Source: https://supreme.justia.com/cases/federal/us/253/245/
Timestamp: 2019-04-26 01:56:26+00:00

Document:
The relation of its members to the principle involved cannot relieve this Court of the duty to determine the taxability of the salary of a judge of another federal court in a case duly presenting the question. P. 253 U. S. 247.
The primary purpose of the Constitution in providing (Art. I, § 1, cl. 6) that the compensation of the judges "shall not be diminished during their continuance in office" was not to benefit the judges, but to attract fit men to the bench and insure that independence of action and judgment which is essential to the maintenance of the Constitution and the impartial administration of justice. Pp. 253 U. S. 248, 253 U. S. 253.
Such being its purpose, the limitation is to be construed not as a private grant, but as a limitation imposed in the public interest -- not restrictively, but in accord with its spirit and the principle on which it proceeds. P. 253 U. S. 253.
Any diminution which by necessary operation and effect withholds or takes from the judge a part of that which has been promised by law for his services must be regarded as within the limitation. P. 253 U. S. 254.
The prohibition embraces and prevents diminution by taxation, and has been so construed in the actual practice of the government. P. 253 U. S. 255.
The purpose of the Sixteenth Amendment, as shown by its language and history and by recent decisions of this Court, was not to extend the taxing power to new or excepted subjects, but merely to remove all occasion otherwise existing for an apportionment among the states of taxes laid on income, whether derived from one source or another. P. 253 U. S. 259.
of the Constitution, and is invalid. P. 253 U. S. 263. Peck & Co. v. Lowe, 247 U. S. 16; United States Glue Co. v. Oak Creek, id., 247 U. S. 321, distinguished.
This is an action to recover money paid under protest as a tax alleged to be forbidden by the Constitution.
"including in the case of the President of the United States, the judges of the Supreme and inferior courts of the United States [and others] . . . the compensation received as such."
respect of his salary consistently with the Constitution is the matter in issue. If it be resolved against the tax, he will be entitled to recover what he paid; otherwise his action must fail. It did fail in the district court. 262 F. 550.
"The judges, both of the Supreme and inferior courts, shall hold their offices during good behavior and shall at stated times receive for their services a compensation which shall not be diminished during their continuance in office."
The plaintiff insists that the provision in § 213 which subjects him to a tax in respect of his compensation as a judge, by its necessary operation and effect, diminishes that compensation, and therefore is repugnant to the constitutional limitation just quoted.
as expressly reducing the compensation from a greater to a less sum per year, and thereby leave the way open for indirect, yet effective, diminution, such as withholding or calling back a part as a tax on the whole? Or does it mean that the judge shall have a sure and continuing right to the compensation, whereon he confidently may rely for his support during his continuance in office, so that he need have no apprehension lest his situation in this regard may be changed to his disadvantage?
The Constitution was framed on the fundamental theory that a larger measure of liberty and justice would be assured by vesting the three great powers -- the legislative, the executive, and the judicial -- in separate departments, each relatively independent of the others, and it was recognized that, without this independence -- if it was not made both real and enduring -- the separation would fail of its purpose. All agreed that restraints and checks must be imposed to secure the requisite measure of independence, for otherwise the legislative department, inherently the strongest, might encroach on or even come to dominate the others, and the judicial, naturally the weakest, might be dwarfed or swayed by the other two, especially by the legislative.
the matter suggests several important consequences. It proves incontestably that the judiciary is beyond comparison the weakest of the three departments of power; that it can never attack with success either of the other two, and that all possible care is requisite to enable it to defend itself against their attacks."
"The complete independence of the courts of justice is peculiarly essential in a limited Constitution. By a limited Constitution, I understand one which contains certain specified exceptions to the legislative authority, such, for instance, as that it shall pass no bills of attainder, no ex post facto laws, and the like. Limitations of this kind can be preserved in practice no other way than through the medium of courts of justice, whose duty it must be to declare all acts contrary to the manifest tenor of the Constitution void. Without this, all the reservations of particular rights or privileges would amount to nothing."
greatest scourge an angry Heaven ever inflicted upon an ungrateful and a sinning people was an ignorant, a corrupt, or a dependent judiciary."
