The Hawaiian gazette., 1897-08-27
TAX Is UNCONSTITUTIONAL.
Court So Decides-Attorneys Wake
field and Wise Censured.

SOui l oO bGSidGS- .AtlOTISNS wa hS-
field and 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
Frear dissents. The decision includes
the cases of James Campbell and the
Honolulu Iron Works, so that it effects
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"
THE statute in question does not ex-
empt from taxation all incomes to the
amount of $4,000, but imposes upon
him who receives over 81 900 a year
tax of l per cent upon the whole
amount, whereas the person whose in
come is less than $4,000 pays only on
the excess of income over 81 ,000 1t is
well settled that the Legislature has
the power TO classify objects of taxa
ton, but it is equally well settled that
selections cannot be made out of a
class for taxation and others of the
same class be exempted The effect of
, this section of the Act would be to
place the burden of this tax upon those
whose annual incomes are over 81 900.
and who constitute a minority of the
community"
The decision of the Court states that
the argument that $4,000 is the aver
|
is not to be taken as true in this COM
munity. But if it be once conceded
: that exemptions so large as this can
: be made as a public benefit, then ex-
Il emptions of much larger amount can
S be made which might place the whole
e burden upon the rich, and if pushed to
ii an extreme be a confiscation and not
o the proportional taxation authorized by
the Constitution"
q The Court states that to mutilate the
s section of the Act by holding that the
: first part, which imposes tax upon all
: incomes of persons is constitutional
t all exemptions being cut off, would be
n in effect the making of new statute
l, which it has no authority to do I'll
t was the evident intention of the Legis-
: lature to establish a general scheme OF
|, taxation and place a tax upon incomes
e of every description, whether derived
: by individuals or by corporations
: Being convinced that the distinction
: made by the first section of the Act
between the subjects of taxation of the
same class violates the constitutional
:. principle that taxation must be pro-
Il portional, we declare the whole act tc
Il be unconstitutional and void" The de,
: murrer is overruled.
: Justice Frear dissents from the opin.
Il ion of Chief Justice Judd and Justice
o Whiting. Justice Frear cites cases in
s the Federal Courts supporting an ex,
emption of $4,000. The basis upor
which such exemptions rest is thai
the general welfare requires that il
taxing incomes, such exemption should
be made as will fairly cover the an.
. nual expenses of the average family
:. The question of the validity of the dis
II examinations between personal income:
of 81 900 and those not exceeding $4,000
Justice Frear states that there i!
:. little question that graduated or pro
= gressive income tax in the usual form
would be constitutional. He holds tina
:, the Legislature has not provided arbi
: trarily or without real grounds for elias
sifcation or with any other purpos
than to equalize the burdens of tax
: alton The tax is uniform upon al
those within each class. The presump
III ton is that the Legislature acted with
in its constitutional power and tn
presumption must not be overcome.
The Supreme Court decided yester
day that it is censurable conduct 70
ST attorneys, while acting for client il
Of one matter to bring an action closet
lie connected with it against him, havini
Sc as its Interior object actual and pros
r. pective gains to themselves. The opin