The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1895-04-11
SEATTLE. THURSDAY, APRIL II.
DIRECT AND INDIRECT TAXATION.


DIRECT AND INDIRECT TAXATION.
The decision OF the supreme court upon
the validity OF the income tax goes farther
than any previous expression Of judicial
opinion by that august body. II has re-
suited not only In the declaration ~ the
inyaiidiiy OF the tax so far as II relates
10 rents ard municipal bonds, bar In
throwing wide open the whole question
OF taxation. While the decision reaches
now only 20 the two classitications az In
come mentioned. IL becomes evident that
the entire structure IS Ia Jeopardy.
AT this stage of the discussion the wis
dom OF the law need not be considered;
and, since the result OF the litigation Is
the declaration OF a line OF construction
by the court OF last resort which is not
likely to be changed until new economic
theories impress themselves upon the ra-
tion. interest is chiefly directed TO the
immediate consequences. There Is. never
theess. some advantage In contemplating
the legal aspect. because the life blood of
the constitution flows through the veins
OF all state and municipal powers.
Judge Field and Judge White repre-
cent the two extremes OF judicial thought.
The former considers tire whole law I'M
constitutional. not only because 1t in
ciudes a direct tax upon real property.
but because It's exemptions create an in
equality forbidden by the constitution.
The other judge sees In the decision a
position 'fuli OF danger TO our institu-
tions."
The first point was whether the income
tax on rentals Was a direct or an indirect
tax. The pertinent clauses of the consll-
tuition are as follows:
Representatives and direct taxes shall
be aaportsonei among the several states
whIch may be insfuded within this Union
according 60 their respective numbers
No capttat5on or other direct
tax shall be- laid unless tn proportion
to the census hereintorore directed TO be
taken
Ia the Springer case, which has been
50 frequently referred 60, Il was held
that 'direct taxes. within the meaning
81 the constitution. arc only capitation
taxes as expressed In that instrument.
and taxes on rsAl estate and THAI ''the
duty watch the internal revenue acts pro-
slded should DO assessed. collected and
paii upon gains. profits and incomes was
an excise Of duty. and not "a direct FAX
within tho meaning or the constitution"
Ia that case William NJ. Springer, of
lllsuoi-. under tho at of 1864. made re-
turn 81 his gains FOR the year 1856. show
ms his ret income subject 10 taxatloa 20
DE $50 7aS. upon which the sum oe 81. 79a. "
was assessed. spriisScr refused so tay
and sssme real estate ga Springiield was
sold In satisfaction. He did not attempt
anjanction. but waited until tha Federal
Then he RAISED the questions whsch ~
suited in the declsson. II win he observed
that the whole suhl e--t 81 iNcugna WAS re-
viewed. without distinction being made
between rentals and any other source or
profit. Herein lies the inagpiicahilsty ot
the Springer case - chat Just decided
The court nov holds that rental j. ex-
esnpt because taxes on real estate he
long "a the class ~ d.rts,t taxes and thar
taxes on the rents or tns,onie ~ real -
tate. which Is incident % its ownership.
belcug 81 the sagn~ vsa,ss." shus falling
within she constitutional requirement OF
state superintendent.
Where. then. shah the line Of distlnc-
ton be drawn
II \ own a large hr3ck factory crested
on hts own land. and hires & out 20 an
other receiving therefor a rental. that
rent cannot be taxed as part OF his tn
come, HIS neighNor n also owns a large
brick factory on his own land. but util-
tzes Il Ia the employment 81 labor. Shall
he he allowed - exempt the rent OF tire
premises in addition 20 his profits up 60
s,.esa. or must he pay tax on II as
part % hts incer,es
Alexander Hamilton suggested that Ill
rest taxes he held 60 moan only CART
sstinn taxes and taxes on the
whole property 81 individuals All else
must OF Necessity Re considered as inat-
rect taxes" In tire Nyitou case also
r4asse famous by sac recent decision. a
Federal tax On plsaNfre carriages was
sustained. In spite az the oplngou 81 Maai-
sen that 70 Was dtFect tax Justice
Chase said, in passing upou ~. a tax on
carriages cannot BE laid IS the rtlfs az
appcFttonmcnt without Vrr- g-fat gr-
equality and inluSgice. "TFor ~xa-nrie
sipp0se two stat1 equal ia sensus 70
PAY SNA.no each nv tax on carriages
- s. On every carriage. and ga ore state
there are 30 carriages. and IN the other
t@a TIRE oWners % carriages IN oae
state would pay ten TIRES the tax az cxv,.
crs 81 ths ether Justice Chase vas in-
N1'ncs g. thlak SHAT the 8irect taxes con-
trrmrlssei ~ the constitution WIRE only
tsso~-a capi'atloa Tax and a TAX On laaa
Chancellor kent agreed wiyh this view
bvt Justice Stayy divides direct and inai-
rccf taxes into tAosa upon land and those
ga consumption. As y snatteT oF htstory
whenever ths government has Imposed
tax watch Il recogn5Erst as = atfvcs tax
q has only beca applied - real estate
ard slaves
Incidentally Il nsay bS mentioned ;A&t
Snska@& Ls@sA iSe-xl IL s~xsss-x q atx-aa