The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1895-04-09
DECISION BY SUPREME COURT.
The Rent and Bond Tax Direct. and
Therefore unconstitutional.
A Tax on Rent Il Tax on Iand-A Tax
on Bonds Is a Tax on the City or
state Issuing Them such Taxes
Must Be Apportioned According To
Population.

Was rendered today by Chief Justice E'ul-
Ter. The court knocked out the law, as
far as Il taxes incomes derived from
rents. and also from state. county and
municipal bonds. BY a tie vote of the
court the Law was sustained in other re-
specsS- The courts conclusions. after
reviewing the historical ana other phases
o. the question. were as follows:
In Charles Pollock VS.. the Farmers
Loan and Trust Company, ct al. ii is
established:
-First-That by the constitution federal
taxation Is divided into two great classes
direct taxes and duties. imposts and
excises.
'Seeond-That the imposition of direct
taxes is governed by the rule of appor-
uohment among the several states. ac-
cordlIls TO numbers. and the imposition
OK duties, imposts and exeises by the
rule OF uniformity throughout the United
States.
'"Third-That the principle that taxa
lloh ana representation go together was
intended TO be, and was preserved. In
the constitution by the establishment of
the rule OF apportionment among the
several states, 80 that such apportion-
ment should be according TO numbers in
each state.
'Fourth-That the states surrendered
their power to levy impoSts and TO resu-
ANANN %SAAsA&ifANc ~ the EGlEFai government.
ana gave IL the concurrent power to levy
direct taxes. in reliance on the protec-
ton afforded by the rules prescribed. end
that the provisions of the constitution
cannot be disturbed by legislative action.
blfTli-Ihat these conclusions result
from the text OF the constitution and
are supported by the historical evidence
furnished by the circumstances surround
ing the framing and adoption OF that In
struEnent and the views OF those who
framed and adopted It,
Sixth-That the understanding and ex-
pectation at the time OF the adoption Of
the constitution was that direct taxes
would not be levied by the general coy
ernment. except under the pressure OF
extraordinary exigency. and such has
been the practice down to August Is.
1891 If the power 10 do so Is to be exer-
cised as an ordinary and usual means
of supply. that fact furnishes an addi-
tional reason for circumspection IN dis
posing Of the present case.
SeVenth-That taxes on real estate he
long TO the class OF direct taxes and that
taxes on the rents or income of real es-
tate. which is incident TO its ownership.
belong TO the same class.
Eighth-That by no previous decision
or this court has this question been ad-
Judicated contrary 10 the conclusions
now announced
"Ninth-T'hat so much OF the act of
August IL. 1891. as attempts to impose
a tax upon the rent or income of real es-
tate without apportionnlent Is invalid"
The court is further of the opinion that
the act of August Is. 1894. is invalid so
far as IL attempts to levy tax upon the
income derived from municipal bonds AS
municipal corporation Is the representa-
tive of the state. and one of the instra-
mentalities of the state government, the
property and revenues of municipal cor
pOrations are not subjects of Federal tax
alton. nor is the income derived from
state, county and municipal securities,
since taxation on the interest therefrom
operates on the power 20 borrow before II
is exercised, and has a sensible influence
on the contract. and therefore such a tax
is a tax on the power of the state and
their instrumentalities TO borrow money,
and consequently repugnant TO the con-
stitution.
Upon each Of the other points argued at
the bar, to-wlt:
First-whether the void provisions as TO
rents and incomes from real estate In
vaiidates the whole act:
Second-Whether as 10 the income from
personal property. as such, the act Is con-
stitutional as laying direct taxes
Third-Whether any part Of the tax. II
not considered as n direct tax. is invalid
grounds suggested.
The Justices who heard the arguments
are equally divided and therefore no opin-
grounds suggested.
The result IS that the decree OF the cir
cult court is reversed. and the case re-
manded with directions 20 enter decree
in favor Of the complainant. I'm respect
only OF the voluntary payment OF the tax
on the rents and income Of its real estate.
and that which II holds in trust. and on
the income from the municipal bonds
owned or so held by IT,
The announcement OF the foregoing con-
clusf0ns OF the court was preceded by
review OF many opinions az the supreme
court from the tire of chief Justice Mar
shall down 20 the celebrated Springer
case. brought hy Representative
Springer. Of Illinois. and by an exhaustive
review of the nature of direct and indi-
rect taxation. IN the course of which
chief Justice Fuller reviewed the de-
hates leading up 20 the framing or the
Federal constitution.
In conclusion the chief Justice stated
that the opinion upou the Pollock case
covered the other cases The delivery OF
the opinion consumed just one hour.
Chief Justice Fuller's Decision
Chief JustIceFuller beEan by stating the
executions 70 the law as made by eoun-
sci for appellant rs follows:
.sFirs,-That the act imposed direct
+ax in respart Of real estate, rents. issues
and Frofts as weIl as of income ana pro-
fis of personal property. and not being
apnoriionea. Is IN violation OF section :,
article I. ~ the constitution.
.-Se~ouf-That the law. X not imposing a
direct tax. is nevertheless uneoHstitu-
ffor1al in that It's provisions are not uni
FORM throughout the United States and
40 rot cr.erzte with the same force and
eTect ,tuon subjects OF the tax Hhcr-
.ve~ found. or IN that e provides eIernp-
,fo~x an favor q individuals and CO
,arsnershin while denying al exemptions
=, .erno-afsons having similar income de-
rived from Ike property valnes. and pro-
,tAes for the exemption ard inequalities
~ Violation OF section 9. article !. of the
constitution.
s.Th{rf-That the act provides no ex-
arwrsfon II tax upon incomes derived
f~er4 stocks and ho8ds - states. the
r-rf+e8 STATES and eazynfiss nni fnunicir'-
a7sflae therein which stocks arf bonds
ara rot a proper subject fn~ - faNinF
..o.~.e~ ~ congress. TIE incnfne from these
,..~,.~s-fs-3 iu the United States amounts
>, ever "a 80 90 Per aunuu. on which
-. total annual Income tax would be
s. 1870 fssa
,.-,s--sq fr,vafve~s s7wesirsy tspGn the fsct
s5ssf tna ronssts gJ3or required aFfseTt 4fsE1-
.,s4fss of 8trecg taxes and uniformity ~
s-x~lsex s-fs Imports Ffe a5so dwelt slpou
.he fuez,foa of regresesi at500 and fexa-
.s.- .hls-h waz ha sad tae fara17nFs