"It is also necessary that there should be a judiciary endowed with substantial and independent powers and secure against all corrupting or perverting influences; secure, also, against the arbitrary authority of the administrative heads of the government."
"Indeed, there is a sense in which it may be said that the whole efficacy and reality of constitutional government resides in its courts. Our definition of liberty is that it is the best practicable adjustment between the powers of the government and the privileges of the individual."
can comprehend and heed. The constitutional powers of the courts constitute the ultimate safeguard alike of individual privilege and of governmental prerogative. It is in this sense that our judiciary is the balance wheel of our entire system; it is meant to maintain that nice adjustment between individual rights and governmental powers which constitutes political liberty."
Constitutional government in the United States, pp. 17, 142.
"shall hold their offices during good behavior and shall at stated times receive for their services a compensation which shall not be diminished during their continuance in office."
the state constitutions on this head. Some of these, indeed, have declared that permanent salaries should be established for the judges; but the experiment has in some instances shown that such expressions are not sufficiently definite to preclude legislative evasions. Something still more positive and unequivocal has been evinced to be requisite. . . . This provision for the support of the judges bears every mark of prudence and efficacy, and it may be safely affirmed that, together with the permanent tenure of their offices, it affords a better prospect of their independence than is discoverable in the Constitutions of any of the states in regard to their own judges."
"Without this provision [as to an undiminishable compensation], the other, as to the tenure of office, would have been utterly nugatory, and indeed a mere mockery,"
"It tends also to secure a succession of learned men on the bench who, in consequence of a certain undiminished support, are enabled and induced to quit the lucrative pursuits of private business for the duties of that important station."
accord with its spirit and the principle on which it proceeds.
"Does not a tax, then, by a state upon the office, diminishing the recompense, conflict with the law of the United States which secures it to the officer in its entireness? It certainly has such an effect, and any law of a state imposing such a tax cannot be constitutional."
But it is urged that what the plaintiff was made to pay back was an income tax, and that a like tax was exacted of others engaged in private employment.
it can find no justification in the taxation of other income as to which there is no prohibition, for, of course, doing what the Constitution permits gives no license to do what it prohibits.
The prohibition is general, contains no excepting words, and appears to be directed against all diminution, whether for one purpose or another, and the reasons for its adoption, as publicly assigned at the time and commonly accepted ever since, make with impelling force for the conclusion that the fathers of the Constitution intended to prohibit diminution by taxation as well as otherwise -- that they regarded the independence of the judges as of far greater importance than any revenue that could come from taxing their salaries.
True, the taxing power is comprehensive, and acknowledges few exceptions. But that there are exceptions, besides the one we here recognize and sustain, is well settled. In Collector v. Day, 11 Wall. 113, it was held that Congress could not impose an income tax in respect of the salary of a judge of a state court; in Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429, 157 U. S. 585, 157 U. S. 601, 157 U. S. 652-653, it was held, the full court agreeing on this point, that Congress was without power to impose such a tax in respect of interest received from bonds issued by a state or any of its counties or municipalities, and in United States v. Railroad Co., 17 Wall. 322, there was a like holding as to municipal revenues derived by the City of Baltimore from its ownership of stock in a railroad company. None of those decisions was put on any express prohibition in the Constitution, for there is none, but all recognize and gave effect to a prohibition implied from the independence of the states within their own spheres.
