The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1897-08-27
TAX Is UNCONSTITUTIONAL
Supreme Court SO Decides-Attor-
neys Wakefield, Wise, Censured.

/ Supreme Court SO DecidSs-AttOr-
neys Wakefield, Wise, Censured.
/ The Supreme Court handed down two
/ decisions yesterday; one declaring the
/ Income Tax unconstitutional, and the
second censuring Attorneys Wakefield
and Wise of Hilo for unprofessional
conduct Chief Justice Judd wrote the
decision on the Income Tax cases. JUS
tice Whiting concurs, while Justice
F'rear dissents. The decision includes
the cases of James Campbell and the
both individuals and corporations. By
decree of the Supreme Court the order
pro forma of the Circuit Judge, sus-
tanning the defendants demurrer, is
reversed and the demurrer overruled
and the case is remanded to the Cir
cult Judge The defendants filed mo-
ton, as a result of the decision, for
the issuance of an injunction restrain
ing the Tax Assessor from assessing
and collecting the tax.
After citing the contentious of both
plaintiffs, and the Act by which the
provision for assessing incomes is
made, the opinion quotes the argument
of the plaintiffs that Article II of the
Constitution means that each person
can only be taxed on his income rate
ably with the incomes of others. The
Court differs from the contention of
the defendants attorney that there
is no limitation to the power of taxa
ton, since we have no provision in the
Constitution that taxes shall be equal
and uniform " The opinion states that
while the power to tax is inherent in
every Government, the Legislature can
only exercise this power in the meth
cd pointed out, so that each person |
shall pay his proportion or share"
1.-The statute in question does not ex-
empt from taxation all incomes to the |
of $4,000, but imposes upon |
him who receives over $4,000 year a |
tax of / per cent upon the whole |
whereas the person whose in |
come is less than $4,000 pays only on |
the excess of income over $4,000. It is
we'll settled that the Legislature has
he power to classify objects of taxa
ion, but it is equally we'll settled that |
selections cannot be made out of a
class for taxation and others of the |
same class be exempted. The effect of
his section of the Act would be to
place the burden of this tax upon those |
whose annual incomes are over $4,000,
md who constitute a minority of the |
The decision of the Court states that
he argument that $4,000 is the aver
lge annual cost of living of a family
S not to be taken as true in this COM
But if it be once conceded |
hat exemptions so large as this can
De made as a public benefit, then eX-
'mptions Of a much larger amount can
De made which might place the whole
burden upon the rich and if pushed to
N extreme be a confiscation and not
he proportional taxation authorized by
he Constitution
The Court states that to mutilate the
ectiOn of the Act by holding that the
lrst part, which imposes tax upon all
Incomes of persons is constitutional
ii exemptions being cut off, would be
n effect the making of new statute.
which it has no authority to do 'It
vas the evident intention of the Legis-
ature to establish a general scheme of
aXation and place a tax upon incomes
# every description, whether derived
~ individuals or by corporations
Being convinced that the distinction
made by the first section of the Act
,etween the subjects of taxation of the
anne class violates the constitutional
principle that taxation must be pro-
)ortional we declare the whole act to
e unconstitutional and void" The de-
nurrer is overruled.
Justice Frear dissents from the opin-
on of Chief Justice Judd and Justice
Whiting Justice Frear cites cases in
he Federal Courts supporting an eX-
mption of $4,000 The basis upon
which such exemptions rest is that
he general welfare requires that in
aXing incomes, such exemption should
,e made as will fairly cover the an
Iual expenses Of the average family
he question of the validity of the dis
between personal incomes
f $4,000 and those not exceeding $4,000.
Justice Frear states that there is
title question that a graduated or pro-
,ressive income tax in the usual form
would be constitutional. He holds that
he Legislature has not provided arbi-
rarily or without real grounds for clas-
ificatiOn or with any other purpose
han to equalize the burdens of tax
tiOn. The tax is uniform upon all
hose within each class. The presump-
ion is that the Legislature acted with
n its constitutional power and the
resumption must not be overcome.
The Supreme Court decided yester-
ay that it is censurable conduct for
ttorneys, while acting for client in
ne matter, to bring an action closely
onnected with it against him, having
s its Interior object actual and pros
ective gains to themselves. The opin-
on reviews the whole Of the testi-
nony in the case, and concludes by
aging: Counsel owe duties to the
'Ourt besides those to their clients.
he conclusion we have come to, in
hort, is that Mace was induced to sign