*1 POLLOCK, & FARMERS’ TRUST v. LOAN CO. 429
Syllabus. FARMERS’ POLLOCK v. LOAN AND TRUST
COMPANY. FROM THE CIRCUIT COURT OF THE UNITED STATES FOR APPEAL
THE DISTRICT OF NEW YORK. SOUTHERN Argued 8, March Decided 7, 11, 12, 13, 1895. April 8, 1895. No. prevent equity jurisdiction A court a threatened breach of trust has corporation misapplication illegal or diversion of the funds capital profits. payments out of its or prevent company being a bill filed a stockholder to a trust from Such voluntarily imposition payment making returns for the of a tax unconstitutional, ground to be further of threatened claimed and on the adequate' multiplicity irreparable injury, objection of suits and court, ques- remedy having at not been raised law below States, jurisdiction by'the having so far as it tion of been waived United so, prevent power sofight being to its do and the relief was within introspect voluntary company and to the assess- action of the trust tax, proceed judgment the court on ment and collection will the merits. one, salutary and is to be adhered to on The doctrine stare decisis is a points issue; occasions, respect directly upon proper of decisions upon any a constitutional but this court should' not extend decision Supervene, question,, principle might if it .is convinced error in case, opinion beginning in this Xnthe cases referred to in the of the court States, 171, Term, Hylton 1796,) and (February 3 with v. Dall. United Term, 586, Springer 1880,) ending (October U. S. with United taxes, in none of them is it on are conceded taxes land to be direct land is not a tax that a tax rent or income from determined derived on on laud. tax, A is a direct within tax on the rents or income of real estate meaning of the United States. of that as used in the Constitution term by a munic- upon issued A of bonds income derived from the interest ipal corporation its instru- a tax of the State repugnant money, consequently mentalities and is to borrow States. Constitution of the United taxation, govern- provide for revenue
So of the act to reduce much 349„as 509, provides levying ment, purposes,” for other 28 Stat. c. estate, from the interest derived from real taxes rents or income bonds, the United States municipal repugnant to the Constitution and is invalid. bar, 1, questions argued Whether Upon at wit: each of the other invalidates provision from real estate as to rents and income the void TEEM, 1894. OCTOBEK Statement of Case. personal property 2, ? as to the income act Whether the whole such, laying taxes ? Whether direct the act is unconstitutional tax, tax, part is invalid for want if not considered as direct *2 — grounds suggested? the Justices who uniformity on either of therefore, divided, and, opinion equally no argument are heard the expressed. a citizen of Pollock, a bill filed Charles This was by . and all other on behalf of himself Massachusetts, State of situated, of the defendant similarly stockholders company Loan and corporation the Farmers’ Company, Trust against directors, that the of New and its York, alleging of the State million dol- of one consisted stock of corporation capital value of of divided into thousand shares par lars, forty was authorized each that the dollars ; company twenty-five and bonds of United stocks to invest its assets public States, or individual or of States, city, of any incorporated it deem real securities as or such or might personal county, all such trusts of also to and execute and take, accept, proper; be committed by any person every description might devise, or or assignment, any by grant, persons corporation, York, of New or order of court of record by any bequest, be the and take estate which and to receive real might the com- assets of trust; of such that the and subject property at of which dollars, to more than five million amounted pany million was owned by least one invested real estate of bonds of the in fee at least two ; city millions company and stocks and at the bonds York; New least one million.in the net States; of other United prof- corporations end- its the defendant or income of during year company than the sum December more 31, 1894, amounted to ing in- $300,000 above its actual and business expenses, operating indebtedness ; losses and interest on and other bonded cluding income an that from its real estate the derived company 'and state, annum, after all $50,000 county, per deducting an income and derived taxes; that the municipal company its investments $60,000 of about annum' from profit per bonds. municipal further was that under and virtue pow- alleged & LOAN TRUST CO. v. FARMERS’
POLL'OCK of the Case. Statement time to time had, conferred company, ers numer- and and executed, executing, holding taken co- persons, trusts committed company by many ous associations, corporations, unincorporated partnerships, orders devise, bequest, by grant, assignment, held trustee for that the now courts, and company various associations, and cor- individuals, rfiinors, copartnerships, many in the States and elsewhere, United many resident porations, in the various States of the situated of real estate parcels value aggregate, United amounting, dollars, millions rents income five exceeding received said defendant in which real collected and estate exceeded the sum of two hun- its fiduciary capacity annually dred thousand dollars. was and averred had been
The bill also that complainant holder ten the owner 1892, since May registered of a stock value exceed- shares company, capital *3 stock was divided the sum that the $5000; of capital ing who as number of such stock- a different persons among large bill a that the was filed holders for constituted body; large and he, therefore, an to them that all; common object brought of in his own behalf as stockholder the com- suit, not only behalf of of and on such of also as representative pany, other and .the interested as stockholders similarly situated to intervene and become choose might parties. of
It was then that the the stock, alleged management of the was committed and concerns affairs, company property, to its and directors, under its acts of incorporation charged of its directors the and a claimed and that majority company of that under and virtue the asserted alleged authority by1 of the United of the of an States act of provisions Congress for entitled, taxation, “An act to revenue reduce provide for and other 15, passed August government, purposes,” and that intended 1894, was liable they pay company to. of two cen- 1, 1895, States before United July per tum on for the net said year profits company ending and ex- 1894, December above actual business operating real derived from its estate and the income penses, including TERM, Statement of the .Case. of the New and city York; its bonds directors that a and asserted similar tax must be claimed paid upon in incomes, and amount excess of gains, profits, $4000, for others whom the of minors and was all company acting And that the in a further, fiduciary capacity. company avowed their its directors had intention make and file with internal the collector of- revenue for the second district York a or statement list, New city return, showing the amount of net income received company during to make and aforesaid, as likewise render a year list or return to said collector of internal revenue, prior that' of the amount of the date, income, gains, profits all minors and other incomes excess of persons having $3500, for whom the in a was .company acting fiduciary capacity.-
The bill of said al- provisions respect charged income tax in the act of were leged incorporated Congress the tax null, void, in that was a unconstitutional, direct tax in real owned estate held and the com- respect by in its own and in as aforesaid, its pany capacity right fiduciary issues, of said rents, profits being imposed real likewise a direct tax estate, its respect per- and the held sonal for others property personal property in its whom acted aforesaid,, fiduciary capacity direct not in and taxes were said act apportioned among the several 2 of article I of the States section required by and that if Constitution; the income tax so incorporated act aforesaid not to be a were held direct nevertheless its were- tax, unconstitutional, null, provisions void were not uniform throughout *4 United States as and of article I of required bysection the Constitution of the United States, many grounds set forth. many particulars and specifically - The further bill that the income tax of charged provisions the act likewise unconstitutional in that they imposed were a tax on incomes not taxable under the and like- Constitution wise income derived from the stocks and bonds of the of States and United States counties -and therein, municipalities . & n FARMERS’ LOAN TRUST CO. '43.3 of the Case.
Statement the means and which and bonds are instrumen- stocks among on their talities for carrying respective governments, employed of the of are not and subjects taxing power proper Congress, counties and and which and are in- municipalities .States their of the of the United States, dependent general government and of stocks bonds and are, respective together of the States to borrow in with the form, exempt Federal taxation. Other were and the unconstitutionality grounds assigned, of articles IY and the Constitution violation asserted. Y bill further averred that the-suit was not a collusive one on a court of the to confer United States of the jurisdiction which it would not have and case, cognizance, otherwise had and its directors complainant requested company omit and refuse to said income tax, contest the con- pay of said and to refrain from act, mak- stitutionality voluntarily and statements its own behalf lists, returns, and on ing for behalf of the and other whom minors it was persons acting in a to a court fiduciary apply capacity, competent to determine its under said act, but that jurisdiction liability and a of its after a directors, company majority meeting at Avhichthe matter and the directors, of com- request them were laid before had action, plainant formally refused and still and intend Avith refuse, comply complain- omitting ant’s demand and had resolved and determined, intended with all and of the said act comply singular provisions and to the tax all net its or in- Congress, pay profits come as rents from real estate and aforesaid, its its including income from and a of the refusal bonds, copy municipal Avasannexed to the company complaint.
It was also if and its directors, company alleged and had their intention to do, declared should proposed the tax or out out its of. pay income, profits, gains, of held it in its fiduci- gains, income, profits property will diminish the assets ary capacity, they company the value of lessen the dividends thereon and shares; Avould Avith voluntary provisions income compliance suits, to a expose.the multiplicity company vol. clvii —28 *5 OCTOBER TERM, 1894.
Statement of the Case. numerous on behalf its and on shareholders, behalf by of numerous minors and it others whom acts in a fiduciary and that would such numerous work suits capacity, irreparable to the business and it to injury subject company, great and and to the damage, beneficiaries irreparable liability and all aforesaid, its irreparable damage complainant shareholders. averred
The bill further that this a suit of a civil was nature the matter in that exceeded exclusive of equity; dispute five thousand and costs the sura of arose under dollars, or laws of the and ; Constitution United States that there was furthermore a between citizens of different controversy States. and was decreed that prayer might adjudged known as the said income provisions incorporated said act of are unconstitu- 15, 1894, passed Congress August and that the tional, null, void; defendants be restrained from of said and voluntarily act, complying with provisions lists, returns, above statements referred to, making tbe tax and for relief. aforesaid; paying general demurred The defendants on the of want of ground equity, been the cause on to be heard the bill having brought thereto, and demurrer the demurrer was sustained and the bill with dismissed costs, the record re- complaint 'whereupon cited of a law of the United States constitutionality was drawn in and an was allowed appeal question, directly .this court. act in of tbe will be found
An abstract in the mar- gin1 1 By to 37 inclusive of the act sections 27 “An act entitled taxation, provide government, revenue for the reduce and for other .which, 15.1894, purposes,” by August having President received originated him to House in which it been returned within the time States, prescribed United became a Constitution law without 509, provided approval, 349,) c. (28 Stat. and after Janu “ 1900, 1, levied, January ary 1, assessed, until there shall be col lected, paid annually profits, gains, income received in the year every preceding citizen of the United calendar re whether abroad, therein, every person residing siding home or at said whether rents, profits, property, gains, or income derived from kind of inter- LOAN & TRUST v. FARMERS’ CO.
Statement Case. two of Article I of the the third clause of section Consti- By and direct it was : taxes shall tution Representatives provided *6 dividends, salaries, est, any profession, trade, employment, or or from or elsewhere, any in the United or or carried on States from other vocation whatever, per a tax of centum on the amount so derived source two over dollars, levied, collected, four thousand and a tax be and above like shall paid annually upon profits, gains, property and the and income from all trade, business, profession every and of or owned carried on in the United by persons States without the United . . . States.” residing estimating profits, gains, any per- in Sec. 28. That the and income notes, upon son there shall be all income derived included from interest bonds, securities, except and other such bonds of the United States the principal by exempt and interest of which are the of their issuance law from taxation; profits year all federal realized within the from sales of real purchased years previous within year estate two to the close of the for estimated; upon notes, income is interest which received or accrued all bonds, mortgages, interest, bearing or other forms indebtedness whether not, collectible, paid good or if and less the interest which has become due person paid by during year; from said or which has been him the the bonds, notes, premium coupons; all amount of on or the amount of sales stock, cotton, wool, butter, cheese, beef, mutton, pork, sugar, of live or meats, hay, productions, grain, vegetable being other or other or other produce person, expended growth the or of the estate of such the less amount purchase production produce, including in the of said or stock or and not any part directly by family; money thereof consumed and the value’of all personal property acquired by inheritance; profits, gift gains, or all other any except portion derived from source that and income whatever of the compensation, pay civil, salary, military, or in received for services naval, Represent- Senators, including or other service of the United atives, deducted, Congress, Delegates in from which the has been required except portion any salary employer that which the withhold, by pays the tax and the same to the law and does withhold officer necessary expenses computing it. incomes the authorized to receive In business, actually occupation, profession any carrying or incurred on paid year shall be and also all such deducted interest due or within national, state, person county, school, existing on all indebtedness. And benefits, taxes, municipal paid including against not those local assessed year profits, gains, from of the within the shall be deducted or income owner, person paid same, person- actually has whether such be who tenant, year, mortgagor; actually during or also losses sustained storms, fires, shipwreck, arising and not incurred trade or or compensated otherwise, to be for insurance or and debts ascertained worthless, depreciation excluding all losses estimated values and year previous purchased years within tire of real sales within two estate which, year Provided, for income is estimated: That no deduction any .paid permanent buildings, shall be made for amount out im- new TERM, Í894.
Statement of Case. be several States which be apportioned among included within to their num- Union, respective according provements, betterments, property any or made to increase the value or further, estate: That one of four dollars Provided deduction thousand any family, aggregate be from the shall income all the members of made children, composed parents, one or both one more or minor or wife; guardians husband and shall allowed make deduction ward, except every where or more favor of each in.case two interests, property comprised joint family, one have wards : aggregate in their four thousand deduction favor shall exceed dollars salary compensation provided further, That in or other And cases where paid person employment any or shall service United States fees, annum, per rate four thousand dollars shall not exceed the during irregular amount in the time which or uncertain or earned, compensation salary such or other same shall or been have accrued gains, profits, or estimating the annual shall be included in income por- person paid, have been and shall include the same shall .whom paid by. salary tion of tax has not been income or *7 required by employer, employer pay on excess over law to where also, any computing the : That in income of four dollars Provided thousand 'person, corporation, company, or association there shall be included any corporation, company, as dividends amount from or association received corporation, company, tax of or if the the stock of such association .upon per paid upon profits corporation, by' com- its net said centum has been two required pany, by act. or as association “ duty persons having age of all Sec. 29. That shall be lawful than five the taxable an income of more three thousand hundred dollars for computed prescribed, or year, a list on the basis herein to make and render return, law, provided by day manner in such form and or before Revenue, by may with as directed Commissioner of Internal Secretary deputy approval Treasury, a of the of the to-the collector or they reside, their collector district of the amount trustees, income, profits, aforesaid; gains, guardians all and and and receivers, corporations executors, administrators, persons agents, or and all capacity, return acting any fiduciary a list or shall make and render aforesaid, deputy the district which to the collector or a collector of capacity person corporation fiduciary or does acting a resides such or business, income, profits any gains, minor or the amount of and act, person persons thousand having less than three for whom report; required and such dollars income are not to make five hundred require deputy every return to be verified collector list or collector or shall it, may party by rendering and affirmation the oath or increase same that the any or if he has to believe amount of list return reason person any having income shall understated; a taxable case such return, or shall render neglect to make render such or refuse list and return, duty of the wilfully be the a or fraudulent list or it shall false CO. v. FARMERS’ TRUST LOAN &
Statement of the Case. to the whole number bers, which shall be determined by adding to service for term of of free those bound persons, including collector, list, deputy according to the best infor- collector or to make such obtaiu, person, any other mation he the examination of such or evi- can dence, per penalty fifty amount of and to add centum as a the tax due of, neglect in all or refusal to make render list on such list cases wilful return; wilfully in all false or fraudulent list or return hav- or cases of a per penalty ing as a to the amount of been rendered to add one hundred centum due, penalty as a tax ascertained to be the tax and the additions thereto to be provided for in other cases of assessed and collected in the manner wilful retiirn, neglect rendering or or refusal to render a list or false or person corporation proviso any or fraudulent return.” A was added that income, might that he or its ward had no taxable or that the same show had paid elsewhere, exempt might from the tax been and the collector for association, year. person corporation, “Any compauy, feeling or collector, appeal aggrieved deputy may the decision of the in such cases thereon, district, to the collector of the and his decision unless reversed Revenue, of Internal the Commissioner shall be final. If dissatisfied with person corporation, company, the decision of the collector such or associa- may case, papers, tion submit the all the to the Commissioner of with Internal decision, testimony Revenue for his furnish the witnesses to prove any having facts notice to that effect relevant served Com- Revenue, prescribed.” missioner of Internal as herein Provision was made sides, place testimony taking for notice on both of time and and that no penalty should be assessed until after notice. By payable July on or section 30 the taxes on were made before incomes unpaid, year, per penalty of1 each levied on taxes five cent interest. By exemp- any might section receive the benefit of the non-resident for, provided computing tions he shall include all and in income income source, every from a citizen of the States he shall but unless he be United pay part on that is derived from of the income which source in statement, to file such United States. In non-resident fails case such on the the collector of each collect the tax income derived district shall district, tax, subject property making to income no situated in his exemptions, property belonging to such non-resident allowance for and all *8 Provided, corpora- shall That non-resident be liable to distraint for tax: corporations, subject tions to tax as resident shall be laws as same provided manner as and the collection of made in the same the shall be persons.” against for collections of taxes non-resident “ collected, assessed, levied, except and as Sec. 32. That there shall be per annually provided, on the herein net otherwise a tax of two centum profits expenses, operating including or and business income above actual resale, expenses bought purchased' or for for manufacture for materials banks, losses, banking of all and and other indebtedness interest on bonded marine, life, fire, institutions, institutions, companies, and saving other trust TERM, 43S tlie Statement of Case. all other three-fifths of taxed, Indians not years, excluding section of the was amended the second Tins persons.” by railroad, turnpike, companies, canal, navigation, slack insurance canal water, water, telephone, express, light, gas, rail- telegraph, street electric companies, way companies, corporations, all other or associations States, doing profit matter no how created for United business partnerships.” organized including but not “ day j'ear; July payable of in each on or the first The taxis made before corporation, company, president any or the and if association, or other chief officer company, any corporation, or foreign associa- or the case of tion, file with the agent neglect or refuse to manager or resident shall corporation, com- said internal revenue in which collector district business, pany, engaged in a state- or or be association shall located prescribed affirmation, form shall be oath or such ment verified his Revenue, approval Secre- tlie Internal Commissioner of with profits tary Treasury, showing or income received of net amount corporation, company, during the calendar or whole said association required, preceding year filing as hereinafter last the date of statement said corporation, company,.or making forfeit as a default shall association per amount penalty centum on the dollars and sum one thousand two due, paid, payment of said month until of taxes for each the same provided neglect penalty and refusal be enforced as in other cases return_of internal, make taxes under revenue laws. . corporations, companies, profits “The or income of all net or associa shareholders, paid shall amounts tions include the or carried fund, construction, any any plant, enlargement account or used or for expenditure paid profits or other or investment from the net annual made companies, acquired by corporations, or associations. said counties, nothing apply to or mu- That herein contained shall nicipalities ; corporations, companies, organized and nor to or associations charitable, solely purposes, religious, conducted or educational includ- .for societies, orders, ing beneficiary operating fraternal or associations life, sick, system accident, lodge payment providing for societies, orders, Other to the members of or associations benefits such funds, the-stocks, shares, dependents members; or of such nor to charitable, by any fiduciary or religious, securities or trustee held companies purposes; building educational nor to and loan or associations banks, shareholders; savings which make loans to their nor to such first, shall, savings no- institutions or societies have stockholders depositors capital except deposits; secondly, members shall except and no deposits amount, year, aggregate not receive than to an one of more not,allow depositor; an thirdly, one thousand dollars from the same shall deposits, depositor, by any exceeding ten thou- accumulation or total of one dollars; depositor’s, fourthly, actually shall its sand divide and distribute to deposits, proper expenses ratably earnings necessary all over the bank, institution, except applied society, to sur- of such such as shall be *9 FARMERS’ LOAN & TRUST CO.
