The Montgomery advertiser., 1909-06-20

| income tax law, largely on the GROUND
that II would be direct tax, serves
to show how legal opinion as well as
public sentiment may change. For
hundred years the courts ana Congress
proceeded on the theory that an IN
come tax was not direct tax--or
more strictly speaking. that taxes on
lands and capitatfon taxes were the
only forms Of direct taxation. which
must. according to the Federal Con-
stitution, be apportioned among the
various States In proportion tot popu-
lation. Twenty-one justices Of the
Supreme Court had taken this view.
directly or Indirectly, while only nve
had held q contrary opinion.
Then came the fight on the income
I tax OF the Cleveland administration.
First, the Supreme Court held that q
tax on rent was q tax on real estate,
and therefore unconstitutional. AM
other case was soon brought before the
court In which It was contended that
any sort Of an income tax was uncon-
stitutional. This was the famous Pol
lock case, In which the court stood
four to four. Judge Jackson OF Ten
nessee being Ill and unable to. sit. On
a rehearing. Judge jackson took part
and supported the constitutionality Of
the law. But one Of the justices who
had voted to uphold the law at the
rehearing. and in spite OF Justice jack
sons arising from q sickbed to sus-
tain the law, Il was declared uncon-
stitutional by q majority of one vote.
The world at large. and even the
most careful writer's. have always at
tributed the change to Justice Shiras
Of Pennsylvania, but Senator Bailey IL
authority for the statement that 1t was
not Shiras, but Horace Gray of Mas
sachusetts. who voted to uphold the
Law In the first case and to declare
1t unconstitutional at the second hear
Ing. Justice Shiras never affirmed or
denied the charge that he had changed
his mind, 1t being an unwritten law
that no Justice shall discuss outside
the consultation chamber that which
takes place behind it's portals. II Sem
ator Bailey is correct concerning this
matter, and he seems to know where
of he speaks, this furnishes a remark
able and unusual instance of widely
disseminated information of an erron-
eous character. However 1t may be.
the fact remains that the changing of
a single mind served to reverse prece-
dents of hundred years.
The first income tax law ever en-
acted by the American Congress was
that OF 1861 known as the Stevens
Morrill, act. Practically everybody ac-
quiesced In II, and as part OF gen.
eral emergency revenue measure It was
but little discussed. The law was re-
pealed In 1859, and another substituted
therefor. The second law was amend
the income tax law the revenues de-
rived from It was about s15.ooo,oo0.
The next year It was $1,000. 600. Dur
ing the fiscal year 1s65-s6 the income
tax revenue was $s0,O00.o00, and the
following year $4,000. 600. Thereafter
the line of exemption was continually
placed higher and the revenues from
the tax declined to $27,0oo,ooo in 1870.
The agitation that led to the repeal
OF the income tax law in 1870 was di-
rected more against the excessiveness
OF the tax than against its principle.
Special Commissioner Wells stated in
his report that an income tax of per
cent. was higher than any nation had
ever before levied excepN In time Of
great emergency, He advocated that
the rate be cut to per cent. and lew
led on all incomes above $1,000. In
1870 the law was amended so as to
make the exception $1,000, and the
rate 1-2 per cent It was by its own
terms TO remain In force only one year.
That winter q bill was introduced by
Senator Scott Of Pennsylvania. the eff
feet OF which was to repeal the In
come tax law entirely. Senator John
Shernaft, AfterSnfd Secretary OF the
treasury and Secretary dof slate, esres1
ported the btif adversely A few days
later Il was considered and passed by
a majority Of ono vote Vs.ss h.tfi
The matter was brought up in the
House eby o resolution denyin 4 the ]
tax. 'lsZisia ton. THE House adopted
the resolution. but the Senate tena-
ciously adhered to Its course, In spite
of the action of the House. Both
houses appointed conferees, but they
were unable TO agree. Later q bill was
offered in the House to repeal the Jaw.
Consideration OF this measure vas re-
fused by a majority Of one vote. Just
as one vote had passed the income tax
measure in the Senate.
From the beginning Of the govern
ment there had been many cases decid-
ed which indirectly afflrmed the con-
stitutlonality Of an income tax. But
the first case in which that precise
question arose was that Of the Pacific
Originally IT was not at all case to
test the validity of the income tax law.
The SUIT grew out of the difference IN \
the value OF gold and paper money.
The Insurance company rendered So
37s as the amount OF Its income tax,
the tender being in paper money. The
collector refused this, declaring that
~ Suoulu DC IN EOtu, OF the equtVdtent
of gold-$7. 365 in paper. It was on
this issue that the case went to the
Supreme Court The attorneys for the
insurance company raised every ques-
ton that could be raised--among them
the constitutionality OF the law itself.
The court answered this question by
declaring that an income tax Is not a
direct tax. William NJ. Evarts was the
Attorney General In this suit.
Several other decisions OF a similar
nature followed this one, the most i'm
portant OF which was the case of Will
liam Fl. Springer, afterward a Demo-
cratic leader in the House Of Repre-
sentatives. He refused to pay his IN
come tax. declaring that the law was
unconstitutional. The government
levied on and sold his homestead. pur.
chasing II for itself at the execution
sale. and then brought suit to eject
Springer. On this issue the case reach
ed the Supreme Court. Springer pre-
pared his own brief. and fighting for
his very heathstone, he is said to have
brought in as nearly a complete pre-
sentation OF his case as ever was made
Of any case in the Supreme Court.
income tax was not a direct tax, and
that therefore It was constitutional
The whole controversy over what
constitutes direct taxes began when
the Constitution itself was being franz
ed. 1t was in the course of that de.
bate that Rufus King asked his ia
nous question: What are direct
taxes7" We have the word of Mr..
Madison that the question went un-
answered The school Of political
thought which holds that income taxes