Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1916-01-25
INCOME TAX ACT
DECLARED VALID
BY HIGH COURT
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whereas e was power recognized 10
exist from the beginning OF the govern
ment, and thus decisions defining the
taxing power previously rendered were
appIicable'to Il.
Hiatory of Litigation.
Five separate suits 70 test the consti-
nationality or the new income tax law
were brought IN the federal courts
throughout the country soon after the
law became effective and all found their
way 70 the supreme court Of the United
States soon after.
For nearly fifty years the fight for
and against a federal income tax his
been somewhere in the courts.
The income tax imposed during. the
civil wac and the years Immediately
following we're not attacked with tho
seriousness Of later casns. II was not
until the Cleveland administration placed
an income tax In the Wilson tariff act
that the fight became serious.
The contest over the validity OF tho
tax IN 1894 and 1895 before the supreme
court was enc of the most bitter ever
fought out before that court. One of
the lawyers. Jamea G.. Carter warned
the court against setting up its Judgment
20 fhwart the win OF eoQoo.OOo people.
Joseph IL. Choate. opposing. cafed upon
the court TO exercise its judicial power
regardless of any popular or populistic
propaganda. t
At first the court decided that the tax
was unconstitutional as TO rents from
land because u was a direct tax not
apportionod according TO population. and
was unconstitutional as 20 inter-
est on municipal bonds. Only eight
Judges participated and they were evenly
divided ~ to the validity OF other feas
lures Of the law. A rehearing was
granted. and Justice jackson. then dying.
took his place on the bench TO listen to
the last arguments IN his lifetime. jus
tice jackson voted to sustain the law.
Justice Harlan created sensation by
announcing from the bench that an
other Justice had changed his mind over
night on the question. and the entire tar.
both as to realty and as to income from
personality was set aside on the ground
that II was a direct tax and not appor-
toned according to population. as was
required BY the constitution OF direct
taxes.
An agitation for an amendment 10 tho
constitution then began. II oarne TO
nothing until President Taft recon-
mended the enactment Of an excise tan
on corporations to be measured by their
income, and an amendment 10 the con-
stitution TO permit the levying of an In
como tax on all income. This amend
ment was submitted TO the states at once
and was proclaimed as the sixteenth
amendment TO the constitution on March
1. isia
II provided:
Tho congress shall have power 20 lay
ana collect taxes on incomes from what
ever source derived without apportion-
ton.
List OF salts Filed.
Congress awaited itself OF the first OPP
portunity TO exercise the new power by
incorporating into the tariff act which
became effective october 8. 1919 the pres
emit income tax. Five suits. all ohal-
longing the validity OF certain features
Of the tax. were;
Frank r. Brushaher. stakeholder OF the
Union Pacific Railroad company. seeking
IN the New York federal court 70 enjoin
the company from paying the tax
John +. Dodge and Horace r. Dodge
manufacturers of Detroit, Mich. In the
Michigan federal courts 20 enjoin the In
formal revenue collector from collecting
the tax. largely or the ground that It
diserinlnsted AGAINST eopaFtnerships IN
favor OF corporations.
John r. Stanton. stakeholder OF the
Baltic Mining company IN the Massaehu-
setts federal court. to enjoin the COM
pany and others from paying the tag.
largely because OF the per cent annual
ceduetion from Income allowed mining
companies for oie depletion.
Tyee Realty company. IN the New York
federal courts. 20 enjoin the collection OF
internal revenue.
Edwin Thorne. IN the New York Federal
court 70 enjoin the collector. largely on
the ground that the additional or surtax
imposed on incomes over $4,000 was un.
constitutional
In each instance the lower court held
the tax constitutional. and the case wns
brought 70 the supreme court on appeal
The cases were advanced for early hear
ing and we're submitted 20 the court for
decision on October rs. 1915. twenty wears
after the first great income tax deessions
I