New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-03-01

laws. from the Hylton case, in 1895, which
sustained an unapportioned tax on car
riages IS Dallas, I'D, to the Springer case,
! IN $780, which sustained an unapportioned
tax on incomes. u02 Z. 6. 5Ss.)
In the mean time numerous laws were
passed and enforced imposing taxes on in
comes without apportionment, and a great
part Of the means for carrying on the Civil
War was derived from such taxes.
Superior Courts Decision.
i In the year 1895. however. an income tas
/ law included in the Wilson tariff act o.
i 1894 was brought before the Supreme Court
/ in the case OF Pollock agt. the Farmers
Loan and Trust Company, and in that case
the court decided against the Law. The
case was heard twice. On the first hear
ing a majority OF the court held that a tax
on income derived from real estate must
/ be apportioned direct tax because a
tax on real estate itself would be direct
and the judges divided equally as to
whether a tax on income derived from per-
sonal property must be apportioned Q5l
! L. S. 429.
Upon the second hearing OF the case the
court, by a majority of five to four, held
that tax upon income derived frcnl per
sonal property must be considered direct
tax and must be apportioned O55 L. S.
eolb- All the judges agreed, however, that
taxes on incomes derived from business or
| occupations need not be apportioned. The
effect of these decisions was thus described
in one of the minority opinions:
/ But the serious aspect of the present de-
! clsion is that by a new Interpretation of
| the Constitution il so ties the hands of
i the legislative branch of the government
/ that without an amendment of that in
strument. unless this court, at some
| future time. should return TO the old theory
of the Constitution, Congress cannot sub
! Ject 10 taXaIlon-hoWever great the needs
/ or pressing the necessities of the govern
| ment-elther the invested personal prop
erty of the country, bonds. stocks and in
VeStnlentS OF all kinds. or the income arIs-
ing from the renting of real estate, or from
the yield of personal property, except by
the grossly unequal and unjust rule of ap-
portfornlent among the states. Thus. I'M
due and disproportioned burdens are placed
upon the many, while the few, safely IN
trenchec behlnd the rule OF apportionment
among the states on the basis of numbers,
are permitted to evade their share of re-
| sponsibility for the support of the govern
rnent ordained for the protection of the
/ rights of all.
| 1t was so evidently impossible 10 collect
an income tax by apportionment among the
states according to population that the
general judgment of the country confirmed
the opinion that the decision in the Pollock
case had practically taken away from Con-
gress a power of vital Importance to the
| general governmental power the exercise
of which had, at least in one time of peril,
proved essential to the nation s life.
Need of More Revenue.
The attention of the country was sharply
called to the need of more government reve-
rue for the first time after the Pollock case
by the decrease of customs and internal
revenue receipts and the rapidly mounting
deficit which followed the financial panic
of 1907. and in the extraordinary session of
Congress which began March To- 1909,
when the revised tariff bill came into the
Senate an amendment TO the bill was intro
duced, reproducing in substance the old
income tax provisions of 1884, which the
Supreme Court had held to be invalid both
as TO income derived from real estate and
as to income derived from personal prop
erty. The avowcd and necessary effect Of
including such provisions in the new tariff
law would be 10 present again to the Su-
preme Court the same questions which had
been decided in the Pollock case and to
challenge a reversal of their decision.
Thereupon the resolution for the submls-
sion of this amendment was introduced in
the Senate and was passed by Congress.
The proposal followed the suggestions of
the Supreme Court in the Pollock case.
The evil to be remedied was avowedly
and manifestly the incapacity of the ma
tjonal government, resulting from the de-
cision that income practically could not be
taxed when derived either from real estate
or from personal property, although 1t could
be taxed when derived from business or
occupation.
The terms of the amendment are likely
to cure that evil and TO take away from the
different classes of income considered by
the court practical immunity from taxa
ton based upon the source from which
they were derived.
State Securities Immune.
There was no question in Congress or in
the courts or in the country about the
taxation OF state securities No one claimed
that the inability of the general govern
ment to tax them was an evil The inability
To tax them did not arise from the terms
of the Constitution, but from the fact that,
being the necessary instruments of carry
ing on other and sovereign governments,
they were not the proper subject of ma
tionaI taxation, and that, therefore, no pro-
visions of the Constitution, however wide
the scope of their language, could be held
J
from them Judge Cooley, in his work on
Constitutional Law, says:
The power to tax. whether by the United
States or by the states, Is to be construed
in the light Of and limited by. the fact,
that the states and the Union are insepa-
rable and that the Constitution contem-
plates the perpetual maintenance OF each
with ali its constitutional powers. unem-
balrassed and unirnpaired by any action or
the other. The taxing power of the federal
government does not therefore extend to
the means OF agencies through by the
employment of which the states perform
their essential functions. etc
This rule Of construction has been main
tanned for generations 1t is undisputed
IL was referred to with approval by the
justices who wrote and delivered the opin-
ions in the Pollock case both for and
against the judgment II has been de
clareG again and again by the Supreme
Court to be not open to question. It is a
rule of construction just as controlling in
defining the scope of the proposed amend
ment as il is in defining the scope of the
existing provisions. Under it, from the
earliest times of our government, the ap-
parently unlimited taxing power conferred
by the terms OF the Constitution has been
nelG not 10 apply to the instrumentaities
of the state Under it acts of Congress
which, by their express terms. appeared
10 include instrumentalitles of state gov
ernment, have uniformly been held not TO
include them. This uniform. long estab-
lished and indisputable rule applied to the
construction OF our CONSTITUTIONS rule
which has been declared to be essential to
-oy1fi of e~pSy