Statement of the Case. so that the 1868, declared ratified Article, Fourteenth July of in should counted, number each State whole persons possess, surplus any form, exceeding plus; fifthly, ten shall not fund banks, deposits; per savings savings aggregate of its nor to such centum institutions, participate composed or of do not societies members who profits pay only depos- and to thereof interest or dividends their which bank, institution, ; part any savings to that of of or nor the business itors stock, capital having association that is conducted on the other similar such.plan; plan solely depositors which mutual for the benefit of its on and keep plan sepa- its accounts of its on mutual shall conducted such business apart from rate and its other accounts. any company its “Nor to insurance or which conducts all association solely upon pol- plan, and for the benefit of its business the mutual members, capital icy having or and and no stock or share- holders no stock holders, holding property policy and all its in trust and in reserve for its members; any part or nor to of holders of the business insurance com- shareholders, capital pany having a stock and stock and conducted which insurance, plan, separate plan solely on mutual from stock its policy on benefit and members insured said mutual holders plan, holding property belonging all from to and derived said part pol- of its of its mutual business in and reserve for benefit trust plan. icy said mutual insured on holders and members “ paid by corporations, state', municipal, county, taxes and town all That associations, operating and companies, included in the business shall be or companies, corporations, expenses or associations. of such collected, levied, paid on all salaries there shall 33. That Sec. civil, military, naval, persons officers, payments or or for services States, including Senators employment of the United other or service exceeding the rate of four Kepresentatives Delegates Congress, when annum, per per centum the excess above a tax of two dollars thousand duty dollars; paymasters all be the shall the said four thousand States, disbursing government of the United or all under the officers any any payment thereof, making officers persons employ or when salary, aforesaid, persons compensation a fixed is determined whose persons, of such officers or settling adjusting the accounts or or centum; pay per roll, and the tax of two deduct and withhold the aforesaid paying as aforesaid shall persons such tax receipts, or or account officers duty be the payment. And shall such exhibit the fact of be made to Department, auditing Treasury when accounting officers officer, any withholding disbursing or officer any paymaster accounts or him, adjusting settling or moneys when salary his received officer, that the taxes mentioned require evidence accounts of such paid to the Treasurer over deducted and this section have been Every cor- the same. to receive officer authorized United or other compensation exceeding salary any employé poration pays report to the collector or the same per shall annum four thousand dollars TERM, 1894.
Statement of Case. and the excluded, Indians taxed as thus amended, provision in force. remains *10 deputy employé pay thereon, subject of his district and said collector shall provided for, exemptions per herein the tax of two centum on the salary Provided, excess of his over four thousand dollars: That salaries state, exempt county, municipal to shall be due or officers from the income tax herein'levied.” By 34, thirty-one sixty-seven, thirty-one section hundred and sections hun- seventy-two, thirty-one seventy-three, thirty-one dred and hundred and and seventy-six of hundred arid the Revised Statutes of the United States provide so as to that it amended were amended should be unlawful for the known, publish and to make or collector other officers or amount source of to “ penalty; every income under that collector should from time to time 'cause proceed deputies through every part inquire his to of his district and after persons concerning pay any and all therein who are to liable internal revenue tax, persons owning having and all or management care and tax, objects pay any persons to liable to and make list of such and enumer- ” objects; ate said that the tax returns must be made on or before the first March; Monday may particulars that the collectors make returns when furnished; given that returns; notice be to absentees to render that persons produce may testify summon concerning collectors books and returns; may persons that enter other collectors districts examine and books; penalties may returns; imposed make and that on false returns. By provided corporations profit 35 was doing section business for Monday make year should returns on or before the first of March of each following year “of all matters preceding for the whole calendar last the date such return: profits corporation, gross oompany, association, “First. The of such or every from all kinds of business of name and nature. “ expenses corporation, Second. company, association, The of such or interest, annuities, exclusive and dividend. profits corporation, association, company, “Third. The net of such interest, annuities, for without allowance or dividends. paid interest, annuities, “Fourth. The amount on account of and divi- dends, separately. stated “ paid Fifth. The amount salaries four thousand dollars less person employed. each “ paid Sixth. The amount salaries more than four thousand dollars person employed each persons and the name and address of each of such paid amount to each.” By kept by section corporations of account should be books
prescribed, inspection granted penalty. thereof be under By provision receipts paid. section 37 for made for taxes By joint 21, 1895, February resolution of making the time returns of for “ year was'extended, provided income for the 189+ and it was com- LOAN TRUST CO. .441 v. FARMERS’ &
Statement Case. to be made actual enumeration within The prescribed first after the and within Congress three years meeting of ten in such as should term manner years, every subsequent be directed. “ for all bills revenue shall Section 1 requires raising origi- in the House of nate Representatives.” thus: The The clause of section reads first taxes, have collect duties, shall .and lay imposts, the debts and common defence excises, to provide pay im- States; duties, but all welfare United general be uniform and excises shall United throughout posts “ To commerce And the third clause thus : States.” regulate nations, with the several with foreign among the Indian tribes.” 9 are as and sixth clauses section fourth, fifth,
follows: “ in laid, other tax shall be unless direct, No or capitation, or directed to the enumeration hereinbefore census proportion to be taken. “ be laid articles from No tax or shall any duty exported State. be of com-
“No shall by any regulation preference given of of one State those or revenue to over merce ports or one be from, State, shall vessels bound another; to, nor or another.” duties enter, clear, pay obliged of 10 that second clause section It is also by provided “ shall, any no State without the consent Congress, lay be what or may or duties on exports, imports except imposts necessarily paid for insur- fire puting under act tile amounts incomes said deducted;” ordinary repairs “in premiums shall be ance and for computing the amounts received dividends under said act incomes be any corporation, company, or not included association shall of the stock per centum also liable to tax of two in case such dividends are although company, profits corporation, such or association net of said corporation, company, paid or may actually association not been said have corporation, person, association re- making at the time of returns dividends, reports names and salaries ceiving and returns or such by the required employers called for employés unless not shall employés.” verify collector in order returns TERM, Appellants. Argument Mr. Guthrie’s for its absolutely necessary executing laws;” and, inspection the third that'“.no State clause, without the shall, consent lay any duty Congress, tonnage.” clause of The first section 9 The provides: migration of such States now importation persons any existing shall think shall not be admit, proper prohibited by one thousand hundred and Congress prior year eight but a tax or on such eight, may duty imposed importations, dollars for ten exceeding each.person. Article Y the mode for the amendment of the prescribes and concludes with this Constitution, “Provided proviso: that no amendment which be made one prior year thousand hundred and shall manner affect eight eight the first and fourth clauses in ninth section of the first (cid:127)article.”
This case was with v. Continental Trust Hyde argued No. Moore v. No. 915. Miller, Company, Hyde of, y Trust Continental 654.) Compan disposed (post, with the in this case. opinion judgment accordance ; but, Moore v. Miller is still undecided as Mr. Edmunds’s for the formed an argument appellant important part it is discussion, this connection. reported general had the has steno- reporter advantage consulting of all the here reports arguments graphic reported, except who of Mr. has been to furnish mate- Whitney, good enough rial for the his report argument. Pollock, W. D. Guthrie for appellant *12 Bristow, 894. Mr. H.
Hyde, appellant Benjamin him and Mr. were with on his Willcox, David Charles Steele brief. to an in the act of
The income tax contained provisions unconstitutional, are in that violate 28; 1894, August of the as to requirement apportionment respect Constitution direct of taxes, of duties, uniformity imposts, respect and excises. FARMERS’ &
POLLOCK v. LOAN TRUST CO. Argument Appellants. Mr. Guthrie’s .for has no constitutional duties, taxes, Congress impose power the, excises which shall of vary according ownership tax, and of the which shall be at one rate subject-matter an the income of and at different individuals, upon entirely of income those who derive corporations rate upon and-of. no incomefrom It has their foster corporate profits. of and and aid favored classes associations corporations them from taxation. It is funda- arbitrarily exempting rule there shall mental of all- taxation be equality of the same class and under well- ; that, burden those among tax be at a if a levied citizens settled principles, rate others of the same class, than is imposed, higher like it is the former. of their having property, depriving the same for without due láw taking process property It is submitted use without also compensation. just public income derived state, cannot county, bonds. municipal are The and No. 894 issues No. 893 substantially interests involved suit, the Pollock No. same; I shall confine the state- more important, larger case. The Farmers’ Loan & Trust to that ment facts in the United trust one of the largest companies Company under the organized and is a trading corporation private It carries no business New York. laws State of no exercises transact; which a' could special partnership its is im- no business duty; public performs privileges; stock $1,000,000, its interest; with no capital public pressed over States into scattered United 40,000 shares divided and accumulations exceed abroad. The capital present to over amount annual of $5,000,000, profits sum real estate in its own right owns $300,000. The- company It $50,000 from rents year. income in an brings of New bonds city owns $2,000,000 also municipal holds $60,000. which is over the income of one York, benefi- minors other real hundred property parcels trustee, and collects as $5,000,000, over ciaries of value of $200,000. rents exceeding annually, a tax of two per act 1S94 impose provisions *13 TERM, Appellants. Argument
Mr. Guthrie’s cent and income derived upon gains, profits, from kind of rent and the property, including growth produce of land and made sale land if upon profits purchased within two element that could years. Every make real or source or value income personal to an property owner is taxed. An or excise is also income duty imposed derived upon from trade, or any profession, avocation. employment, The tax is not their entire upon persons generally upon income, the excess over and above All upon hav- $4000. persons or incomes under are $4000 The whole ing exempted. burden of the falls less than two cent of upon per population country.
The rate of taxation upon associations is corporations of the rate excess individuals and imposed associa- upon tions. Persons incomes of or under having noth- $4000 pay like incomes two ing; corporations having cent. pay per Persons incomes of over on the having $4000 excess. pay like incomes, derived from like Corporations having property and like two cent values, the entire pay per amount. upon are from the Partnerships expressly exempted operation An the act. individual lands, rents of which net owning or $8000, $80, him two cent pays per excess over upon A or association corporation $4000. like having property a tax two cent per whole pays $8000; $160, double the tax the individual. Eive individuals as part- ners own business property carry after them, netting taxes and all $20,000, paying expenses, divide they _f rom partnership entirely taxa- equally. exempted and each member is tion, If those same five indi- exempted. viduals or association organized private trading corporation of one of under laws held the property form, have to an income tax they pay $400, .would because had united their interest in solely simply or associate form instead of a In a corporate partnership. the rate varies form word, or nature of according .own- whose Citizens income is and under, $4000 derived ership. dividends of are profits corporations, deprived benefit because their shares or exemption, interests v. FARMERS’ LOAN & TRUST CO. Appellants. Argument for Mr. Guthrie’s to a tax of two corporations subjected profits per income from similar while the same derived business and cent, *14 those who on business by carry individually property similar would be If the wholly or as exempted. partners exemption cover the of a was to cer- household, expenses $4000 in all their means invested all persons having corporate tainly their household have hot ex- shares expenses. equally Why ? them empt new the
The act of 1894 is provisions discriminating is from whose income derived dividends cor those against taxation of and in the favored exemptions pri porations the old Under income tax vate associations. corporations classes certain selected business laws, corporations, insurance banks, institutions, companies such saving The is taxed. o'f act all railroads was language present associations, or business for doing corporations, companies, no how created matter States, United organ profit tax The but not classes ized, upon including partnerships.” sustained, old not under the law was because of corporations tax selected, it was a corporations property upon excise that it was an their but the distinct upon upon ground reason Justice by business.. Such assigned case of Insurance Co. 7 Wall. Soule, S wayne Pacific Mr. Justice Miller in and such the 433, ground reiterated of the court in Railroad v. Col Co. delivering opinion to be tax, 100 595. The bank was held not U. S. lector, but act of notes; or income, issuing property in a itself, on the but on its use not particular way. obligation Fenno, 8 Wall. fol The Veazie Bank v. judgment 101 Bank U. S. 1, lowed v. United National this to be the shows .true clearly gro.und. charitable, act not
The of 1894 religious, exempts from the institutions, educational excepts opera- specially build- business such as concerns, tion of the tax certain private banks and mutual insurance loan associations, savings ing — but mutual mutual life all not companies, companies merely marine, life, fire, or whether associations, insurance companies The is without accident. inland, exemption granted regard TERM, 1894. 446 Appellants. Argument Mr. Guthrie’s an the business of or income. If amount of property for the conducted on the stock insurance plan company if taxed; dollar of shareholders, of its every benefit profit on for the benefit its members it is carried policy-holders, it is shareholders, but another form wholly exempted. who are accumulations of estates the immense show The census reports or institutions. hands of these exempted corporations hundreds of mil- the act State of New York, In the exempts lions of property. were com- that when the statistics census show reports there were 1926 insurance transacting companies
piled of which were business insurance property, relating of all these on the mutual The assets business plan. doing ascertained, we but. those companies reported, taking of assets owned stock insurance $278,000,000 find companies *15 of owned mutual assets $1,200,000,000 by companies: to latter are tax; former are the income abso- subjected from such burden because the method freed any lutely simply manner of business to or same conducting very happens the mutual The amount of tax saved to these be plan. mutual at annum. favored is least $1,200,000 companies per ít is not contended that doubt exists as to the power to or income of cor- Congress property private under state laws in the same manner and organized porations rate it at the same taxes the and income of property individuals; but it is insisted that the income of or property or citizens their income therefrom corporations deriving be out to cannot be and taxed at a rate assessed singled higher than the or income of other individuals or property partner- If to such are be then ships. exemptions exemp- granted, tions must to have their means allowed those who equally In invested and who derive their corporations income whether not is corporate profits. Congress question can select taxation, classes of or income for particular property — whether it can article tax one article at one rate and another — n at a different rules tax- rate, whether it can prescribe like it ation or which shall as like income upon property vary one is held or collected on the individuals and by partnerships & TRUST FARMERS’ LOAN CO. v. 447 Appellants. Argument Guthrie’s on the and their stockholders other. hand'or by corporations to an excise certain impose Congress The power is not or businesses occupations or distinct challenged; peculiar an excise tax its impose right regarding which shall or occupation vary business a particular or individuals carried on by corporations. at the of others no has owning power, expense to foster and aid character, private of the same
property and loan associations, such building corporations, trading and acci- life, fire, marine, inland, and mutual banks savings which serve or no associations, dent insurance companies interest whatsoever which national public purpose of their members. There for the pecuniary profit exist solely have held that the that the courts be a notion right seems discretion, there is no is one legislative exempt With its exercise. under us, it and no limit to check upon is untram- no the American government system, The exercise of discretion to melled or unrestrained. some cannot must be public-interest; exempt regulated some there must be principle arbitrary capricious; that the public support presumption policy public will be subserved interests exemptions private for the profit- allowed. Private pecuniary enterprises be aided under exer- their members can never guise Loan Association v. of the discretion Topeka, cise exempt. 106 v. Brown, 487; U. S. Cole Wall. v. 655; Parkersburg 20 43 California, 331, v. Eddy, U. S. 1; La Grange, People 375, 378; Barbour Indiana, 339 State v. ; Indianapolis, 655; Rail *16 645, 654, 82 Trade, Kentucky, Louisville Board Brewer Brick Co.v. Kansas, 751; v. 23 Smith, 745, road Co. 9 McQuillan's Heirs, v. Maine, 72; 62 62, Brewer, Lexington 5 Heirs v. 517; Louisville, Dana, Sutton's Dana, 516, 513, 28, 31. whether these
We now come to the gross inequalities 8 of Article Section are unconstitutional. discriminations shall have I of Constitution is as follows: and excises; duties, taxes, and collect imposts, lay defence and common the debts provide pay 448 TERM, 1894. Appellants. Argument for
Mr. Guthrie’s welfare of the United but all States; duties, general imposts, shall be and excises uniform the United throughout States.” and of The contention government appellees, to be seems that the act, uniformity support required not character, is does simply geographical prohibit to the same among persons regard inequality property tax, be uniform subject provided inequality through- States. contention out This is without United merit, is sustained The true certainly by authority. meaning of that Constitution clause duties, imposts, bear excises shall taxation and be equally upon subject the II nited States. uniform Loan Association throughout v. ; Wall. 655 v. 20 106 U. S. Parkersburg Brown, 487; Topeka, 113 1; U. S. 20 v. La v. Grange, Salem, Cole People Michigan, 9 Bank v. Fed. Maher, 452 884 Mobile v. Albany ; Dar ; Rep. Davis v. Alabama, 310; 45 145 gan, Litchfield, Illinois, 313, v. 9 McQuillan, State 327; Lexington Dana, 513; v. City of Law, 36 66 State v. N. J. ; Newark, 37 N. J. Readington, Law, 415; Water v. Coster, Co. 18 N. J. S. Tide 90 Am. 518; C. Eq. Co., State v. 60 Dec. N. H. 634; 219, 252; Gatlin Express v. N. C. Durach's 119, 122; 62 Penn. Tarboro, 78 St. Appeal, 491, 349, v. 9 Heisk. 356 Chandler, see also 494; ; Taylor Washing 69 Penn. St. Avenue, 352, 363; ton Hammett v. Philadelphia, 153; Talbot St. 65 Penn. v. County Anne's Queen County, v. 245, 260; 50 Ryerson Maryland, Utley, 269; Michigan, Patchin, Missouri, McCormack which A tax one rate imposes individuals rate upon corporations, individuals higher exempts gen- extent of $4000, denies such erally practically any to those their income from exemption deriving corporate and which investments, immense accumu- arbitrarily exempts the hands of lations favored property private corpora- associations, tions and not uniform in or in sense any the United States. part cannot strike out
The court and itself re- exemptions act so as to model make act uniform. The of 1894 because of its fall utter lack must It is not uniformity. (cid:127)within to make a judicial new law. would be province *17 & LOAN TRUST FARMERS’ CO. v. Appellants. Argument for Guthrie’s refused what to enact. law Congress deliberately as decreeing had not been immense accumulations ex- these property If' had not been discriminated if corporations against, empted, been at all the rate events, never have the law passed: might have been would reduced one of taxation per probably out will not strike these and ex- court cent. The exceptions act an so to give operation Congress emptions meant. If annul the what never you exemptions, confessedly for a tax from of law would exist warrant these collecting As Mr. Matthews said case mutual concerns? Justice 118 U. S. 90, 95, delivering Spraigue Thompson, this would confer court, of the whole opinion intent, statute beyond legislative operation positive have one can would enacted view what beyond sa}' of the exceptions.” .of illegality limitation, of the constitutional
But, grant irrespective the limi- p'ower necessarily implied and uniform all taxes should be tation that impartial, equal, _ as to all situated. . similarly inheres
The equality approximate requirement exists and it whether de- to tax, nature very be .It difficult, Constitution. or not the written may clared as between if obtain absolute equality impracticable, that; there all Ve must classes of recognize property. owners between absolute persons equality select kind of The same .taxing power property. ¡'land kind of or select omit any particular personal property, courts cannot and the inter- land, and omit personal property tax is it must but on fere; whatever subject imposed, similar to-all uniformly owning property; apply equally tax one and it cannot cannot ownership.; vary according at one for the rate it cannot be another; arbitrarily exempt for the rate at another individual, corporation. due Amendment, Fifth prescribing provisions if of law and property private
process just compensation from en- for the Federal use, taken restrain government public tax laws. forcing unequal partial
"When the expressed Constitution people adopted, vol. clvh —29 OCTOBER,TERM, 1894. Argument Appellants.