under discussion was intended to embrace and prevent diminution through the exertion of that power, for, as this Court repeatedly has held, the power to tax carries with it "the power to embarrass and destroy," may be applied to every object within its range "in such measure as Congress may determine," enables that body "to select one calling and omit another, to tax one class of property and to forbear to tax another," and may be applied in different ways to different objects so long as there is "geographical uniformity" in the duties, imposts and excises imposed. McCulloch v. Maryland, 4 Wheat. 316, 17 U. S. 431; Pacific Insurance Co. v. Soule, 7 Wall. 433, 74 U. S. 443; Austin v. The Aldermen, 7 Wall. 694, 74 U. S. 699; Veazie Bank v. Fenno, 8 Wall. 533, 75 U. S. 541, 75 U. S. 548; Knowlton v. Moore, 178 U. S. 41, 178 U. S. 92, 178 U. S. 106; Treat v. White, 181 U. S. 264, 181 U. S. 268-269; McCray v. United States, 195 U. S. 27, 195 U. S. 61; Flint v. Stone Tracy Co., 220 U. S. 107, 220 U. S. 158; Billings v. United States, 232 U. S. 261, 232 U. S. 282; Brushaber v. Union Pacific R. Co., 240 U. S. 1, 240 U. S. 24-26. Is it not therefore morally certain that the discerning statesmen who framed the Constitution and were so sedulously bent on securing the independence of the judiciary intended to protect the compensation of the judges from assault and diminution in the name or form of a tax? Could not the purpose of the prohibition be wholly thwarted if this avenue of attack were left open? Certainly there is nothing in the words of the prohibition indicating that it is directed against one legislative power and not another, and, in our opinion, due regard for its spirit and principle requires that it be taken as directed against them all.
La.Ann.197; 48 N.C. Appendix; N.C. Public Documents 1899, Doc. No. 8, p. 95; In re Taxation of Salaries of Judges, 131 N.C. 692; Purnell v. Page, 133 N.C. 125, and has strong sanction in the actual practice of the government, to which we now advert.
"The judiciary is one of the three great departments of the government, created and established by the Constitution. Its duties and powers are specifically set forth, and are of a character that requires it to be perfectly independent of the two other departments, and, in order to place it beyond the reach and above even the suspicion of any such influence, the power to reduce their compensation is expressly withheld from Congress, and excepted from their powers of legislation."
the Constitution. It is, moreover, one of its most important and essential provisions. For the articles which limit the powers of the legislative and executive branches of the government, and those which provide safeguards for the protection of the citizen in his person and property, would be of little value without a judiciary to uphold and maintain them which was free from every influence, direct or indirect, that might by possibility in times of political excitement warp their judgments."
"Upon these grounds, I regard an act of Congress retaining in the Treasury a portion of the compensation of the judges as unconstitutional, and void."
that the salaries of the President and judges were exempt." The income tax acts of 1913, 1916, and 1917 (c. 16, 38 Stat. 168; c. 463, 39 Stat. 758, § 4, c. 63, 40 Stat. 329) severally excepted the compensation of the judges then in office -- also that of the President for the then current term. In short, during a period of more than 120 years, there was but a single real attempt to tax the judges in respect of their compensation, and that attempt soon was disapproved and pronounced untenable by the concurring action of judicial, executive, and legislative officers. And so it is apparent that, in the actual practice of the government, the prohibition has been construed as embracing and preventing diminution by taxation.
Does the Sixteenth Amendment authorize and support this tax and the attendant diminution -- that is to say, does it bring within the taxing powers subjects theretofore excepted? The court below answered in the negative, and counsel for the government say: "It is not, in view of recent decisions, contended that this amendment rendered anything taxable as income that was not so taxable before." We might rest the matter here, but it seems better that our view and the reasons therefor be stated in this opinion, even if there be some repetition of what recently has been said in other cases.
Preliminarily we observe that, unless there be some real conflict between the Sixteenth Amendment and the prohibition, in Article III, § 1, making the compensation of the judges undiminishable, effect must be given to the latter as well as to the former, and also that a purpose to depart from or imperil a constitutional principle so widely esteemed and so vital to our system of government as the independence of the judiciary is not lightly to be assumed.
conflicts of opinion which were settled by its adoption may properly be taken into view for the purpose of tracing to its source any particular provision of the Constitution, in order thereby to be enabled to correctly interpret its meaning."
