The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1902-08-13
DECISIONS ON
INCOME TAX
HOW THE TERRITORIAL SUPREME
COURT SUSTAINED THE
LAW.
SOME CLAUSES ADMITTED TO BE
PROBABLY INVALID.
Associate Justice Galbraith Dissented
On the Grounds Now Urged Before
United States Judge Estee.

Col. Fitch, the champion of the in
come tax fighters, was quoted yester-
day as saying in reference to the ques-
tion of the validity of the income tax
law:
The Star which is usually correct,
was in error in stating that this mat
ter has been before the Supreme Court
of the Territory of Hawaii. What was
decided was relative to the case of the
Oahu Railway Company which held
that they had a ten years exemption
from taxation under their franchise
The Supreme Court simply held that
this exemption did not hold good as
far as the Income tax was concerned.
The validity of the tax was not touch
upon in the judgment"
The Supreme court decision on the
subject here was on all the points which
attorneys could raise on the general is
sue of the COnstitutiOnality of the in
come tax law. The case was brought
on August 10, by Attorneys Smith and
| Lewis and a. S. Hartwell Robertson &
Wilder appearing for the defense. There
were two appeals, one in the case of
| George II. Robertson to test the issue
| as to individual incomes and one in
the case of the Waimea Sugar Com
pany to test the law as to corporations.
| for declaring the act unconstitutional
and on August 26, the Supreme court,
Galbraith dissenting, handed down a
decision sustaining the law. The fol-
| lowing is the syllabus
Parts of a statute may be invalid
without rendering the statute invalid as
whole. No opinion is expressed as to
the invalidity of certain clauses of the
income tax law which are claimed to
| vs,I,
against characterization unreasonable
| searches and seizures, excessive fines
and cruel and unusual punishments, in
| asmuch as no action has been taken
| under these clauses, and they would not
if invalid, affect the remainder of the
| statute.
IF the Territorial legislature cannot
tax the interest from United States
| bonds and the salaries of the judges OF
the Supreme and circuit courts of the
| territory, still the income tax law would
not be invalid as a whole though gem
eral in terms and not expressly except
ing such interest and salaries. A law
| may in cases be invalid or impliedly
| inapplicable to some of the objects
within it's letter without being void as
a whole. The invalid part, to avoid af-
| fecting the remainder of the law need
not be in a separate clause.
THE Legislature may classify the OBJ
| jects of taxation, provided the Classifi-
| cation is not merely arbitrary.
THE Legislature may place individuals
in one class and corporations in another
class, eXempting the incomes of the
| former up to one thousand dollars in
lieu of a deduction for personal and
family expenses, and not allowing a
similar exemption to corporations, they
having no such expenses. a deduction
of other necessary expenses being al
lowed in both cases.
IAN exemption of all incomes to the
amount of $1,000 is not invalid on the
ground that it is excessive.
"Such exemption is valid though al
| lowed only for the aggregate income
of all members of a family composed OF
one or both parents and one or more
minor children, or husband or wife; anC
for each ward except where two OF
more wards are comprised in one
family, in which case the aggregate de-
ductiOn shall not exceed $1,000
In estimating the income tax from
sales of personal property, a taxpayer
may be lawfully permitted to omit pro.
ducts produced and consumed by him.
self and not sold.
THE legislature may lawfully pu
| foreign insurance companies in g
class by themselves and tax them one
per cent on their gross income anC
other persons and corporations two pei
cent on their net income and one pei
cent on their property"
Justice Galbraith's dissent was baseC
largely on the ground WHICH is now tC
be urged before Judge Estee, that the
Territorial Legislature has not the pow
er to enact a law which Congress ha!
been held poweTless to enact. Gal
braith also pointed out number of de
fects in the law, which he declared t
be such that he could not sustain the
art.