Mr. Guthrie’s *18 their not intended to be conferred apprehension powers claimed and exercised the Federal might government, and that there be an of abuse taxation. Hamilton might had in the Federalist that had argued adequate precautions and that inserted, been the doorbad been closed to partiality but the insisted on further oppression; people specific restrictions and to that end ten amendments upon Congress, at were the first of session the First proposed Congress March, 1789.
The Fifth thus Amendment, to restrict the adopted powers of no shall be life, of Congress, provides person deprived law, without due nor shall liberty, property, process for taken use without public compen private property just We sation. contend that an act of which Congress imposes the burden of a tax or income of certáin property while others like citizens, .like owning property having income are or which a rate of taxation exempted, imposes like varies to their subjects according ownership, those discriminated of their without deprives against property due law and takes such for process arbitrarily property use without To a tax on just public compensation. impose A and C and D B, situated, not taxa similarly exempt but exaction and confiscation. tion, Our of the conception of our clients under the shield and of due rights protection finds of law its definition in the of the Chief language process v. S. Justice Caldwell 137 U. 697: ‘Due Texas, 692, proc secured ess law5 is so laws on all alike and operating individual to exercise of the subjecting arbitrary established unrestrained government, prin powers distributive justice.” private right ciples And there can be no doubt that in further, enacting 1894, tax law was the deliberate intention of income state, to tax thfe income derived from county, Congress securities. The as to the precise municipal state, to tax income derived from munici- county, Congress never held bonds been has often been decided, .has pal of the instrumentalities state cannot be, that the governments and of course, or indirectly, taxed, municipal corpo- directly & v. FARMERS’ LOAN TRUST CO. 451 Appellants. Argument for Mr. Guthrie’s is but branch ration government S.tate. cannot sustain
authorities fully proposition (cid:127) of the States or their munici borrowing powers to tax it would ; existed, if the right clearly place palities at oE the States 'completely mercy borrowing powers v. Church United Holy Trinity majority Congress. Banks, 143 U. S. Blake v. National 23 Wall. ; 307; 457 Kirk, ; v. S. 453 United States v. Jennison 98 U. Union Pacific Railroad, 91 American Net & Twine 72; U. S. Co. v. 141 v. 11 Wall. 468, 113; U. S. Collector Day,
Worthington, v. Wall. v. United States Railroad 17 Weston 322; Company, 449 Railroad Charleston, ; Pet. Wisconsin Central v. Price Tennessee, 133 U. S. Van Brocklin v. 496, 504; County, 427; S. 12 Wall. ; 418, U. 178 Ward Maryland, Fifield *19 v. 15 v. Estate 19 Close, 505; Jones Wis Keep, Michigan, 369, 22 consin, Davis, Wisconsin, 225; Union 373; Sayles Bank v. 3 Warren x. 22 Hill, Coldwell, 325; Paul, Indiana, ; State v. 32 Garton, Indiana, 1, 276 discrimination case cannot be sustained present that the the various may
upon theory taxing power classify various kinds of kinds of or the business property purposes a tax at of taxation. is not classification one impose and at rate on the income or a different business corporations if rate the same business carried same income or on upon lawful or to be individuals Classification must partnerships. kinds of not differ- between different property, distinguish ent different business or between pursuits, ownership, or between individuals or selected corporations particular in the rate of taxation same class. If the is not difference nor based the nature of the use made upon upon property, of the then it is of its based ownership, property, irrespective involves discrimination against ownership particular which is In the case, unlawful. pwners, present corporations have not been but the same tax is classified as a class, imposed from associations companies distinguished corpora- tions, no matter Besides, how created and under organized. act, class of these large corporations, companies, act, associations are "withdrawn operation TERM, Appellants. Argument ior Seward’s that said, therefore, cannot be has classified Congress corpo- if class, it had the rations as even to do so. power Ve are not instructed to present which shall any argument or- embarrass the abridge taxing power Congress gov- ernment in that now exist or hereafter emergency may arise. Let remodel the act, Congress apportioning direct taxes and indirect within taxes, the limitations of equalizing the Constitution, and none more than our clients willingly will contribute their share of the burden to maintain, defend, national even if it shall preserve government, take all their ¥e ask no you limitation property. impose to tax full measure of right Congress- up of the Nation. requirements authority Recognizing tax in its nature must be without limitations except equality and that it burden, involves we are destroy, some, here to the destruction must result from plead Union, and however the necessity peril occasion arise, the destruction must be uniform and equal not of selected individuals or classes: we are here to plead — .that cannot sacrifice one the lowliest or the richest n —for the benefit of others. Mr. Clarence A. Seward for Pollock, appellant in 894.- Hyde, appellant an
Is income tax a direct tax within the provisions Federal Constitution ? This is a to be fact, deter- mined of the term “direct at the meaning tax” time *20 of the Constitution. adoption
There is no doubt that that term as used in state statutes and constitutions at the present construed day universally (cid:127) not to be limited to a tax on land, but to include also a tax on income. How it in was ? The that year 1787 theory the words “direct taxes,” used did Constitution, a include tax on income first in the was voiced judicially case, decided in Springer 102 U. 1880, S. 586. was This case founded v. United upon Hylton States, 3 Dall. decided 171, in 1796. Alexander Hamilton, counsel for the. govern- v. FARMERS’ LOAN & TRUST CO. Argument Appellants.
Mr. Seward’s “ case, meiit undertook to define the direct phrase ” taxes so as to exclude from it a tax on He said: carriages. “ The to be the direct following presumed taxes: only or taxes; taxes lands and Capitation poll buildings; gen-. eral whether on assessments, the whole of individ- property or on their whole uals, real or All else personal property. must of be considered as indirect taxes.” necessity When case into the hands of the passed court, Mr. “ Justice Paterson said : Whether direct taxes, the sense of the Constitution, other tax than a comprehend any capitation tax on land, tax and a is a Mr. Justice questionable point.” “ said I am Chase : inclined to but of this I think, do not give that the direct taxes judicial opinion, .the contemplated by Constitution are two; to awit, tax capitation poll and a tax on land. I doubt whether a tax simply, gen- eral assessment of within the personal United States property ” is incldded within the term ‘direct tax.’ Mr. Justice Iredell said : direct tax, sense Perhaps Constitution, can mean but a tax on annexed nothing something inseparably soil. A land or considered this poll In to other there articles, description. regard may possibly be considerable doubt.”
There was no evidence adduced Mr. Hamilton in
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If the conclusion reached in the was case Hylton unsup-' evidence —was in direct to the evi- ported'by .antagonism — dence as it exists which was not produced passed — if a time of more favorable for an abso- peace lute disassociation from than was political atmosphere pos- sible when the then the. rule decided, case Springer stare decisis not- to a bar to a new exami- ought constitute
454 TERM, 1894. Appellants. Argument for
Mr. Seward’s involved, nation of the not heretofore question grounds nor the of a different if conclusion, such a presented, reaching conclusion can be v. justified. Mobile, 127 judicially Leloup U. S. 640.
In this court in has Mar considering question, supplied 304, tin v. 1 Wheat. Hunter’s Gibbonsv. Lessee, 323; Ogden, 9 1, Wheat. and Rhode v. 188; Massachusetts, Island Pet. 657, rules for the 721, the Constitution. interpretation Words to be taken in their natural sense, the courts resort to such sources information as are judicial resorted to all in courts statutes. construing
Is there that evidence the framers of the any persuasive did Constitution not use words “direct taxes” in their “natural and obvious sense?” Would there be absm’d- any did them, so use ity injustice they holding intended what said ? Is there they precisely they any persua- sive evidence that intended to restrict the mean- present to a more limited and to ing phrase reject signification, therefrom the inclusion of a tax on income? would seem,
It from a reference to such sources judicial information as are resorted to the courts construing Constitution, these be answered in the must questions There is no evidence that either .the negative. constitutional convention or the conventions of the several States, assenting or the who attended both, the words “direct people used with taxes” restricted an unnatural sense, meaning, or that a tax on excluded incomes there they intelligently from. The is to of this statement qualification explicit be found in the of this court in Bank v. Veazie language 533, 8 Wall. Fenno, of the decision in where, treating Hylton case, court of Mr. Paterson’s Justice spoke statements as either There is testimony.” nothing Elliott’s Debates or Madison’s which shows that Deports of the definition of the words “direct tax” “direct taxes” ever came before the conven Philadelphia tion. was not there Under discussed, or decided. debated, circumstances, these ex Justice Paterson any opinion was an rendered nine the conven pressed after opinion years & CO.- TRUST LOAN FARMERS’ Appellants. Argument
Mr. Sewarcl’s *22 — individual his was opinion, its labors ceased had tion Such an to the evidence. reference not fortified by was “ as testimony.” be construed Apart not to ought opinion has been no evidence produced so-called testimony from this to show cases in antecedent tending the courts before excluded’by people incomes intentionally a tax upon meaning of the Constitution the framers and by limited were or that such taxes taxes,” “direct the phrase reached has been This conclusion to taxes on land only. a conclusion founded and not as a matter as opinion, of evidence. the weight “direct the words date of the Constitution (1787) At the ” “ ”, were household words. taxes were They and indirect taxes Britain and of Great literature and from the practice borrowed in are to be found literature the continent of They Europe. of both Federal and state con- in the debates of the period, in taxes been used had Europe meaning ventiohs. They like a land tax its owner, which fell directly upon property taxes of which ultimate and as a tax incomes, meaning who than the one another fall originally incidence might there- like taxes them, inquiry, upon consumption. paid in this- is, when whether, country, they now fore, adopted obtained which universally them the carried with signification with a limited arid were or whether elsewhere, they accepted which confined meaning restricted signification, taxes. on land words taxes capitation Confederation, The Articles of originally adopted, pro- the several to be a common vided for treasury, supplied land within each of all in to the Value proportion to be levied the taxes for State, proportion paying But the state and direction legislatures. authority this in treasury 1783 this was amended by providing “ in States the several proportion supplied should the and inhab- free citizens and other whole number of white those bound condition, itants, including sex, every age, three-fifths of all servitude for a term years, in the other description, foregoing persons, comprehended which number State; each taxes, Indians not except paying (cid:127)' ;-456 TERM, 1894. Appellants. Argument for
Mr. Seward’s to the United States shall be taken and transmitted triennially mode as shall direct and such assembled, Congress 1 Ell. Deb. 95. appoint.”: “ was this land, improvements Why phrase buildings, this stricken out amend- Articles, thereon,” by- original He ment “ said: ? Mr. Rufus answers King inquiry. ratified in Confederation, 1781, to the sums According for the welfare and defence should be apportioned general thereon lands and according surveyed improvements but that it hath never been States; the several returns from to follow that rule, several States so 2 Ell. Deb. In being very imperfect.” return of to make a the- the States Congress required *23 houses and lands but one State only surveyed; complied — did therewith Massachusetts not. Con- New Hampshire. consulted no rule. It was resolved the several gress States should taxed their Ell. ability.” according Deb. 45. other have “Massachusetts has while States paid been . . . on the for that States delinquent. Requisitions and were made. Who them? Massachusetts money paid . And few others. . . But have been $1,200,000 paid. six States have not it.” 2 Deb. 56. Ell. paid farthing-of
Therefore, there is this that the concurrent words testimony were intelli- “land, thereon” and buildings, improvements not Confederate as rejected by the gently Congress being either an or a convenient of revenue for source just, equal, the Federal and if that was government, prior opinion to the it at a how later' adoption Constitution, comes “direct taxes” is to be day phrase interpreted “ to a tax on only land, relating improvements buildings, thereon,” and thus to that which the tax back place had been as the source Federal previously rejected only taxation ?
In his letter to the convention of the 10th of Octo- Georgia ber, 1787, Governor con- “There is another Randolph said: — sideration less of' attention the first rule for Worthy each the valué all lands determining quota by granted and of the thereon. It surveyed, buildings improvements v. FARMERS’ & LOAN TRUST CO. 457 Appellants. Argument for Seward’s is no that an mode esti- doubted uniform longer equitable, twelve States value is and therefore mating impracticable; have substituted the number of under certain inhabitants, limitations, as the standard to which to be money according furnished.” 1 Ell. Deb. 484.
This amendment was sent to the Articles Confederation forth an to the address by Congress people, accompanied and Hamilton. In Madison, Messrs. Ellsworth, prepared by when this, rule of taxation, as the they speaking population “ said: This not free from liable rule, objection, although to- fewer than other that could be devised.
material it in the deliberations of attended difficulty was to fix the between the labor difference Congress proper of free and of all other inhabitants. industry inhabitants The ratio the result of mutual to was ultimately agreed concessions.”
Two of full. States these amendments All accepted the others which related the first accepted appro part, for them of revenues priation substantial and effectual deem most support general government, might (cid:127)convenient. Two of the York did States, New Georgia, not act at all amendments (Jour, Congress, the time of the fact remains that their 1783-4); until the decision the Confederate adoption land thereon Hylton case, improvements buildings were never thereafter as the source of revenue regarded Federal that after therefore, land, government. results, ” were withdrawn as a thereon buildings, improvements *24 n subject Federal thé were taxation, requisitions met the States their own of taxation. "What by by system was that ? system
A careful .examination state 1787 legislation prior Massachusetts, establishes that the States of Term on Con- t, necticut, New Pennsylvania, Delaware, Jersey, Virginia, South Carolina assessed their citizens their profits upon their collected a tax professions, trades, employments, thereon for the benefit of the and of the States general gov- ernment. IE1U1, 1894. OC'lOl-’.Kll Appellants. Argument for
Mr. Seward’s to these taxes all the income, In addition States nearly taxes on cattle of all taxes, lands, kinds, poll imposed kinds of various personal property. all these taxes kno'wn to the
How were of the States people were them ? at the time when they paying “ In the United all The Century Dictionary says: States, taxes direct, are are levied state municipal of real and assessed valuations personal property.” Cooley and the American also assert that all state taxes Cyclopaedia direct taxes. But there is more are evidence as to persuasive kind of at what taxes the time called those which people were the States for the they paying joint support States general government. “ convention, In Massachusetts Mr. Dawes said: Con- had it not their to draw a revenue from com- gress and therefore their merce, on the multiplied States. requisitions Massachusetts, her made her own willing pay part, trade on which the trade to such law, of our departed neighbors made no such on commerce; thus we lost impositions what little revenue we had, and our course to a direct was, taxation.” 2 Ell. Deb. 41.