This sound rule is as applicable to the amendments as to the provisions of the original Constitution.
True, Governor Hughes of New York, in a message laying the amendment before the legislature of that state for ratification or rejection, expressed some apprehension lest it might be construed as extending the taxing power to income not taxable before, but his message promptly brought forth from statesmen who participated in proposing the amendment such convincing expositions of its purpose, [Footnote 8] as here stated, that the apprehension was effectively dispelled, and ratification followed.
source or another. [Footnote 9] And we have so held in other cases.
the income was derived, shall not be subject to the regulation of apportionment."
"did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the states of taxes laid on income."
After further consideration, we adhere to that view, and accordingly hold that the Sixteenth Amendment does not authorize or support the tax in question.
Apart from his salary, a federal judge is as much within the taxing power as other men are. If he has a home or other property, it may be taxed just as if it belonged to another. If he has an income other than his salary, it also may be taxed in the same way. And, speaking generally, his duties and obligations as a citizen are not different from those of his neighbors. But for the common good to render him, in the words of John Marshall, "perfectly and completely independent, with nothing to influence or control him but God and his conscience," his compensation is protected from diminution in any form, whether by a tax or otherwise, and is assured to him in its entirety for his support.
that an income tax laid not on the gross receipts, but on the net proceeds remaining after all expenses were paid and losses adjusted, did not directly burden the business, but only indirectly and remotely affected it. Here, the Constitution expressly forbids diminution of the judge's compensation, meaning, as we have shown, diminution by taxation as well as otherwise. The taxing act directs that the compensation -- the full sum, with no deduction for expenses -- be included in computing the net income, on which the tax is laid. If the compensation be the only income, the tax falls on it alone, and if there be other income, the inclusion of the compensation augments the tax accordingly. In either event, the compensation suffers a diminution to the extent that it is taxed.
We conclude that the tax was imposed contrary to the constitutional prohibition, and so must be adjudged invalid.
"I wish to say, Mr. Chairman, that, while there is considerable doubt as to the constitutionality of taxing . . . federal judges' or the President's salaries, . . . we cannot settle it; we have not the power to settle it. No power in the world can settle it except the Supreme Court of the United States. Let us raise it, as we have done, and let it be tested, and it can only be done by someone's protesting his tax and taking an appeal to the Supreme Court."
"I think really that every man who has a doubt about this can very well vote for it and take the advice of the gentleman from Pennsylvania [Mr. Graham], which was sound then and is sound now, that this question ought to be raised by Congress, the only power that can raise it, in order that it may be tested in the Supreme Court, the only power that can decide it."
Sparks' Washington, vol. X, pp. 35, 36.
2 Story, § 1628; 1 Kent's Com. *294; 1 Wilson's Works 410, 411; 2 Tucker § 364; Miller 340-343; 1 Carson's Supreme Court 6.
"upon all salaries and emoluments of office, created or held by or under the Constitution or laws of this commonwealth, and by or under any incorporation, institution or company incorporated by the said commonwealth, where such salaries or emoluments exceed two hundred dollars."
Act No. 232, § 2, Penn.Laws 1840, p. 613; Act No. 117, § 9, Penn.Laws 1841, p. 310.
Cong.Rec. vol. 44, p. 3344.
Cong.Rec. vol. 44, pp. 1568-1570, 3377, 3900, 4067, 4105-4107, 4108-4121, 4389-4441.
Cong.Rec. vol. 45 pp. 1694-1699, 2245-2247, 2539, 2540.
Cong.Rec. vol. 45, pp. 1694-1699, 2245-2247, 2539-2540.
In passing the income tax law of 1919, Congress refused to treat interest received from bonds issued by a state or any of its counties or municipalities as within the taxing power, Cong.Rec. vol. 57, pp. 553, 774-777, 2988; c. 18, § 213, 40 Stat. 1065, and, in the regulations issued under that law, the administrative officers recognize that the salaries and emoluments of the officers of a state and its political subdivisions are not taxable by the United States. Reg. 45, published 1920, pp. 47, 313.
contrary to Art. III, § 1, of the Constitution, which provides that the compensation of the judges shall not be diminished during their continuance in office. Upon demurrer, judgment was entered for the defendant, and the case comes here upon the single question of the validity of the above-mentioned provisions of the act.
