled by repeated adjudications of this
court as we'll as by the uniform and long
continued practice Of the other depart
,nents OF the government. That ooiiteii-
tion has been sustained, [though:b; an