Mr. Nicholas, said : “Nine-tenths of the Yirginia, reve- Britain nues of Great and France are raised indirect taxes; and were raised direct they taxes, would be exceed- At the reverse' of this oppressive. ingly present proposition holds little is raised country, indirect very taxes. treasuries are means of direct public supplied by taxes, not so for the 3 Ell. easy Deb. 99." people.” Iredell, of North said: Carolina, Our state legislature has no considerable way sums but raising any by laying direct taxes. Other States have This imports consequence. afford them a considerable relief; State, our perhaps, could not have raised its full direct without taxes quota by burdens too for the imposing bear.” Ell. heavy people Deb. Morris,
Gouverneur in his observations on the Finances of United two after says, the Constitution years : “There is a concurrent inter- adopted jurisdiction respecting direct taxes.” nal *25 & TRUST CO. u FARMERS’ LOAN 459 Appellants. Argument for
Mr. Seward’s in Albert Gallatin said: 1812, In his Congress, report “ the last taxes laid the several States direct during The by more War were of generally heavy Revolutionary years with convenience; could during years than paid than two hun- direct of more an annual tax 1789, 1785 in which was dollars was raised dred thousand Pennsylvania, and was with paid great punctuality.” oppressive, which the fact that all the taxes people This establishes under- their common in were, were 1787 according-to paying after- in conventions, their expressed expressed standing, been constituents of those who had in the writings wards taxes time, direct taxes that such direct at the ; the State for the and were so income, out support paid were.paid collected state were True, Federal by government. that it is now to collect them but the fact officers, proposed not seem to income Federal does officers, out of change into the indirect from the direct tax of the income tax of 1894. now whether arises, practical interpreta- inquiry ” “ the words direct taxes tion people given limited or laws of the several any way convention. restricted Philadelphia proceedings this convention this court Daniels v. said, In speaking circumstances which sur- 102 U. S. 419 : Tierney, “Th§ its action are a the convention-and controlled rounded part and we are bound to take of the times, judicial history notice of them.” be borne mind that the debates must examining In “ do not occur Constitution. direct taxation”
the words ” “ words direct tax and limited to the That instrument debates war- taxes.” Á-careful examination “direct ” “ taxation as that the direct used the assertion rants phrase as a was not used convention always syno- Philadelphia “direct taxes” “direct taxes.” The term implies nym the tax is either the one of two things; objects upon the tax or the incidence of property placed, taxation,” its owner. Direct very person refers to the modus instances, oyoerandi collecting many TERM, 1894. Appellants. Argument for Mr. Seward’s *26 the is, that whether should be ; the tax power to given direct the tax taxation, to collect whether to collect Federal be taxes.should exercised the power had the States been dishonored. after requisitions (cid:127) draft Constitution Pinckney’s Mr. direct regulated the whole to number of taxation inhabitants and according to Mr. Paterson's resolution author left the Congress. to make a the basis of ized requisition Congress' popu old Articles lation, estimated according Confederation. in introduced a resolution that Wilson Mr. order providing in the the alterations that may to ascertain happen population States, a several census should be and wealth taken; doctrine that was thus reaffirming original population wealth, criterion and index this the true resolution il That order to ascertain the was thereupon adopted: in the and wealth of population alterations may happen be a census shall taken.’.’ the several and it came representation,, Then was appearance . that direct to to, taxation moved, be agreed ought to thus out according representation, striking proportioned the number of and substituting representatives population for the direct taxes. The basis amend- apportionment basis of taxation, and ment representation rejected the old rule of the given population, computed substituted was moved that to manner. representation ought again direct to order taxation, be according proportioned in the direct taxation which the alterations might ascertain be that a census should taken. This was the be required, rule adopted, finally representation introduction in the as taxation. to be manner s.ame proportioned ought was an animated contest ovér this There proposition, were extended debates over whether direct there be taxation should proportioned representation according on the 16th of this resolu- 1787, Finally, July, to population. “: was tion adopted Representation proportioned ought And in to direct taxation. order to ascertain according which in the direct taxation bemay alteration required, relative circumstances time, by time changes & v. FARMERS’ LOAN TRUST CO. Argument Appellants. Seward’s — That census be Resolved, .... and that taken, States the direct taxation proportion accordingly.” legislature over debate There was which cul- again suggestion, draft of a constitution which direct minated apportioned the number of taxation This according representatives. and on the 12th of remodelled, was revised September, introduced, draft of the Constitution provided and direct taxes on the apportioned .shall “representatives under the rule basis of prescribed by population,” On 12th Articles of Confederation. this same of September,' draft of the 1787, the revised Constitution contained these words : That no shall be laid unless tax. capitation propor- to the census hereinbefore directed to be taken.” Then tion *27 debate in -which were there came a these discussed: questions to taxation, The States are asked internal give power now them for the benefit of the exercised respectively gen-, so that it eral to exercise directly government, Congress, such with the States, concurrently directly upon power and inhabitants of the States. This was the property of what the States were asked to after do, and, understanding of what had done. the constitution they adopted, n “ convention, In Massachusetts Parsons said: Con- with each have a concurrent State, only gress right laying direct not an and the taxes, exclusive each right right; extensive State to direct taxation is as the of' equally right 2 Ell. Deb. 93. Congress.”
In New said: is observed York, Chancellor “It Livingston if can that, they general government disposed, levy taxes an But have not exclusive exclusively. they right. . . . Their concurrent.” Ell. Deb. 346. right only we find therefore, Mr. Hamilton said: “Unless, of taxation are we must conclude powers exclusively granted, that there remains a concurrent 2 Ell. Deb. 363. authority.”
The their States were also asked up right laying to-give and duties on the surrender-of imposts imports exports, which to their own inter- would confine them thereafter right nal If we surrender the taxes. said substance: They right to and if we divide direct duties, power imposts TERM, 1894. Appellants. Argument Mr. Seward’s to with our- taxation concurrent right giving Congress direct such as have heretofore existed taxes, selves lay our how are we to the exercise of this so guard power- to be .that not be used How is shall oppressively? will not restricted so have right impose Congress undue burdens the States ? to this Such restriction can be
The answer wras: properly with to ourselves and to imposed justice Congress limiting the exercise of this concurrent to the rule of power population, index and If which is the criterion of wealth. we give to the Federal to come into the States government tax the same we are there amount objects taxing, of such tax on behalf of must be apportioned upon the basis and so that each State will know obtaining, heretofore how much it is called to contribute'. -precisely It would indeed be when the if, singular States.were giving to the Federal a concurrent and col- government right lev}^ lect the direct taxes which themselves were collecting, to collect this and.inconvenient only right unjust, unequal, tax on lands if it limitation, exists, This does actually passed. from the used, not arise which the States direct language an without .taxes,” which, interpretation support- excludes the residue. evidence, ing- first, struggle-was, require Congress apply
States before of direct ; having second, taxation right if that could not be then to limit carried, direct right taxation to Mr. Martin voiced this when he said : population. *28 “ members, number, Many myself thought that States were much better the circumstances judges citizens, their and what sum of could be collected money direct taxation, them . . and that the general gov ernment not to have the direct taxes ought power laying delinquency but in case of a 1 Ell. State.” 369. Deb.
That the States believed that had limited the they power taxes to rule of direct assessing collecting population, is further shown in the debates in the state conven- clearly tions. to Having relinquished duties, imposts given & CO. v. FARMERS’ LOAN TRUST Argument Appellants.
Mr. Seward’s a concurrent to collect direct taxes, lim- ited the exercise of the collection such taxes to the rule of Hence the and direct phrase, “representation population. hence the “no taxes;” shall be laid phrase, capitation unless to the census hereinbefore directed to be proportion taken.” This on 14th latter was, phrase September, amended on motion of Mr. Read of Delaware. He 1787, “ ’ ‘ ‘ moved to insert after the words or other direct capitation tax.’ He afraid that was some otherwise liberty might to taken saddle the States with the this rule readjustment by his amendment, past requisitions Congress, another cast to the would take giving meaning, away pre- text.” 5 Ell. Deb. 545. Mr. Williamson seconded the motion, to. agreed “ The effect of the' or other direct words so that tax,” adding the sentence should read “No or other direct tax capitation shall be to the laid, unless was to census,” proportion include therein but all tax, also only not. capitation other which the States at that time were taxes to collecting their to the- indebtedness general government. pay far, therefore, Thus there the debates to indi- nothing cate that the words “direct tax” were to have a restricted and limited on were taxes land meaning, apply on taxes polls. Mr. Madison’s Journal as the fifth volume of printed “ Elliot’s Debates. He there states that Gouverneur Morris moved to add to the clause empowering legislature vary of wealth and representation according principles number of that taxation should be in inhabitants, proviso . . . He admitted that proportion representation. some motion, his objections lay against supposed they would be removed the rule to direct taxation. by restraining With to indirect taxes and on regard exports imports the rule would be consumption, inapplicable.” his motion Morris, so varied having inserting “ word as follows: Provided direct,” passed always, direct taxation to be representation.” ought proportioned ' 5 Ell. Deb. *29 TERM, Argument Appellants.
Mr. for Seward’s amend, in Ellsworth moved to substance, Mr. (Id. so 302,) the rule of contribution direct taxation for the by .that support of the of the United States should be the rule as government Articles of Confederation. stated 20th of In debates Mr. (Id. August, 451,) asked Massachusetts what was-the King precise meaning direct one taxation? No answered. This tois inquiry, “ is meant observed, tax, was not What a direct by by taxes?” If there would doubtless have been an so, direct taxes was meant that direct such taxes as the answer by then but asked the States were paying; having question meant direct taxation?” he left to'be “What was ” “ that he used the direct inferred taxation not with phrase direct taxes were to be reference objects upon he had reference to collected, assessed the same “ and he of modus asked What was meant opercmdi, question is, taxation?” that whether direct should have and collect the tax, whether levy requisitions be first made The therefor should States. if it Mr. related to the modus
was answered by Gerry, ope- Ell. taxation, moved, for he Deb. rcmdi of “from (5 451,) until the first United meeting legislature all for taken, a census shall moneys supplying public direct taxation shall be raised from the several treasury to the number of States according representatives respectively branch.” in the first was lost. The motion result, therefore, was practical words of the amended the old Articles of Confederation the standard as for both taxation and
were taken affording, The South secured the exclusion two-fifths representation. taxes, its slaves the North secured apportioning of the same two-fifths in the exclusion apportioning repre- The latter Mr. Morris attained, said, sentatives. object the ostensible as referable to exclusion incidentally,” leaving it had been under the Confederation. The taxes only, to have the was satisfied representa- North apportionment the same rule of and to which taxation, controlled by tion had theretofore as. rule States consented. So long latter v. FARMERS’ LOAN & TRUST CO. 465 Appellants. Argument Seward’s *30 was for both the rule adopted controlling representation it was immaterial whether such rule taxation, was introduced ” “ or otherwise. The to limit incidentally taxation httempt defeated, was sub- representation representation by rule, to the old which had been in force as to taxation jected since 1783. It therefore, that the evident, interpretation given by “ of and the laws the several States the words direct
people ” limited or taxes was not restricted by proceedings convention. Philadelphia
And : It is further established conclusively affirmatively that the their people, represented by state delegates called conventions the Federal Constitu- adopt ratify ” “ did not limit the direct tion, taxes to a tax on land phrase used Dawes and Mr. only. language by'Mr. Adams in Ellsworth in Massachusetts, Connecticut,, Mr. by Chancellor by and Mr. York, New and Mr. Jay Livingston Nicholas, Mr. Mason, and John Marshall in this. The proves Virginia, latter said : “The of direct taxes are well objects understood. are but few. What are ? Lands, They slaves, stock they all and a few other kinds, articles of domestic property.” Deb. Ell.
What were the direct taxes to which he was ? Not- referring the direct taxes of the United the United because Spates, no tax, whether yet direct levy any States^'had “ ” indirect. when he Therefore, direct he spoke was- taxes of them as he understood them and as speaking existed in the and in States the State of from which he was. Virginia, a delegate. Mr. in his Wolcott, when Report Congress, speaking
n taxesassessed under the laws 1781, 1782, said Virginia “ ” that taxes were assessed on lots and houses in towns; being ” “ “ ” “ Marshall; on slaves,” lands the slaves being Mr- “ horses, on stud other Marshall; horses and jackasses, “stock of all mules,” kinds” Mr. Marshall; being “ and on tables, billiard four-wheeled carriages,'phaetons, stage “ with two wheels,” the few wagons, carriages riding being ” other of domestic referred to Mr. articles Mar- property vox.. clvii —80 TERM, 1894. Argument Appellants.
Mr. Seward’s of direct taxes which were then shall, well being objects understood. fair
It is to infer from of Mr. this statement Marshall that if he had been a member of at the court the date' of the in the case, decision he would Hylton have concurred of Justices Chase, Paterson Iredell. When opinions undertook to law was under pass judg- case, ment Mr. Madison said he should Hylton vote because was Bi- unconstitutional. against Why? the tax cause was a direct tax. the state evident, therefore, delegates
conventions direct which the understood taxes,” *31 collect, Constitution the to and gave Congress levy meant not taxes on lands but all such as the taxes they only, States were then and under name the of levying collecting, “ direct taxes,” exclusive duties on and imposts exports Chancellor and Mr. said' that direct imports. Livingston Jay meant land taxes taxes on and these were duties, specific the kind of all taxes which the were then' levying States with the which had a York, New collecting, exception tax. The other States direct on ; had taxes property property on on slaves, on of them incomes, two on stock, carriages. All were direct taxes that by taxing description property more or less enumerated Mr. Marshall. the fact by Recalling that in there was no from 1787 standard of Federal taxation ” “ can be taxes; which drawn a definition of words the direct “ ” in mind direct that were known to the taxes bearing' people “ the of all States that name and direct that as taxes,” by in such on in various the States included a tax taxes conclusion that both in the Phila comes, inevitable in convention and “direct the state'conventions the delphia referred taxes” were which those to they by delegates were accustomed in their own those States; delegates ” “ used the words taxes as sense, direct their natural then them “direct ; understood used the people phrase ” as a noun taxes multitude, Congress speaks to-day and the United Court, Supreme Arm}r, Navy, without States member of either. particularizing any . v. FARMERS’ & LOAN TRUST CO. Argument Appellants.
Mr. Seward’s for ” “ The direct taxes was a household phrase known phrase all, and is of definition susceptible accordance with only literature with ; accordance the definition placed upon or it must nations, other include the by taxes of the. period which the were then in their people paying States respective for the of the States and of the joint Federal support govern- ” “ ment and those direct taxes ; were not limited to a tax on but included all lands, the internal taxes which fell upon citizen property upon person State who owned it. advanced Mr. “presumption” Hamilton is by overcome the historic evidence here
by such produced. evi- Possibly dence was not accessible when the case was Hylton argued.
One word as to the literature. Adam Smith’s Wealth of Nations was published It was referred to the court It case. Ilylton as a book spoken whose Cooley maxims had Judge secured them universal awas acceptance. recognized on both sides of the Atlantic. authority Smith made it clear ” direct he taxes meant taxes assessed persons income, according property “indirect opposed ” taxes on expenses consumption. the French lived Turgot, author, 1781. He 1764 work on published taxation. He of its says forms: “ There are three Direct possible: funds; direct upon becomes person, labor; indirect *32 or that which is imposition, placed upon consumption.” In the American Museum for January, this work is that it was in Turgot quoted, then circulation in showing America.
Inasmuch as these words of the Constitution are written words selected and discussed, after deliberately were se- they lected, and anxiously several patiently by and that States, no was ever raised until the case as to what carriage — was meant the term “direct by taxes,” as to whether such phrase Constitution had a different interpretation — what it had when in used the States arises inquiry whether the States have ever given judiciary TERM, 1894. Argument Appellants.
Mr. Seward’s and selected so discussed was to to that thé so say language and restricted than have a more limited signification as were understood natural sense of the words those they by . who used them. ” “ be taxes are to If the words direct as interpreted being it to be land is said a tax on then interpretation only, them convention, by Philadelphia was placed of the several It States. was conventions repudiated a to new word. is a new equivalent substituting interpretation, or the conventions convention, That the Philadelphia new re- to would assented have adopted their as to what and surrendered judgment stricted meaning, cannot now be to the new then meaning, were they doing affirmed. sense; were under- commonly had natural they
The words were used for the what they to mean they imported; stood then and if a new inter- a fact existing, expressing purpose it be must them, is be so with- to placed placed upon pretation or state either Federal conventions. out the assent of “direct” and “land,” strike out insert If. the court is to ” “ direct or the word as either interpreting by expunging land, effect confined its inserting meaning only which not there Constitution, new found, phrase their never assent. which States have and to given therefore: results, It tax income tax as a direct existed before That an long
(1) after the ; existed some States the Constitution and in one of the States until the day. Constitution, present other the localities as well Recognized one of direct tax, It was known called a tax. the States. taxes imposed Constitution, introduced into the When the words were
(2) “ in their said, Justice Marshall used, were as Chief “ in their as he also said, and are sense,” taken, natural ” “ nor a natural sense sense.” It is not a natural obvious ” from the taxes natural obvious sense reject all such used, the words were were when people paying the words limit and restrict land, taxes except *33 v. FARMERS’ & LOAN TRUST CO. Whitney’s Argument for the United States. did to that individual use tax. The whHi have people never assented to that restriction in convention. any order, If an income tax be a direct tax, then., to be
(3) a constitutional it must be tax, collected as apportioned such. Such and collection do not involve
(4) apportionment practical difficulty.
Mr. Assistant General Attorney who Whitney, appeared by leave of for the court, United States.
The method which the are questions presented Pollock and cases was not Hyde chosen with the consent of have government. at corporations ample remedy law, either on the by standing defensive, the tax by paying under recover amount protest Plain suing paid. tiffs would be a decree sufficiently protected by restraining Yet corporations the bills voluntary do payment. not that the intend to allege corporations pay voluntarily. No it is has ever been injunction, believed, granted against of a tax to the United States payment government; execution a law the United against States on the that the law was unconstitutional. It is ground believed that in no case can such an and it injunction properly ; granted not to chain regarded break the important precedent such relief. These against are however, objections, juris dictional in the strictest Hollins v. sense. Coal Co., Brierfield 380, 150U. S. 371, 381, cases v. cited; Insley United States, 150 U. S. 515, are not taken defendants. In view interest and of the fact great public aroused, that no cases form are now these proper are pending, objections waived on behalf of the far so is in the government, of its officers to waive them.
As to the method in which the questions presented the Moore case, the to the form of action is not objection waived. The had full suit, to appellant remedy by recover taxes under paid (Elliott Swartwout, 10 protest 137; Pet. Insurance Co. v. 5 Wall. Ritchie, 541; City Philadelphia TERM, 1894. *34 Whitney’s Argument the United States.
Mr.
Jackson,
Railroad Co. v.
Wall.
720;
5 Wall.
7
Collector,
v.
v.
11
567;
9
Osbornes,
v.
Wall.
Collector Day,
Assessors
262;
12 Wall.
Erskine v. Van
1;
v.
113;
Hubbard,
Wall.
Collector
Railroads,
294;
Wall.
Barnes v. The
17 Wall.
;
15
75
Arsdale,
323;
20 Wall.
v. United
Cos.,
Cheatham
v. Insurance
Stockdale
v.
98
Commissioners,
S.
Railroad Co.
U. S.
85;
U.
