Court Opinion

ID: 9418686
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:35:31.579979+00
Date Added: 2024-06-11T16:49:52.450171
License: Public Domain

Mr. Justice Sutherland,
dissenting, delivered by
Mr. Justice Butler.
In the convention which framed the Constitution, Mr. King on one occasion asked what was the precise meaning of “direct taxation,”.and Mr. Madison informs us that no one answered. That Mr. Madison took the pains to record the incident indicates that it challenged attention but that no one was able to formulate a definition. And though we understand generally what is a direct tax and what taxes have been declared to be direct, we are still as incapable of formulating an exact definition as were those who wrote the taxation clauses into the Constitution. Since the Pollock case, however, we know that a tax on property, whether real or personal, or Upon the income derived therefrom, is direct ; and that to levy a tax by reason of ownership of property is to *140tax the property. Dawson v. Kentucky Distilleries Co., 255 U. S. 288, 294.
The right to give away one’s property is as fundar mental as the right to sell it or, indeed, to possess it. To give away property is not to exercise a separate element or incident of ownership, like the use of a carriage, but completely to sever the donor’s relation to the property and leave in him no element or incident of ownership whatsoever. Reasonably it cannot be doubted that the power to dispose of property according to the will of the owner is a property right. If a tax upon the sale of property, irrespective of special circumstances, is a direct tax, it is clear that a tax upon the gift of property, irrespective of special circumstances, is, likewise, direct. In my opinion, both are direct because they are in substance and effect not excise taxes but taxes upon property. By repeated decisions of this Court it has become axiomatic that it is the substance and not the form that controls in such matters.
Brown v. Maryland, 12 Wheat. 419, involved the validity of a state statute which exacted a license fee of $50 of importers of foreign goods and other persons selling the same by wholesale, bale or package, etc. The act was held void as imposing a duty on imports. It was argued that the tax was not upon the article but upon the person; that the state had the power to tax occupations, and this was nothing more.' To this. Chief Justice Marshall replied (p. 444) in words that have been repeatedly approved in subsequent decisions of this Court:
“It is impossible to conceal from ourselves, that this is varying the form, without varying the substance. It is treating a prohibition, which is general, as if it were confined to a particular mode of doing the forbidden thing. All must perceive, that a tax on the sale of an article, imported only for sale, is a tax on the article itself.”
*141In Cook v. Pennsylvania, 97 U. S. 566, it was held that a tax on the amount of sales made by an auctioneer was a tax upon the goods sold, and where these goods were imported in the original package and sold for the importer the law authorizing the tax was void.
Nicol v. Ames, 173 U. S. 509, is not to the contrary of these cases, but in complete accord with them. There it was held that a tax levied upon a sale of property, effected at a board of trade or exchange was an excise laid upon-the privilege, opportunity or facility afforded by boards of trade or exchanges for the transaction of the business and not upon the property or the sale thereof, which, it was conceded, would be a direct tax and void without apportionment. Brief quotations from the opinion will make the distinction clear. Referring to the cases which had been cited against thq tax, including Brown v. Maryland, supra, and the Pollock case, it was said that all these cases involved the question whether the taxes assailed were in effect taxes upon property and (p. 519): “ If this tax is not on the property or on the sale thereof, then these cases do not apply.” At p. 520, answering the contention that the tax was one on the property sold, it was said: “ It is not laid upon the property at all, nor upon the profits of the sale thereof, nor upon the sale itself considered separate and. apart from the place and the circumstances of the sale.” And finally at p. 521, the Court said in words that admit of no mistake: “A tax upon the privilege of selling property at the exchange and of thus using the facilities there offered in accomplishing the sale differs radically from a tax upon every sale made in any place. The latter tax is really and practically upon property. It takes no notice of any kind of privilege or facility, and the fact of a sale is alone regarded.”
To me it seems plain that a tax imposed upon-to ordi- ' nary gift, to be measured by the value of the property *142given and without regard to any qualifying circumstances) is a tax by indirection upon the property, as much, for example, as a tax upon the mere possession by the owner of a farm, measured by the value of the land possessed, would be a tax on the land. To call either of them an excise is to sacrifice substance to a mere form of words. I think, therefore, the first question certified, without stopping to consider the second, should be answered in the affirmative.
Mr. Justice Van Devanter and Mr. Justice Butler concur in this opinion.