The decision below seems to me to have been right for two distinct reasons: that this tax would have been valid under the original Constitution, and that, if not so, it was made lawful by the Sixteenth Amendment. In the first place, I think that the clause protecting the compensation of judges has no reference to a case like this. The exemption of salaries from diminution is intended to secure the independence of the judges on the ground, as it was put by Hamilton in the Federalist (No. 79) that "a power over a man's subsistence amounts to a power over his will." That is a very good reason for preventing attempts to deal with a judge's salary as such, but seems to me no reason for exonerating him from the ordinary duties of a citizen, which he shares with all others. To require a man to pay the taxes that all other men have to pay cannot possibly be made an instrument to attack his independence as a judge. I see nothing in the purpose of this clause of the Constitution to indicate that the judges were to be a privileged class, free from bearing their share of the cost of the institutions upon which their wellbeing, if not their life, depends.
was diminished by a charge. If he bought a house, the fact that a part or the whole of the price had been paid from his compensation as judge would not exempt the house. So if he bought bonds. Yet, in such cases, the advantages of his salary would be diminished. Even if the house or bonds were bought with other money, the same would be true, since the money would not have been free for such an application if he had not used his salary to satisfy other more peremptory needs. At some point, I repeat, money received as salary loses its specific character as such. Money held in trust loses its identity by being mingled with the general funds of the owner. I see no reason why the same should not be true of a salary. But I do not think that the result could be avoided by keeping the salary distinct. I think that the moment the salary is received, whether kept distinct or not, it becomes part of the general income of the owner, and is mingled with the rest, in theory of law, as an item in the mutual account with the United States. I see no greater reason for exempting the recipients while they still have income as income than when they have invested it in a house or bond.
The decisions heretofore reached by this Court seem to me to justify my conclusion. In Peck & Co. v. Lowe, 247 U. S. 165, a tax was levied by Congress upon the income of the plaintiff corporation. More than two-thirds of the income were derived from exports, and the Constitution in terms prohibits any tax on articles exported from any state. By construction, it had been held to create "a freedom from any tax which directly burdens the exportation." Fairbanks v. United States, 181 U. S. 283, 181 U. S. 293. The prohibition was unequivocal and express, not merely an inference as in the present case. Yet it was held unanimously that the tax was valid.
discrimination. At most, exportation is affected only indirectly and remotely. The tax is levied . . . after the recipient of the income is free to use it as he chooses. Thus, what is taxed -- the net income -- is as far removed from exportation as are articles intended for export before the exportation begins."
247 U.S. 247 U. S. 174-175. All this applies with even greater force when, as I have observed, the Constitution has no words that forbid a tax. In United States Glue Co. v. Oak Creek, 247 U. S. 321, 247 U. S. 329, the same principle was affirmed as to interstate commerce, and it was said that, if there was no discrimination against such commerce, the tax constituted one of the ordinary burdens of government from which parties were not exempted because they happened to be engaged in commerce among the states.
A second and independent reason why this tax appears to me valid is that, even if I am wrong as to the scope of the original document, the Sixteenth Amendment justifies the tax, whatever would have been the law before it was applied. By that amendment, Congress is given power to "collect taxes on incomes from whatever source derived." It is true that it goes on "without apportionment among the several states, and without regard to any census or enumeration," and this shows the particular difficulty that led to it. But the only cause of that difficulty was an attempt to trace income to its source, and it seems to me that the Amendment was intended to put an end to the cause, and not merely to obviate a single result. I do not see how judges can claim an abatement of their income tax on the ground that an item in their gross income is salary, when the power is given expressly to tax incomes from whatever source derived.

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