92
States,
The government dis- direct and indirect or of the taxation, relating writings to the excise laws of 1794. This prior point cussions & FARMERS’ TRUST LOAN CO. Whitney’s Argument for the United States. ” “ taxes definition direct has been settled,, is because of the income tax deci- the constitutionality sustained, will not be which the assumes this court government sions reconsidered. are consen
Economic definitions inapplicable. By general a direct tax is a sus of economists present century, be shifted on to shoulders of tax which can taxpayer tenant. other some buyer, mortgagor, person, tax can be Whether or not a shifted many particular economists a difficult instances question upon It'cannot taxes can'be shifted have Some part only. agreed. *35 law the of a tax should been intended validity depend upon Tax on See Gross Railway such abstruse discussion. State was settled defi 15 Nor there Wall. 294. 284, Receipts, in last The French taxes” nition “direct century. in influence held America, had economists, who then great all others indi land taxes were-direct and taxes and that poll then in tax was known Europe- rect.- No income general tax of salaries, income 1759 The profes partial English “ front called a as etc., distinguished sional was duty,” receipts, -the eco a “tax” the land tax. The inapplicability like definition, however, nomic settled during Washington’s confirmed a construction, administration by by Congressional laws The excise of 1794 were decision of this court-. hotly- contested in constitutional grounds, oppo Congress upon after sition led Madison. Shortly passage being by doubtless case was made laws, these a test upon Virginia, and the other leaders. This was with Madison consultation 3 States, v. United Dall. 171. tax case of Hylton carriage tax is definition, economic a to strict carriage part According It is direct as' car direct and indirect. pleasure against part as indirect car owners; use of their against kept riages is The tax classified stables. usually livery riages belonging to be a held, however, It was duty,” economists direct. by of eco The had called as it been inapplicability by Congress. construc confirmed nomic definitions was further by practical under the war of 1812 by levy tion during period would which economists classify rule of uniformity oftaxes OCTOBER, TERM, 472 Whitney’s Argument for the United States. 3 Stat. Dec. 40; 15, c. 24, 1813, 24, direct. Acts of July 186 23, c. 3 Stat. Feb. 1815, ; Jan. 148; 18, c. 3 Stat. 1814, 12, 3 Similar 61, during c. Stat. 217. 27, 1815, legislation construction course after the civil war, practical completed The economic definition be conclusive. of itself should this court. In disavowed was then by again repeatedly Pacific taxes under discussion Wall. 433, Soule, Insurance Co.v. — in and undistributed sums, tax dividends included a — in tax, Rew, income Scholey fact, complete corporation estate was discussed; real Wall. succession 331, S. an individual 102 U. v. United Springer All sustained. would tax. All of these were unanimously the true definition taxes economists: That construed direct indeed shown Constitu is not the economic definition is between direct distinction drawn is not tion The there itself. but between direct taxes on the one taxes, taxes and indirect an'd on the other. This “duties, hand and excises” imposts, different from economic definition. radically Many most excises are direct taxes as understood economists. “ direct taxes,” constitutional definition as as thus far character. The best evidence of in settled, negative tentions of the friends of the found Constitution is to be which two of case, Hylton Justices concurring were members of the Constitutional Con only prominent but members who attention to vention, gave especial questions *36 Without of taxation. so the court inti definitely deciding, mated, as stated Mr. Justice “that Chase, the direct taxes the Constitution are Jby to wit: a contemplated two, or without poll capitation simply, regard property, ” or other circumstance, and on land a tax profession (3 other Dall. 175) the French After a words, definition. —-in series of cases which this (see was considered par Bank v. Veazie 8 Wall. ticularly Fenno, this court 533), laid down case the finally deliberately Springer Mr. Justice “Direct following proposition, through Swayne: taxes within the of the Constitution are meaning only capita tion taxes as and taxes on real expressed instrument, This definition, estate.”. of 88 controversy years’ closing v. FARMERS’ LOAN & TRUST CO. 473' Whitney’s Argument for the States. United should as one which standing, regarded rely. might implicitly taxes,”
“Direct a more would practicable definition, mean taxes taxed at least falling and, directly thing out of it. collectible Familiar instances are primarily, poll taxes, and in land taxes States many chargeable only against the land and not its owner at all. An in- charge against come tax is less direct than a carriage tax, may made to fall or even directly upon distraint; carriages by an which, than non- seizable for import duty upon goods, of the tax. tax on not a at it is payment all; property a tax not on what a now but on has, man measured himself, have, did most of it he have what he although may already spent. court held an income tax not however,
Not has this only, held it be an to be direct has excise tax; expressly on net is similar in character a tax A tax income duty. taxes even less direct. Such have on gross receipts, excises. In the case defined as duties or Springer been often The tax of which the error : this court said plaintiff of an 102 excise duty.”. is within category complains cases, and Scholey Insurance U. S. 602. Besides Pacific 15 Wall. State Tax Gross Railway Receipts, we refer to Memphis 595, 598; 100 S. Collector, Co. v. U. 284, Railroad 293; 108 v. U. S. & Co. United Charleston Railroad U. 142 S. 228, 217, Trunk Railway, Maine v. Grand 234; 4; 145 U. 2 Postal Tele 1,S. 228; v. Shelby County, Ficklen see 699; S. also 2 688, 155 U. Adams, v. Cable Co. graph v. 12 Bank Apthorp, 6th ed. Portland 603; Com. Steph. p. 252, Hamilton Manufacturing Mass. v. 256 Commonwealth ; Commonwealth v. 632; 6 Wall. 12 aff. Co. Allen, 298, Ins. Co. Mass. Connecticut 493; Bank, Lancaster Savings Minot v. 161; 133 Mass. Winthrop, Commomwealth, Mass. the former tax, a direct also
If an the tax were excise held Hylton and, term It is more governs. specific, “direct taxes” as applied the rule of case, apportionment and “radically wrong” “the work compromise” *37 TERM, 1894. 474 Whitney’s Argument Hr. for the United States. “
well as not to therefore impracticable, extended construction.” The however, two words, used exclusively and whatever is an Constitution, excise cannot abe direct tax within that instrument. meaning “ as to the clause.” This is uniformity Next geographical in character and means that the tax must be the same in each State it is in other State. The construction every is clear from a of the two clauses under comparison consideration. “ The words uniform the United States” are evi throughout used contradistinction to the words dently “apportioned the several States . . . to their among according respec tive numbers.” is also well established. Head Money Cases, 112 U. 594; Constitution, 241; S. on 580, 240, Miller Pome pp. 1 Law, 287; Constitutional 280, roy’s Consti Story §§ tution Moreover, the Constitutional history § Convention of shows that its 1787 members had in clearly mind between the different States and not uniformity uniform between different classes of individuals. same ity .The phrase is elsewhere the' used same with reference to ology ..article naturalization and bankruptcy. uniformity requirement as to these has never been to be other than supposed geo graphical.
While the clause” is “uniformity merely geographical there character, a certain is, however, degree uniformity “ ” involved in the word tax; very uniformity requirement involved definition of that word and guaranteed by Fifth Amendment to the Constitution. While A cannot be taxed to benefit B v. 3 Dall. merely (Calder Bull, 386; Loan Association v. 20 Wall. 655; Cole La Topeka, Grange, 1; c; U. S. Constitutional 295 Miles Plant Pomeroy’s Law, § & Co.v. Ct. ing Carlisle, Dist. Manufacturing Columbia, App. so on the other if A and B January hand, 1895), belong we class, same concede that are to be taxed A alike. tax cannot be laid A because he special simply is A and not B. Such a law would be an to exercise attempt not a but the of eminent taxing domain, power, would for the taken. Thus the require compensation property constitution of uni- taxes shall be Pennsylvania provides & v. FARMERS’ LOAN TRUST CO. *38 Whitney’s Argument United States.
Mr. ”(cid:127) while class of subjects; same on the Supreme form Court decided has de- requirement merely that State Case, 82 Penn. St. 211. Kitty Roup's claratory. how far the therefore, arises, legislative power question, Most extends. decisions in-State courts are
of classification construe not found Fed provisions inapplicable, Under above Pennsylvania eral Constitution. requirement of classification is extensive. very Common quoted, 145 Penn. St. Co., 83, wealth v. Brewing 86, 89; Germania Co., v. Oil 157 Penn. St. 516. National In Commonwealth similar Constitutional lati restrictions, the absence special this and other courts. Bell's allowed tude has been by Gap 134 S. 237; v. U. Home 232, Ins. Pennsylvania, Railroad Co. 607; S. 606, 134 U. York, 594, v. New Express Co. Pacific v. 148 339, Tiernan, v. 142 U. S. Giozza Seibert, 351; U. S. Co. N. Y. 104 McPherson, 306, 316, 317, Matter 662; 657, 318; 116 U. S. Columbia, 404, 408; v. Gibbons District Cooley 164. 2nd Taxation, ed., on p its in this act has exercised of classifi- simply right now are all to be cation. The objected nearly provisions laws of the war and tax in the income reconstruction found in all similar fiscal are and many systems. general period, this law and discuss its to construe constitution- is impossible its without understanding ality application underlying is one of This Certain compensation. principle principle. well almost settled, of taxation are universally principles bear hard that taxes first, consumption unduly recognized: what is called economists the upon poor because the middle class, lower financially-speaking, compara- their all of income; consume all second, nearly tively poor an income fairest method taxation equalizing below a of all incomes certain amount. with an exemption 476; Vol. Sir Political Rob- Economy, 2, Mill’s John Stuart p. Sherman, Globe, 23, Senator. ert Peel, May Cong. quoted Id, Fessenden, 1861, 25, 255; Senator 1870, 381; July p. p.’ Trumbull, 28,1864, Id. 2512-15; Sumner May pp. Senators Sherman, 23, 1870, 377-380; Id. Appendix, Senator May pp. This and March approximately 1872, p. exemption OCTOBER, TERM, 1894. Whitney’s Argument for the United States. the incomes represents which, prior establishment of than their income bore more fair tax, share of taxation. Economists and statesmen differ as to the advisability this method of adopting compensation. Many urge it as familiar objections inquisitorial, productive dishon the honest, are esty, etc., sufficient discriminating against counterbalance its Such advantages. practical considerations for the economists statesmen and not for exclusively Coxe, court to decide. Cranch, Pennington 33, 59.
The various the score of objections will uniformity now be considered their order. *39 The minimum This has been already $lfl00. explained.
It is the limit fixed the incomes by Congress dividing pre taxed from those viously unduly favored. previously unduly The whole attack on the of this minimum feature -is justice based a fundamental the notion fallacy; that the income tax stands alone instead of of a forming part general fiscal the different of which are set to system, balance parts each other in to that approximation its equality per “ fection baseless dream.” Head Cases, 112 U. S. Money 580, 595. All our income tax laws previous contained a sim ilar minimum and some of them levied provision, graduated taxes. The last one, that of previous 14, 1870, 255, c. 16 July Stat. taxed 256, incomes over The $2000. same is true of all or all similar nearly laws, domestic past present, Personal foreign. succession taxes and property n others many like carry The clause exemption. uniformity of the Constitution duties as well applies as to inter import nal taxes. Erom 1846 to 1861 duties were ad valorem import At all other have entirely. been periods they partly specific, duties are although specific harder notoriously unequal, bearing on the than on the rich. Instances have poor also been com mon of sarpe duties article compound classifying according value with a series of minimum rates v. (Arthur Vietor, 127 U. S. 572, 575; Hedden v. 151 U. S. Robertson, 520, 521), all below a certain value. exempting imports Arthur v. Mor 112 U. S. 498. Our gan, 495, first excise act taxed distil city leries at one rate and distilleries at another. Act of country & FARMERS’ TRUST LOAN CO. 477. v. Whitney’s Argument
Mr. for the United States. 1 Stat. 199. next The 15, c. draw- 3, 1791, March provided but not on on distilled less than backs spirits, quantify 1 32, c. 8, 1792, Act ot' Stat. 100 267. May gallons. contain minimum excise acts also Act of provisions.
early
1
Stat.
acts
9, 1794, 65,
397;
18, 1815,
c.
c.
January
June
23, 3 Stat. 186. This
3 Stat.
c.
is a Con-
180;
legislation
widest
assumption
very
possible powers
gressional
stood so
classification.
consti-
Having
long unquestioned,
construction
the Constitution which should
tutes a practical
Clark,
v.
S. 649,
be conclusive. Field
143 U.
McPher-
691;
minimum
v.
Objection isor to one member to each its income whether belong family, — con- one that when is, family contributed more than so children, minor sists of husband and wife, parents This a corollary the common is the income is combined by law. based. Two families which the law is to upon reasoning to to suffer size and ability may presumed equal pecuniary in- from taxes whether the same extent consumption, upon or not. family, come all to one member of belongs deduct is allowed It is that a said further corporation case tax, is from income before its paying $4000 TERM, 1894. 478 Whitney’s Argument for the United States. is individual. The reason This is not a tax plain. with an but a tax net income. income, The net gross pf different character radically corporation income the elements which individual. make Among an go that of or income of an individual net profits the so-called up as “wages known to economists or the superintendence” individual value of the labor of the himself. See Muser v. individual 155 S. 240. The U. business man does not Magone, account himself his esti pay wages keep representing the value of mate of his own services. that he Everything makes over above what he out else pays somebody returned as must be net income. The of a cor net income hand, on the other contains no such element. The poration, ” consist of salaries its wages superintendence and is counted as an When the indi managers expense. owner of a vidual business he at it, once incorporates begins himself a from the funds of the pay salary corporation.1 were If, therefore, allowed the mini corporation same mum as an individual, there would be a lack uniformity to the individual. prejudicial
Next as to
The law
certain
exemptions.
classes of
exempts
from taxation. Some of
corporations
these
are
exemptions
also
contained
income
laws. The
prior
is well settled. Bank
Commerce v. New
exempt
York
Black,
2
620, 631; Home
the Friendless v.
City,
8
Rouse,
Wall.
Welch v.
430, 438;
Cook,
The other objections
It is no
to a tax that it is
objection
seriously
pressed.
income received
prior
measured
by
passage
part
v.
20 Wall.
Stockdale
Insurance Companies,
323;
act.
U.
Lockev. New
Rose,
;
v.
95 S. 78
Orleans,
Railroad Company
15
66
63,
v.
Wall.
172;
;
v.
Darlington,
4 Wall.
Gray
Wright
If
Mr. for the United States. $4000 articles of from the first of one’s upon consumption income. measure this tax does Hence, not bear the to the values of land. proportion slightest tax on when it a Moreover, is direct land, is a tax tax, of, out collectible land' itself. Here there upon, is a for the lien, not even land whose tax, rentals have into of the entered income gross tax-payer. income tax is no tax on
An more a land than is a succession tax when the succession is to land. v. Rew, Scholey 23 Wall. therefore, in In is, that case the tax 331, was point. even a lien land made itself. The specific government in relied on authorities that a covenant a lease holding pay land does not cover a tax on taxes landlord imposed in land. court held that was not respect See on land. also Minot v. 162 Mass. Winthrop, 113, cas. Wallace v. 38 Fed. 184. Myers, cit.; Rep. a tax on all
In or all economy income is political property not as a series taxes regarded equivalent special all or income. The same covering parts property distinction is the law. Railroad recognized by Company v. 100 U. S. v. Collector, 595; United States Erie Railway, . 106 U S. 327; v. 6 Wall. Society Coite, 594; Savings Hamilton 6 Wall. In Massachusetts, 632; Home Company York, v. New 134 U. S. surance Co. 594. See also Allen Van 3 Assessors, Wall. 573, 583; v. The v. The 4 Bradley People, Tennessee v. 459; Wall. U. Whitworth, 117 S. 136-7; v. Middlesex Wilcox 103 Commissioners, Mass. County 544; Wall, Tax on State Gross Railway at Receipts, p. the tax on rentals is
If so vital an element the whole as void scheme to make the entire law if the not rentals are rule case taxable then the is uniformity, Springer While own income included Springer’s point. particular rentals of real was no nevertheless, property, involved his for if void m as to case; the law was toto whose income was in so it rentals, made part persons up .void toto as else also. everybody rentals arc from the If the rest regarded separable tax, then the case still shown. Scholcy point already & TRUST CO. LOAN v. FARMERS’ States. for the United Argument Whitney’s income from that per- discuss suggestion do not
We
that
reasons; first,
for two
non-taxable,
sonal property
tax on
personal property,
the rule
settles
case
Hylton
valua-
at a
on all
property
than
personal
other
a tax
least
at
did
these
second,
excise;
appellants
tion, is duty
other
property
personal
income
to have any
appear
n
bonds.
than municipal
the bonds of one
State
bonds. It is settled
Municipal
another State. Bona
be taxed
its
municipalities
*43
it is not
S.
but
settled'
592;
v. Tax
104 U.
Court,
parte
the Federal
government..
taxed by
whether they may
in
v.
Collector
Bradley
of Mr. Justice
See dissenting opinion
remarks of Mr.
129. The
Justice
113, 128,
11 Wall.
Day,
121
York,
138,
Bank v. New
U. S.
Matthews in Mercantile
162,
Marshall
Chief Justice
regarded
question
obiter..
the Federal
could
left
whether
tax
government
open,
it were decided that
State could
bonds, even if
not
state
4
bonds.
v.
Wheat. 316,
tax Federal
McCulloch Maryland,
that
been decided
the State could not
436.
It has never
435,
in a
tax
bonds
(in
include Federal
general property
Bank
Congress),
absence
by
except
express prohibition
2
620.
Black,
York
See
v.
City,
New
Commerce
People
26
23 N.
N.
192;
Y.
Y. 163.
Taxes,
The
Commissioners was asserted by
the States
dissenting-
power
Judges
The
Weston v.
482 TERM, Moore, Argument Appellant.
Mr. Edmunds’ who were fortunate to divide its A enough spoils. general state income tax could' not impede disadvantage any- the Federal to borrow. The way right lender property was taxable before the loan. He its simply form. changes The tax on at the same rate. goes the other Exemption, hand, to the Federal borrower. positive If advantage the citizen lends to the he will no more government, pay taxes the State. He therefore calculate supposed sum the interest he will thus principal save, representing sum, the form of a pays principal premium, isWhat the net result? The government. government has confiscated the taxable value of some the taxable sold property State, then it to for cash. somebody in the Bank never Commerceoase came be time, fore the court a second because the act of Congress, by 1862, 345, c. February 25, Stat. expressly exempted n United States bonds from State taxation. The court’s line of not has been sustained in other cases. The reasoning prin of the case has ciple been to other Federal applied agen cies. Railroad Co. v. 5. The Peniston, Wall. argument if the that, Federal bonds were at taxable State all, could establish a tax with which would be general- exemptions, substantial of a Federal equivalent tax, -special *44 courts would be unable to the of ex pass propriety has in emptions, been overruled Mercantile Bank v. New
York, U. S. 138, 161, 162. F. in 915. Edmunds for Mr. George Moore, appellant and M. Samuel Mr. Jeremiah Wilson were with Shelldbarger brief. him on his-
n Moore, has I am first to consider Mr*. client, whether any my to be in this court. There are very important heard standing tax law. is involved in this income so-called questions of to his to be heard power judicial objected right and what we be, what to United States he conceives against inva- be an absolute and unauthorized believe and maintain to that he shall has said sion of his private rights, not be heard. FARMERS’ LOAN & TRUST CO. 483 Moore, Argument Appellant. for
Mr. Edmunds’ under the to has no Constitution If he to the right appeal courts of his protection no law country against is and which destitute of authorizes, on absolutely authority thus of who undertake to invade his part persons office, his him to and books, to compel explore pay, finally in so far as that he decide whether has fact, told the goes, it and if he not, truth about think has not told the to him. a a final’ truth, in punish penalty if, judgment; case, such he cannot courts, course he appeal has no business to be here.
But if the Constitution our has created a country really of the United in States, itself, judicial independent — of the the rock Constitution standing department to which Constitution has the author- imputed government citizen to unlawful ity protect duty against of his he invasions has a tyrannical private rights right —then to ask to whether decide these invasions which are now you threatened him those which law has war- against ranted, or are those which have been invited by body who had no respectable right gentlemen, speak, who have off now the face of the earth. disappeared political
The Constitution declares that shall judicial power law extend do all cases in under the Con- equity arising stitution and the United laws of this Court gives in such cases. The act of original jurisdiction judiciary motion, and it continued has so with- put judicial power out as to about which I am change, point speaking.
The statute which is to bar Mr. Moore of the supposed right be heard in Bev. Stat. provision equity § that “no suit for the collection or purpose restraining shall be assessment of maintained court.” any any If that lawful If it tax, means is absurd. means, mean, was intended probably merely apply questions classification, assessment, amount of the irregu- etc., view it larities, technicalities, one is con- point sistent with interest. But if it as I meant, assume it public *45 citizen to a be, to as a whom man against every prohibition comes, be a collector to or assessor taxes falsely pretending TERM, 1894. Moore, Appellant. Argument Mr. Edmunds’ real act of behind without and- the sheer him. any Congress branch force an executive of the government, arbitrary books, and his office his decides whether he has invades not, or seizes his I finally truthfully property, reported declaration that had no to a make. Congress it is power say cases in that The Constitution certainly regarded equity accorded with and well-known settled, historical acknowledged, and the historic for hun- practice principles jurisprudence dreds of ones for an a to years,-as proper appeal judicial said it it meant what it tribunal; so, said. And when it that the should declared consider and judicial decide, in before all cases in it, cases under the brought equity arising and laws of the United Constitution it was a function that the courts, Constitution one which implanted act of no so-called could abolish or diminish. Congress in that Congress says exercising Suppose original juris- in this court diction of no suit shall be equity brought by another, one an State ambassador. against respecting Can there would be want we think this unanimity tribunal that was a matter supreme holding beyond could Congress you say only exercise competence the Constitution had of what and that -part given you, you not, States or should respect ambassadors, particular that fell within of particular topics range scope Constitutional description boundary your powers, per- be heard did while mit them exercise you your powers ? all other cases action of defies the such Fourteenth Amend- Congress
All amendment if that ment, United States applies I (as as well as to for it the-States, think declares that the does) laws is inviolable for protection everywhere equal everybody. protection I with confidence and maintain, So that that this hope, have no court will this difficulty saying prohibition kind of on account of suit, against particular suit in of a unconstitutional tyrannical its respect being who part person holds attempt particular invade affairs of no private my client, office impedi- consideration of the .case. to your ment *46 & TRUST FARMERS’ LOAN CO. 485 Appellant. Moore, Argument for Mr. Edmunds’ is whether there now to the juris- I come equity question is a is that where there ade- insisted plain diction. of cannot be at law the courts remedy equity appealed quate knows it. And then all that. it to. We Everybody grant in in tax as whether there other, a cases, becomes every courts inclined in an at law. While are is remedy adequate a as in cases is cases, tax some other (when ques- they railroad a to refrain tion of a trespass), stopping stopping courts in etc., everywhere yet issuing injunctions, to a been careful sav- to these tax cases have respect express be the circumstance of mul- that if there clause, ing meaning in of of matters suits, injury respect tiplicity irreparable suit at dam- sense, of in a a law for redress just incapable will intervene. ages, equity Here is a Now, do we fall within the statute, principle? — — here is a
so I it a for statute called call statute brevity of a officer which'declares that government particular — which the himself Constitu- his deputies appointed at he not all, tion him to is no appoint authority gives — do now stand on that head a not —-1 of but we department that bloom in of it of of vice this as one only speak plants — of in last may compel garden injustice if he has citizen of not a $4000 the United every to which no tax $3500, if he in has earned year, respect — him, series be assessed to make a answering report — and of I assume for under act questions authority — which the act in- the moment that are authorized by transactions, and affect in- vade item of his every private of,, in he been terests with has connection, whom everybody as law- confidence, situations of trust of the sacred most most for of trust sacred instance; situations yer, most in situations confidence, private a physician; most ; his own situations business purely character bank, or a sacred broker confidence, as president market, for compel thousands customers acting to, him of this the satisfaction agent expose everything do what ? it, he he then law, as called. And if does mind, make his Then this law is to so-called up agent TERM, 1894. Moore, Argument Appellant. Edmunds’ make, he much from such chooses how inquiries If the man has income is. submitted to man’s exaction really return, to make a and the collector his far enough deputy be.dissatisfied, he him a chooses maj' punish penalty cent the citizen added. Then to the col- per appeal for final lector internal revenue collector is justice. not a of his .is an countrymen. trial, Probably jury equity such as forbids Circuit Court and to this statute *47 an trial court, but before collector of internal equity .the case, revenue. He whole decides the statute upon it shall That end be final: is the says jurisdiction. The invoked is' to be at all. It comes judicial power around of the final whether of disposition these exactions under of law is.to be pretence authority it determined or whether is to be determined judiciary, the administrative officer’swho are made the as inquisitors well the final as judges everything. ' We have been referred to the in case, decided Hylton, That the case on was which allowed a a as not duty carriages In direct tax. the court below Mr. Justice-Blair- —-and you will an find whole case extremely amusing suggestive — was of one that tax this on was a opinion carriages direct tax. But were divided' judges opinion. Court who heard the held that case judges Supreme that tax was and that not a valid, it was direct tax. Well, let for us a moment I that that is law. believe suppose good that was a if it will add chariot, anything dignity of the case. But tax on was each. these dollars eight The decision then was that a tai car- simply solely was not a tax, direct a the court but it was as riages duty, called and how a it, from an sense duty impost differs I will not take time to your discuss. up
Now that was suppose so. A is' a thing carriage is from the no doubt separable the owner. There is person that the owner is is from when he separable carriage out in a A is which we thrown a runaway. carriage thing have an idea of as a definite and as distin- complete thing, from the guished of the owner. personality & TRUST FARMERS’ LOAN CO. Moore, Appellant. Argument Edmunds’ % I income take it not. idea about an have such Can you a a as tax whatever we Therefore, may say respects upon it is a as a different about object, -whichmoves physical thing tax a a a and different conception upon per- idea thing a tax tax is or be— all this income son, professes circumstance of a because particular inseparable person, upon times, him. old is curious from English an dictionaries, formed, even since Constitution law tax income was described capitation imposed of their of the amount consideration property persons their profits. that the Su fact there no from the
In escape proposition a mistake when said, Court of the United States made preme fell hesitation, and with that a tax doubtingly upon carriages de which, into the of indirect over taxes everybody region them, to fall were those which are intended scribed and the movement commodities, voluntary occupations n men. So much for the case. Hylton Then we come down series corporation along through etc., which I think Honors cases, banks, insurance your over one all of one, would excuse me for hardly going which, I submit, *48 entirely this* distinguishable ease,
At last we did hold, to come although Springer's all that that clear, the facts as were not sources income income within the without was competence regard apportionment. and to
That to reconsider, decision I Honors your request back It is al- come true the Constitution. rule of again in the of human well, ways always progress necessáry affairs and to remember that and in society grad- government, ual and line Constitutional infinitesimal departures marked and out for be we all believe one, our march there (if one further, and is) further precedent gradually depart there like the mariner until at last we are another, following obliged, storm, after a when wilderness, or like .the in traveller stars come and correct our course. to take a new observation out, I time this
Now, Constitution that at prove propose in both the conven- discussed, at the time it was proposed, TERM, 1894. OCTUHER Moore, Appellant. Argument for
Mr. Edmunds’ tion in and and in the conventions of the discussions, public States and of the it, adopted principles practice gov- ernment which led these these terms so employ gentlemen and did, as demonstrate industriously careMty they beyond cavil that a tax or doubt in of his person respect did fall within duties, income not of the words, category excises, that it fell within the terms and imposts, and other direct taxes. And if this capitation description I submit that true, so now. dic- you say Every ought shows-— n have — I at looked Johnson’s tionary dictionary — at that time and in of the editions of great Jacob’s, dictionary those in dates, Blackstone, the Acts of .Parliament, Coke, this distinction everywhere appears clearest way.
Our fathers who built as familiar were with Constitution Blackstone as of us bar below the are. were as any The}7 familiar with Coke. knew much of They meaning who has succeeded them. English language anybody can no There the clearness improvement upon of the There are fewer style Constitution. language in it, that are of different construc phrases probably, capable tions and than other similar any equivocal interpretations, number of words document It therefore does existing. to do with words into the Constitution say they put out consideration, without and industrious intellectual selection of the terms which and without use, intended to the clear and definite universal intending meaning of mankind at that practice time to them. imputed Blackstone, There was work was whose instance, printed in 1765, was formed. twenty-two years before this Constitution That book was on of half the lawyers the tables undoubtedly of the United States, and the tables undoubtedly committees and on the tables of convention. the constitutional (cid:127) He treats of taxes this first whole very volume (the but I interesting, read the First, phrase question). *49 there the direct tax, the and land all tax, subsidies, and the that variety nomine, there eo tax, no income things, being official except upon etc., etc., and salaries, there were stamps, & CO. TRUST FARMERS’ LOAN Moore, Appellant. Argument for Mr. Edmunds’ a measure as at that idea of income time being but make to the should common the subject contribution of their tax found in the was system arrangement treasury made of all the valuation was land and in this way: and then when the counties, in the several etc., property, — when as power or the they usurped Parliament kings, under the direction usurp- this administration — £100,000, to raise a this was wished now levy ing Constitution counties, as the says just apportioned among the States, shall be direct taxes among following apportioned at Then it came last to the taxes. the course of the English amount idea of that amount, usually paid adjusting in the tax was book land and the which already property, —(cid:127) did not a new assessment and have every year, they — the valuation stood a time they provided long tax, should these Acts of Parliament paid upon the amount-of income that ratable’ proportion properties If the man’s out of them. the owners of property got was to a tax he instance, was rated at £100, pay property was rated at if his £1000 of a penny pound; property a tax at had to and his income then he £500, pay on. rate of and so pound, sixpence at our taxation the time That kind of was the state of that the manner Constitution That was was formed. regulating and real the burdens and that were taxes things paid upon the various counties estate and inhabitants of property by when made knew and that our forefathers they England; knew, it was a direct Constitution; and our forefathers excise impost. from duty, distinguished ” “ kind it. duties covers But term be said that the but when our sense; of taxes. So it broadest would its and modes Constitution its subjects distributes description in another taxes,” taxation, says in one pf says place is it not obvious “duties” “excises” “imposts,” into one class intended things to throw one part and that duties were class, the other the other into part into put according where they belonged association were Blackstone, usually imposed those imposts *50 ' TERM, Moore, Argument Appellant. Mr. Edmunds’ for customs, sometimes which our Constitu- upon exports, tion but forbids, which our Constitution- always upon imports, allows. Blackstone of these taxes that are the says customs, they or the toll, or tariff duties, merchandise payable upon exported that this book imported.” Supposing table, lay upon and we were a and wished to class constitution, framing income tax and it in its put proper place among descriptions of taxes which be authorized to would Congress raise, .should doubt where we it % anybody must Sol that in all put say, the dictionaries of the in all the commentaries of time, in all the time, the time in that statutes from which kingdom we drew our our inspirations public liberty principles there judicial was never or a justice, thought suggestion ’ of an income tax taxation direct except body of the from time property to time and kingdom, regulated aas direct graduated tax, according ability per- son that owned the as shown sometimes his in- property, by come for one and sometimes for three year average years. n If that be so and it — — so how is it for us in an possible intellectual sense, matter res to conclude that nova, being a tax incomes falls under the upon personal head of duties, and excises, to be uniform imposts, the United throughout ? States And a tax at that which, if the had then time, been exerted would have way, accomplished very mischief and the that the founders of that Constitution wrong intended to burden prevent, by almost the entire imposing three or four States. And we government upon thus see when this that, Constitution was was adopted, very point in the discussions those burdens from which everywhere the citizen could not or diminish act of ordinarily escape, his own as he can in will, to how he lives and what he respect should consumes, committed to a mere majority voters impose upon others, should ap- the States portioned among to their according population, and if it found when it came to be that it would applied work injury injustice, sometimes all taxes then do, need not it. adopt & FARMERS’ LOAN TRUST CO. Moore, Appellant. Argument
Mr. Edmunds’ — Have formulated own Harlan: you your Mr. Justice which we are to rule determine whether mind any general indirect ? direct or tax is — am. I have. I to state it. Mr. Edmunds: perfectly ready all rules, like most requires exceptions,-as judi- But general with all affairs know. courts know and cial people acquainted rule which to state will not It is almost general, impossible *51 and its and its variations. have its qualifications, exceptions, — it,to is and I believe be definition But my generally —true that a direct tax a is tax found to universally upon kind of' kind of and in upon every person every property of his or either in himself, respect property, respect to be and not in or existence or acquired, respect acquired, or acts, to his voluntary pursuit goods calling, importing not as' he which he or" not import pleases, may import or a trader in all manufacturer, etc.', of his being respect taxed as of his free choice of which cases he is consequence of which burden is to some and all business degree — in that the exist- moved respect things belong — a state as an ence of entity physical being. property are, excises and and almost Duties, large degree, imposts, each or upon person, heavy light depending upon universally, . as some writers that do, will. If we indirect his own say, I those what I repeat taxes are consumption, again upon taxes extent, before to some con- believe I said which bear not taxes are so- unequally upon sumption because we all rich, know —-it called so-.called poor — are that there ah people everyday experience very — — town, in this room I know there are very probably half who live comfortably upon respectably their some who are costs neighbors. — distinction Is not the Brown : somewhat Mr. Justice like direct, both this: That taxes immedi- taxpayer paid indirect taxes are while immedi- ultimately; paid ately else. ultimately by somebody ately by taxpayer — a much that is clearer Yes, sir; Mr. Edmunds': definition I think whole burden I have than though rarely given, I borne is, think, last'man. It falls on the partly by each TERM, Argument Moore, Appellant. Mr. Edmunds’ in the movement. The income of man is agent inseparable It from man from him. is as as his inseparable character is, his name. It is there. It It or personal. begins ends for that reason that I read with him. It was the definitions — in existence at the time this Constitution was made as a tax included an income tax. It is an capitation inseparable could not idea, entity human quality, grasped by mind than in connection otherwise with the person.
be that it should not have been so. our Perhaps patriotic friends who have left us would have made some other way. But our mission is to find out what it and not was, what it to have been. think I that if were ought Personally, you an income impose all gains property to valuation all over the United property according States, to their it would come much according population, nearer man for uniform, being man, United throughout than a great many politicians philosophers suppose.
I come if now, Honors your uniform- please, point ity. is: dictionary “uniform” meaning “Having the same always form, manner, degree; varying, variable; consistent; unchanging; equable; homogeneous.”
I have to submit that in the phrase Constitution, and “duties, excises shall be imposts, uniform throughout States,” United is not merely geographical phrase. I take it that learned friends my on the other side will that the uniform word is not a agree word taken geographical Constitution, alone. And' after it had meant, what pro- vided that direct taxes should be apportioned according and so on, population, that duties, requirement excises, and should be uniform imposts the United throughout was that must be assessed they and collected princi- of fundamental and of ples justice that are equality implied name of taxes in a very constitutional of free government men. And I submit that it would in a not, direct tax case, have been within the competence Congress, having imposed direct and lands it apportioned States among according that in population, say one State or all States owners of two hundred of land acres should pay FARMERS’ LOAN & TRUST CO. 493 Moore, Appellant. Argument for
Mr. Edmunds’ owners of less than all the two and tax, all the hundred acres the Constitution said none, although should about pay nothing it. — under uniformity And so other class regard excises. When it and speaks duties, imposts, uniformity States I means, the United and submit, throughout literally it shall not merely grammatically, everywhere it shall be uniform first, after same, but, per se, being that the uniform shall be se, uniformity universal as to per That is the common it; sense of it. places. grammar in which the word uniform That is the sense used my for the learned brief defense. That is brother’s the sense and in which the Hamilton and the writers, very others, phrase discussions in the Constitution, Fed- preceding eralist, of taxation and the speaking principles imposi- tion of were to be these used the burdens, uniform, word. — think Justice Harlan: You the word “uniform”
necessarily implies equality? — Mr. Edmunds: I do. The so. One of its dictionary says definitions is equable.
Mr. Justice White: —Then the use of both the words mere “uniform” was “equal” tautology? ” —(cid:127) Mr. Edmunds : Yes. The was in the word equal origi- nal and when revised was stricken draft, out, being the committee but it, that was the committee on reforming Thus of this I style, instrument, as said tautology. making model before, ol' concrete perfect'a symmetrical English as was ever in the world. printed
So I maintain that it is not merely chiefly geographical word, also a duties, excises, word thus imposts, qualifying made equable homogeneous respect things to which that the persons shall equality applied, be everywhere. —
Mr. Justice White *53 how here, : If rule do your you applies meet the statement a while in the made by you ago discussing amount of of a certain furniture, exemption which was not taxed? universally ' TERM, / Moore, Appellant. Argument for
Mr. Edmunds’ — and I meet it the Mr. Edmunds: principle upon practice formed, was and that that existed when Constitution has since, that the existed every government lawmaking power that are of so small value that does not tax the cost of things is than the the tax more amount of the and tax; collection consent implied affirmatively, by dealing prevailing civilized and men, constitution every among principle prac- tice of whole the citizens body those small leaving etc., like effects, furniture, bibles, free etc., family personal And' it is that and from taxation. principle practice and and charities and schools libraries and that churches' have and for.these latter been exempted; also buildings public krone things to-'the-public-use devoted things and therefore them is another, merely taxing way taxing' no itself, and, consequently, public advantage. It. to me. seems so of this notion of
An illustration uniformity, geographical for I stated, occurred to think me, might has just It is the one. still old, inscription good still Bell of cracked, Liberty, inspiring Philadelphia. was cast the order colonial That bell England and had cast on curi- Revolution, it, before very assembly — land in the of Crom- enough prophetically ously enough — reach of within the ears III and, well, George perhaps, “ Proclaim all the and to these land, words: liberty throughout thereof.” all the inhabitants se,
That It was liberty. geographical liberty, jper man, and that should and live inherent rights expand think, all. That was the I uniformity, everywhere, among in the Constitution. that our fathers meant in that phrase using There was -fundamental important principle word uniform, embraced in the justice rights equal within then there was the added that everywhere requirement of all borders the States same principle equality should exist. justice — White: How do meet Justice you argument construction of the other side in advanced by regard the last duties levied in all the thirty tariffs during specific *54 & TRUST CO. FARMERS’ LOAN Moore, Appellant. Argument for Mr. Edmunds’ of two cents take the instance, per imposition For years? of the cotton. to value reference without cotton on pound which has existed the root of at legislation strike would That Is not that a neces- of the government. the foundation since ? that construction consequence sary — not, sir. I think : Edmunds Sir. — like see White: I would why. Mr. Justice — of commodities introduction : The Edmunds States is one the United depends into countries foreign is no statute There will the free importer. Louisiana, citizen of commands any States United to do or of California Iowa, Texas, or of Vermont, of anything exclude alto- power kind. having Congress, has say to admit or imports, gether, it likes. It may say shall be any qualification admitted-upon the terms into the them country upon you may bring pre- of a It is as not, or granting privilege. scribed you please. the same as State them, admit exclude or just You may them on refuses may or grant corporate rights. grants different terms to B. A. terms to A. and on entirely certain have is an- B. none. There have restrictions may may that in all cases and that is me, other it seems to nearly thing, in all assessed, been duties have probably where specific cases, the article. on the value of duties are those specific base4 instance, threads to the inch and cloths For forty having taxed ten cents a Cloths worth one dollar yard. might n and worth inch two threads to eighty square having much dollars shall so more. pay this Constitution
Then applied again, language and when one one set of have subjects may meaning, applied it we all know varies, to another set the may, meaning sometimes. been decided this court as it has may Again, men are embraced a tax if all or of whole things body would be uniform, or without other burden imposition differences the circumstantial particular regard A tax of the men or or things. characteristics qualities tall and short men, between or does not polls distinguish A tax on all horses, head, their wealth health. per TERM, Moore, Argument Appellant. Mr. Edmunds’ A tax on would be uniform. all cotton at so much per pound n would be uniform. But such case the tax every would be direct.
But when comes to case of imposed upon must which the and which does not people, people pay, depend man the conduct of the he do, but is anything he cannot one from which then the of uni- escape, principle *55 men versal as well as within uniformity, among boundaries, is and the of that language capable applied, expansion ap- to the different to which it according subjects plication might be applied. has been made to
Some allusion the head cases. I money a word about will this. The say taxes, so only could called, uniform, not because it is geographically clear perfectly like that in a State Montana, others which are not many on the where no could water, such a ship possibly in, get not But could could be and apply. they were intrinsically to men and uniform as things. had a law that
Congress passed people vessel coming by a tax; should had said that in pay suppose Congress of New York line, one port people Cunard coming by ten should and that Line, dollars; pay people coming by International Line Paris and (the New into the same York), the. fifteen should dollars a head. What pay do think port, you have been the would decision ? case Would brother my that was uniform? I Carter take it not. say You would say had no to do Congress power of the kind. anything ask I shall attention for your few moments more with to'the of this case. I respect general aspects insist that thé inherent of taxation in a quality to be government professed founded on democratic principles (as exists an England — constitution for unwritten government England — founded on democratic it is in some principles more respects — democratic than ours administrations come and go by mere of one will branch of that with written government), with constitutions, equal rights, equal' responsibilities, equal is that the duties, name and idea of taxation is the imposition of the burdens benefit, its for their common people FARMERS’ & LOAN TRUST CO. Moore, Argument Appellant. Edmunds’ that the the burdens order to be must be imposition just as far as human exertion can make it so. It must not equal as it inis this be, case, mon- intentionally tyrannically If were state tax in the State of Ver- strously unequal. ’ mont which that all worth" provided persons owning property than $80,000 more should all the taxes of the State, pay less shall none, those one having pay probably exceeding hundred in the rural and modest to which I State persons — — less than two hundred would bear the belong certainly whole of the State. expenses
I maintain, therefore, line in- pervading every for the distribution strument and exércise of providing taxes, direct powers government, impose and indirect, must, be so greatest degree possible, exer- cised that the taxes bear its úpon people-equally respect and rates to which can Al- subjects, persons, apply. latitude as to where we draw lines, still lowing large taxes must be laid as as fair human exertion cart nearly equal make them. And when find á case where you a. state has undertaken to make legislature a dis- deliberately crimination which throws all the burden small *56 very of the and on to do minority and people, it, not purpose of the situation, and a tax any necessity which relieves the vast which is as able to majority, just as the minority, you b$ar must decide that the has Congress the gone beyond boundary of its and that the powers, judicial which power, Hamilton so said embraced the prophetically and the majesty of justice the is bound to see and government, to hold the calm and reg- nant shield of the Constitution between the citizen and despotism.
ISo maintain that it ais fundamental written or principle, unwritten, that the burdens taxation should bear equally. But fifth and the fourteenth amendments of the Constitution would relieve us of all if certainly difficulty, in any existed, the fundamental I have stated. principles Take the Four- teenth In Amendment. terms it does not that say Congress shall not to all deny people equal protection laws. it had said that Suppose Congress may deny, although
VOL. CLVII 32— TERM, Moore, Appellant. Argument
Mr. Edmunds’ the States to not, all the people equal protection ? laws would have said that it was a monstrous Everybody and if this court had the proposition, power highest courts Great Britain, would have said such a you provision was the Constitution void as natural law. But I against believe it is now understood this and court, everybody land, that the and the substantial principle application of the Fourteenth Amendment are bind- as provisions just and as Con- ing upon Congress they is a was and that it was not body powers, gress delegated to to that is not necessary say deny anybody no because laws, equal protection power delegated at-, them to do such monstrous true that the things. tainment of in taxation ais baseless perfect equality dream, as has been But it said. does follow the legislative can the other extreme and lawfully purposely go taxes to be false and impose broadly designed unequal, classification one set of citizens in arbitrary con- great body flict with another. If'the Amendment to this is the case, Fourteenth applies — two. this small cent of the
taxing minority per people the United them this burden, imposing States — to them the that the denying protection ninety-eight percent have, cent to granting privilege ninety-eight per on the two cent to duty pay nothing, imposing per pay much little or declare if it has (for Congress may right a two cent it can tax, impose per compel twenty fifty warranted one clause of hundred) equal protection? If such discrimination is to be then we have taken the upheld, toward the first destruction of all free step great government. I have said, I believe reference the framers of this must law, have been Constitution, learned they must have understood clearly they meaning — used I am sure paragraphs I plain phrases that. All their *57 am about all their discussions right writings, the and in the conventions Federalist other publica- that with the tions show whole they"were acquainted history from the detail, Greek,'and civilization Egyptian, v. FARMERS’ & TRUST LOAN CO. 499 Attorney Argument for tlie Mr. General’s United States. where the of taxation Roman tyranny governments, pro- much down all the
duced so misery, through performances feudal the French times British the British ad- times, ministration at that time. was before them. The Everything and the distant near. And now we are to present past told that these did not know what were talk- gentlemen they and that did not ail about, literature, mean what ing all the lexicons, and the and all the law books of legislation, the time to those and all this for the words; plainly imputed mi- allowing majority levy purpose nority. to me, therefore, is the mission of appears grand court
this of last resort, independent supreme, bring back to a true sense of limitations of its the. Hamilton in one of his letters stated truth, powers. great n that “In which is to be framing government ^administered men over men, lies in must great difficulty —you first enable the and,- government control governed; in the next A place, oblige control dependence itself. is, doubt, a control "on people primary no govern- n experience'has ment; mankind to insist on auxil- taught ” - Of'‘these,-h'e'said precautions chief is “in the iar} distribution of of the State.” supreme powers
In the exercise of itsmlear it is the of this jurisdiction right and we court, it will find it to its to see hope glad duty, this fundamental in taxation is not principle equality If the Constitution has disregarded. been and if invaded, courts has been recognition by mistakenly"given the.
invasion heretofore, now is the before time, we wider depart and wider from that true line of equal justice equal rights which cannot exist without to return to equality burdens, the true of the Constitution.. paths leave of Attorney General, for the United court,
States in all the cases.
The chief interest of the government present litiga- tions relates to the constitutional which the several questions *58 TERM, Argument Attorney States.
Mr. General’s United to be involved. Whether are they really allege plaintiffs or be dis- involved or whether the suits should must not, of a matter do not different is which on .1 grounds, posed I am to assume care be heard. For willing present purposes, that the are in their and that the con- claim, plaintiffs right have settled are so issues desire to stitutional presented or must, these that the court either properly litigations and determine them. consider may, bills and briefs and
An examination argu- plaintiffs’ that ments to show seems satisfactorily many quite law are income tax to the alleged objections validity fhe forma, taken character. are They pro simply perfunctory aof because of the point by way possibility precaution, as a connection, in some just good developing unexpected and of the be his case his perti- equity pleader, knowledge to wind his nent ever so fails remedies never up thorough, relief. further bill with the for other and general prayer is of course, plaintiffs pur- criticise, There nothing at the to sift out that makes suing plan. only proper which alone outset.the exact plaintiffs propositions upon no time can and do real reliance. For example, place any that need be I take the averments init, discussing spent, an takes income-tax law is of vested prop- invasion rights, are due without of law. These pure erty process propositions and if there otherwise, anything generalities, glittering which more them is because are others they comprehend and which are real specific subjects profitable only the income-tax discussion. it to true Again, suppose methods law undertakes ascertain citizens by the incomes of which are not are infringements disagreeable, void, is, the law not that personal rights. consequence The but that the methods denounced hotly inquisitorial to. to its resorted cannot be merely ancillary operation like law is that the considerations apply objection instrumen- void because pronounced taxing agencies talities of the the several States. governments
I wTill satisfactory not undertake able repeat to be There seems associate argument my point. TRUST CO. POLLOCK v. FARMERS’ & LOAN Attorney Argument General’s for the United States. reason the income of state and no secu why municipal good should not be taxable rities United States when it is of the total income of the assessed as owners part respective under law income and not assessing generally discriminating those securities and others of between like character. In I do not overlook the able and elabo making suggestion bf the court rate opinion supreme District, holding, *59 want of on the the United largely ground that this income-tax law construed has no properly application to the income from state and securities. But municipal sup — that the the statute must be pose contrary suppose inter state unlawfully preted taxing taxing agencies instrumentalities. The result not that the law is, is bad in but that it is to the toto, bad income of only state and securities. The seek to meet this municipal view plaintiffs by in their bill that the income from state and muni alleging securities the amounts to cipal throughout country $65,000,000. made that then declare that it was Having allegation, they the intent of is Congress necessary accomplish that this law, $65,000,000 should be general purpose taxed. But the declaration is mere assertion without evidence in its either the statute or outside of it. The support do not even the assertion an air of give plaintiffs attempt this of income $65,000,000 which the probability comparing law reach cannot with the other income which remaining the law does reach. Yet would have made the they certainly if the that would show this attempt $65,000,000 comparison income so non-taxable is the entire large proportion all income of of the as to make it incon people country that ceivable or even could mean highly improbable to tax this .were $65,000,000 income at all unless included as of it. part
If I am observations, in these constitutional con right tention down to two of the simmers One points. plaintiffs direct tax and must be that an tax is a accord income imposed not to the I do rule of discuss stop apportionment. ing rule of what the constitutional is. I apportionment question the court for do think I delay any considerable ought TERM, 1894. O.CTOBER Argument for the United Attorney States. General’s an tax is direct whether income in time with Scientifically, economically, direct. practically, result of the other without present the one or either them, affected. In cases degree slightest being ” or otherwise in direct an income is, is material point ” u is used ? direct Constitution the term sense in which tax within the not a “direct” mean it is answer that five at least unless concurring judicial of the Constitution ing in 1796, the earliest when court, expressions opinion convention constitutional were on of the three leading spirits all been have erroneous and and the last in bench, or not But, whether erro now be reversed. ought doubt, were said, and, matter when all is is, gravest neous them now to be no idea of certain, ought it ever so reversing A constitutional exposition considered. practically seriously that has been acted itself, with the Constitution coeval every ever since as occasion department required irrational in itself nor vicious in its is not government, and strain such as indeed a stress during workings, value the civil war was found Republic, greatest *60 ifas into to be considered as immutable deserves incorporated To it after a cen itself. the text- Constitution reject hurtful is to set a would far duration precedent go tury’s a written constitution is not that to thing prove government but of and wishes of of stable views principles, fluctuating and the when and from particular period particular judges its to be called for. In this whom interpretation happens therefore, connection, there is but one I suggestion to notice. A desire of the income taxable very briefly part of under law rents and a tax land, is rents is claimed upon ” to a tax and so land, be to be a tax direct within upon of Constitution. But the is meaning suggestion no is novel, means not to as certainly sound. be,accepted is a There commercial in which a tax sense practical upon rents is a tax land. value land; It affects the upon always of tax, the income from which is a land, must sell for less subject market than land the income of which not so subject. in that a tax But, rents is not a view, except upon necessarily & FARMERS’ TRUST LOAN CO. Attorney Argument for the United General’s States. be a a distinct tax but tax land, upon may wholly upon subject- matter. Instead of so realty, may being upon upon much dissociated from the land.' It is, wholly personalty of tax for the either course, government competent — a to tax under taxation of rents scheme plan personalty under a scheme of as or to tax them taxa property, personal as the value of tion as measuring realty representing — an real estate. The is of the intent intent only question to be for looked and found the statute only imposing tax. That test what is the being applied, purpose Congress — in the law it to tax land income-tax ? Is rents present being — it or is to tax used as mode of valuation rents as so ready its It % much is diffi origin personal property irrespective cult to how that be answered one see can except way. — tax is aimed the statute Noland at there attempted — is no on for and the whole lien land its payment scope tenor tax statute show the subject contemplated to be else. It is well nothing nigh personal property is no conclusive there on this provision point — land valuation and taxation provision unproductive found if the that would have been had almost object certainly been make a real-estate tax. It may however, suggested, that it such land be the tax land may purpose of such an intent rent. But is no yields there symptom sign its while statute,, pro any general specific provision abut tax observed, visions, nothing contemplate already if tax reaches also be personal estate. suggested may matter what land no fact, rents in it is a tax point intent be. But wholly statute position . taxing of the owner are not untenable, because rents pocket are like and of themselves land. They money, intrinsically have of a any other. for the purpose If it is a char of land, artificial character as the.'representative some, and can come source acter them impressed^upon *61 I submit, itself. statute from no other source than taxing rents a tax that while confidence, with therefore, great in truth be to under circumstances be'held may' some such under a to be be held fact tax it cañnot land, TERM, 1894. Attorney Argument General’s for the United States. statute like the rents taxes without present regard land and as one of the constituents of merely income. — me to the
This consti- brings only remaining point tutional alt which, that has been so objection notwithstanding said on direct tax con- earnestly forcibly this part is, I am satisfied, main the. reliance. troversy, plaintiffs’ .The the income is the statute under con- point imposed.by is not uniform. sideration But' what does the Constitution mean “uniform” as to a tax? But by applied for the strong find counsel to pressure upon plaintiffs’ this objections no statute there would be as to the controversy meaning. shown the debates in the constitutional conven- clearly tion and by utterances of the repeated unequivocal forth, of the framers Constitution It is themselves. set law, writers constitutional who are unanimous in their inter- It is this court in judicially the well- pretation. expounded by known in the so-called Head cases. The judgments Money of tax uniformity Constitution is a prescribed by territorial A tax, Federal which not a uniformity. tax nor a tax on poll must be the same in all land, It cannot parts be country. one Maine and another Florida. law thing thing for such a tax must be like a law or a providing bankruptcy law. naturalization It must have the same operation every- where, of state wholly lines. irrespective It is for the assent manifestly impossible plaintiffs settled construction of the word do uniform,” not they it. assent to to insist that a They tax, be compelled ” “ uniform within the must be Constitution, meaning uniform, as between geographically taxpayers. In other words, make it the nature and prescribe quality of a tax as well as local its I submit that their application. contention is hopeless fairly regarded already decided them. Let it be, against however, for present pur- “uniform” poses adjective describes and regulates of a tax. I then leave to submit properties beg plaintiffs gain concession, and so far as nothing that, of this income-tax law validity other tax law is con- cerned, the word “uniform” as well out of the might *62 & v. FARMERS’ LOAN TRUST CO. Attorney Argument for the United States.
Mr. General’s The word it. desig- Constitution surplusage. simply is — an of tax ele- an essential element every nates and describes and the of inherent tax absence ment which is valid every sufficient to annul exercise of which would be any attempted the taxing power. it is and the truth of this neces
For the basis position only of a moment to the nature the to refer for power. taxing sary is and its essence The to tax is wholly legislative, power That to public. raise money public power from for is undeniable. To force a tax must be of public object to enrich at from of large pockets people pri money is abuse of the vate individual so clear an taxing powrer without the would so declare court every principles general constitutional Conversely, aid any prohibition. express for individual uses take the public property single of eminent to tax but the domain, exereise power the individ be on the condition can done rendering ual full inherent limitations These taxing indemnity. and control scheme taxa every enter into power necessarily tion and extent its and determine the mode operation upon a tax for bene estates. Theoretically, private persons fit of all should fall persons composing public equally often it, as text writers should, express public; judges and be so be ratable and adjusted every proportional, his shall contribute member just equal community and the welfare. share toward the common defence general such as can ideal conditions under theoretical and Moreover, would be these maxims of, actually conceived general in a com individual If, for every exactly applicable. example, like were other every respect property, munity to accrue of the benefit taxation, to bear ability could receive be taxed he should taxation, how done but to have to be one would apply answer. Nothing for three, inadmissible rule would be rule of other any of tax rate make one man obvious reasons. To higher pay are than in both cases exactly another when all the conditions abe alike of the excess taking private to the extent would, for uses without special compen public making property such a which alone can taking. sation justify TERM, Attorney Argument General’s for the United States. is an Taxation, however, affair. uncommonly practical is' for use and is .power practical necessarily conditions of human life. adapted practical These are never the same two and for persons, any community, however small, diversified. infinitely Regard being paid them, evident, more has been nothing oftener nothing *63 declared courts and than that absolute jurists, equality taxation is as characterized an in impossible is, opinion — a court, baseless dream.” No has been or system can be that will devised such result. any produce Suppose, for instance, manhood were taxation resorted a to, as sort of to offset manhood and that the suffrage, public exchequer to wére be filled a tax levied on adult males at sought so head —the and of such a per tax .much inequity impolicy would be and universally denounced. recognized universally n Butif such would be the of a fate tax capitation employed n thesole source of revenue, less lies public hardly objection an ad valorem tax which should make property every owner, without or sort, discrimination exception exact any pay to the value of his estate. and theoreti- proportion Logically nó could be made on such a But criticism tax. cally, prac- it loses of a most sight element, to tically important wit, the to bear taxation, fact that ability ignores exacting $5 the from a man whose annual income is him an $500 upon puts burden the than exaction of from infinitely greater one $500- whose annual income is $50,000. is There at blush first plausi- in the the rule bility should be that suggestion every n person should contribute to benefits ratably it. derived from But could be more nothing objectionable would more to than certainly an to col- objected attempt lect revenue on such public bene- any plan. principal ficiaries of almost of the taxes all-taxes, for highways schools all sewers, and-almost other of state and objects are municipal classes of commu- expenditure, poorer To taxes of the nity. impose solely ensu- upon principle realized would ing advantages largely exempt effect more fortunate classes and wealthy place greater part burden those least able to bear it. & FARMERS’ TRUST CO. LOAN Attorney Argument States. General’s for the United serve to the nature of the show These taxing considerations if for the that it offers any, opportunity exploi- power; little^ for with abstract of theories or tation experiment generaliza- that it calls for the wisdom to tions; practical highest of a to the actual varied-affairs infinitely particu- applied its, and that in exercise, lar community people; taxation, some selection of subjects taxing persons is vested others, and estates and legislature exempting no and widest discretion. means fol- with largest limits. to tax is without are, lows that They power observed, that is, already so speak, self-imposed, itself. No from the nature result very power country, ever Union, no State of this for adopted plan example, that did not some taxation except portions community others. The a burden that was to- power imposed exercised. do so Neverthe- universally unquestioned It cannot has bounds. be used less, exempt nor to view, without to the end. mere gratify regard for a tax instance, A law, whim providing caprice. *64 members of the commu- the be light-eomplexioned paid would be the dark, unhesitatingly pro- exempting nity but an as not'a use abuse of nounced void taxing being an abuse because the discrimination It would be power. line of it could not be traced made any public policy. for the of a tax, classified So, community purpose having selection to then arbitrary cannot proceed legislature out of class to which That individuals they belong. take — “uniform” means that is what rule of is the uniformity as used in that is its whole to.a tax —and meaning applied conceded that it when is Constitution, even pre- the Federal ' as between localities, of a tax, merely the nature scribes no The rule of uniformity between places taxpayers. into classes division community restrictions upon any deem wise. which the for taxable legislature purposes the members formed, the classes declares that, being It merely taxed and shall be alike be on the same shall of each footing, discriminations without arbitrary alike exempted of a class between members cases. Uniformity individual TERM, Attorney Argument General’s for the United States. created for taxable is purposes required same upon grounds senseless and purely prevent capricious division into The classification classes. must be such that it can be to some view of referred public policy. made Being on that any justified only principle, exemption particular void because members of class is in conflict necessarily with its preventing operation. principle ” maintain For these I that the reasons term uniform in if it even describes Constitution, of a properties tax, no limitations puts upon taxing power Congress are not inherent nature of the very It is a power. to enforce from the money power uses. public Could public so it be exercised as to produce taxation, could equality no other exercised manner. That not feasible in being the nature of it is for things, Congress alone Congress decide how shall be power taxing so as best to applied that result. In approximate making application, Congress is of course bound to in view the keep fundamental purpose aim at its power accomplishment. Hence, this class or that, must taxing exempting Congress proceed considerations of and cannot public policy, adopt classification which has no relation to the end to be attained founded in whim and on Hence, caprice. same classes for the of taxation ground, purpose consti- being the rule of tuted, taxation or must be uniform exemption between members of the class. these limitations But, its taxing being granted, deter- right Congress vvhoshall mine be taxed and what shall be taxed and all the and means of assessment and ways collection, is practically uncontrolled. beside the quite issue to this or argue other case that has mistaken what Congress public policy On that is the requires. point sole final author- and its decision once made controls other ity, every depart- *65 ment of the government. familiar
These so well established that principles, cita- any tion authorities and I decisions is, think, quite unnecessary, -1 effectually submit, dispose, contention in plaintiffs’ cases. "What do present ? is not that they complain & FARMERS’ LOAN TRUST CO. Argument Attorney for the United States. General’s tax and has taxed income has determined gener- Congress has made favor of It is exemptions Congress ally. if and the contention, to its classes, plaintiffs’ pushed certain that' cannot tax means income at conclusion, Congress logical the income of- man, every woman, all without ratably taxing The harsh in the and im- country. preposterously and child tax as that it such is not of any necessary politic operation has rightfully repudiated to descant Congress upon. it had full While incomes
such power taxing generally, plan. as its views make such public policy exemptions required, here has it is, now and abused or real and the only question ? tests stated already exceeded that exemption one answer to the render being applied applicable, no makes favor The statute exemption possible. some obvious line of that is not based on of a class public one uniform established, rule is the class and, being policy, Take, for to members. example, its principal applicable — division the entire of all classification grand with into incomes separated people country population with non-taxable, under who are people of $4000 It manifest that who are taxable. of over $4000 incomes definite distinction in this Congress proceeding at and was a views of aiming accomplishing public policy the load of tax- It was adjust seeking object. public great in the manner that shoulders of the ation to the community most felt. Hav- it borne and lightly would make most easily it have a raise, got so much revenue might pro- ing all the of-the income of the entire people portional small sum taken in mind the But bore fact country. than is an deprivation from a small income infinitely greater one case income; taken from sum large large while of decent impaired, means support might very life would luxuries of all the to command other the power or con- these considerations be affected. hardly Acting upon mod- undertook to exempt as these, siderations such to draw the It had the tax erate incomes from altogether. The same it drew it at objec- line somewhere, $4000. if it had drawn have existed would tions point principle *66 TERM, 1894 Attorney Argument Mr. General’s the United States. at at other But $400,
the line no any figure. objection at because it is lies evident all, truth as well in entirely that, incomes of and under as in $4000 incomes taxing exempting has been what it $4000, of over governed by deemed — another Take illustration an sound public policy. example formed to a of class class. The by way exception larger rule is that is entitled to a every taxpayer statutory general before, taxable income is fixed deduction reached. $4000 of a case, however, In the husband family consisting and a minor child or there children, is one wife, parent from the deduction income of all mem- aggregate $4000 Here is a differentiation of a class bers family. special than members taxed others whose higher having the' same amount. But the not incomes of discrimination is nor but is founded on obvious views of senseless, arbitrary true— n — It what is assumes policy. undoubtedly equity a rule there is but one income one breadwinner that as the fact but, the rule has to one family, recognizing it makes the existence of several incomes to exceptions, many basis of somewhat rate a family just proper higher ' It is an to tax with short, of tax. some attempt, regard to bear another it. Take capacity taxpayer — that a class which the counsel illustration plaintiffs’ — and with (cid:127)dwell at unction great length exceeding of business Their net incomes class, namely, corporations. at the standard fate of two cent are taxed undiminished per by The man in the standard deduction of result is that a $4000. as a member of a is taxable at a little business corporation rate than a man in the business himself or as a same by higher it is a distinction without a dif- Here, claimed, is copartner. is the establishment of a class without ference, special special it. But I venture to reasons equity policy justify that that is and that the so, submit higher statutory.rate tax for incomes is founded and vindicated corporate differences thfeconditions under which essential corpora- individuals on business. 'The tions respectively carry as a business rather acquired doing corporation, advantages individuals or and are than as notorious. partners, plain & v. FARMERS’ LOAN TRUST CO. Attorney Argument for the United States. General’s distinct of a shape, interest tangible corporator and is unaffected moment, at insol- marketable is an interest or decease of other corporators. vency for debts. with a definite and limited It is attended liability an ratably interest corporator- participates through *67 from benefits the transaction of business on a all the arising and other like commercial of These scale. advantages large are wholly dependent upon legislative grant, incorporation fountain of franchises. But so which is corporate has of and so been these appreciation general pronounced that of there is a State the Union which hardly advantages facilitate formation of business a does not corporations by and and law, that general corporation great ever-growing one of the multitude and of such strik- variety corporations of It is common modern times. ing phenomena knowledge, are an for the that so successful indeed, corporations agency wealth conduct of business and tbe accumulation of that a of them views with intense dis- section large community for- and devised inventions mak- favor as malicious cunningly When, then, rich richer and poor poorer. ing people people of class business this income-tax takes law special corpora- rate than and their at a ations taxes incomes higher it to the incomes of persons incorporated, applied simply facts conditions which would social and recognizes existing of and be the It classifies discrimi- folly height ignore. and of nates Basis public plainest policy, upon equity both those business conditions enabling enjoy- superiority rate of tax and them to and ing pay special higher making and should it. Other like equitable they pay just of the statute, covering religious, educational, exemptions and charitable semi-charitable insti- and émbracing companies, where their and tutions scanty earnings lodge wage-earners which are enabled to of small means cooperate persons and these benefits, various for mutual ways security exemp- a wise and tions rest firmly legal footing same. humane It be tedious and cannot be would public policy. it to Suffice that the consider detail. say each necessary of incomes down a rule for the taxation statute generally, lays TERM, Attorney Argument for General’s the United States. and adds then qualifications, exceptions, exemptions, can it said to no be that it one of does not fairly repre- to make sent an honest attempt operation that it the tax does not reflect equitable, just honest views Congress true respecting requirements That it avails so, being public policy. nothing plain- out instances in which the law tiffs to taxes point property other twice over produces inequalities incongruities taxation. else could Nothing way expected it is safe to would different, predict, result nothing even if the had other law, plaintiffs it. drawing for the also, learned counsel avails nothing, convince them- also, the court selves, perhaps views of Congress’s mistaken. When have quite done public poliby they that, % what have have they accomplished They an gone through exercise which from the intellectual character of counsel is both bound to be brilliant. But interesting have else because, nothing views of accomplished Congress’s so mistaken, ever court cannot avoid public policy ruling *68 bound them. that is absolutely been endeavor has to eliminate and such discuss of
My are issues too presented already legal conclusively of admit to do discussion, settled to so without succinctly, elaboration of' details, and without unnecessary be- being those of into trayed bypaths metaphysical economical however which, and historical in them- inquiry fascinating with so little connection have real selves, business of the — (cid:127) would be a I am It mistake case. aware that the court — of in no into but it is would danger be falling certainly infer that this of to mistake array counsel, elaborate great and these and voluminous many treatises mis- argumentation, the name of indicate briefs, called by anything specially either in the intricate facts before the court or in unique law which rules of to An them. income applicable a tax tax is and all the rich, circum- preeminently adverted to the immense stances stake prove just pecuniary for. It is so is now that which counsel fees and played large bills are mere It is so costs printers’ bagatelles. large & TRUST CO. FARMERS’ LOAN POLLOCK v. Appellee Argument in 894.
Mr. for Carter’s or consti- that no and so stimulates the of counsel efforts legal venerable however tutional way, stands principle in, is suffered long universally acquiesced .however indeed, It matter is pass congratulation, unchallenged. is not itself impeached, existence of the Constitution demonstration and that we are with not threatened logical least, under at we are still all taxable for purposes living, Seriously old Confederation. Articles of régime laborious that all this I venture to however, speaking, suggest be must necessarily and erudite and formidable demonstration its In essence without result on one distinct ground. the judicial but a call
its last it is analysis, nothing political supplant department government for discretion its exercise of the substitute power; taxing taxation, the that of subjects respect and discriminations and all the distinctions plan taxation, which to be adjusted taxation equitably sought classes society. resources and the different capacities cannot, I am Such an however effort, supported, weightily bound to believe, inevitably predestined successful. in its time history, unless the first shall, to failure this court for the judicial overlook and the bounds separate overstep — observance from the bounds, scrupulous legislative power essential which it has often declared to absolutely so of our constitutional government. integrity system of The on behalf Mr. filed a brief Herbert Turner B. in 893. Farmers’ Loan and Trust Company, appellee William, filed Candler B. and Mr. Flamen Jay brief on Trust appellee behalf of The Company, Continental in 894. Trust Company,
Mr. James C. Continental Carter *69 him on. with C. Gulliver 894. Mr. William appellee the brief. This is
I Trust here for the Company. Continental appear it be supposed, represent of one which, might companies of income tax- subjects interests which would be the especial vox,. cx-vn —33 TERM, Argument Appellee
Mr. Carter’s I ation, atn instructed and it to defend and yet maintain by to the best of of the law. I am validity my.ability glad that there is at least one to great corporation subjected tax, which to avows its readiness itself submit without controversy of contention the law the and to country, discharge burdens which that law it. imposes upon
It admits its bill demurrer unless by that, restrained inwill, by accordance with the process injunction, of the make the returns and requirements law, prescribed pay tax. .'Outside of bill admits, this and indeed this asserts, determination; and if those circumstances constitute reason a court of should why take case and equity jurisdiction listen to are then raised, argument upon questions there is some for the invoked support equity jurisdiction the complainant.
Inasmuch as main other side, position upon branch of the the taxes are inquiry, imposed by act because violate the true unjust they principle equality I taxation, shall be for a brief moments, few obliged inquire, what that how it been and is; has stated principle equality laid down statesmen and far economists; how governments adhere to and to what what it, practice extent, occasions, from it. they depart
We with the "course, admitted truth begin, govern- ments exact sums those who live under very must large them for the for which are established, purposes governments first or rule as I believe, is laid down principle which, the most agreed statesmen economists, approved otherwise, is that taxes representing, variety every opinion, be laid must several abilities according respective whom to bear them. people imposed It will be that this rule has observed regard, principally,, the different members of considered as society individuals, its to purpose fairly burdens justly arrange public them. as between is a Government, however, complex in which different are involved, considerations problem many and this rule or is, in in all coun- principle equality practice, from in tries, departed variety ways. *70 & FARMERS’ TRUST LOAN CO. Appellee Argument for in 894. Carter’s' from most the rule is coun- the first departed
In place, and various in favor of the very poor,, exemptions, tries and the effort is made to or total, mitigate either partial fall otherwise them. would upon which burden taxes is an next expense collecting In the place To collect with exact consideration. taxes item for important and involve a very expenditure large might require equality difficulties. is otherwise important many revenues and and be certainly of a should cheaply easily government with end in therefore, contrived this and modes collected, are, view. into are taken view. There are moral
Again, purposes such as indul- drinks, consumable articles, some intoxicating some States to in which it is the endeavor to gence policy out this seek and object by carry imposing repress, their commodities, duties such thereby increasing them more difficult. the use of The wisdom making price of much enactments is the such subject dispute. otherwise desirable taxation, some forms of very Again, because of the ease with avoided, because just equal, The income tax is which they may supposed evaded. It is, not so however, to this open objection. particularly as the much to be to on this account personal objected prop- tax in this communities. erty large Notwithstanding objec- that the be said income tax is at the tion, however, may civilized States a day everywhere part present among of taxation. system which
There is another form of taxation society adopts which indeed, flagrantly disregards principle equality, to it but which ; no whatever is recommended pays regard statesmen administrators some public especial quali- which it the tax on ties This is consumable possesses. goods, truth, with that this said, or domestic. It is whether foreign mode of the taxes saves great expense, collecting for the also said' with it is a desirable truth, very thing maintain in as a whole, every establish' good society, all nation industries upon society depends important is, indeed, which, for a tax its convenience and its comfort. It TERM, Appellee Argument in 894. for Mr. Carter’s liable to abuse, when for purpose, particularly imposed it turns the most and the controversy concerning part abuses of it. the real or supposed to introduce another cause But there .is tending inequality taxation far effect than all burdens of greater *71 from the rule of which I of have equality instances departure does is a cause which not arise mentioned and this ; just of but from whatever, consideration the public good inherent of men. In those who every community selfishness of taxation are feel the burdens relieve naturally prone if and the extent can; of the themselves from them they inis, which make relieve themselves effort they general, which extent of the burden to the they suppose proportionate them. One to throw has been laid class struggles upon shoulders. If succeed, burden off its own course it they also, turn, must fall their labor to others. They upon get rid the load and falls those who will it, finally not, upon is, make a effort for This cannot, successful relief. general, a one-sided which the rich and it is struggle, only engage, in which the to the wall. poor always go struggle This part wealthy struggle highly organ- ized classes society constantly, must unceasingly exerted, succeed, either necessarily and it completely partially, does succeed. The is that in everywhere consequence every and in burdens of country every age taxation principal have been borne This fact is so by poor. .the universal that it furnishes no inconsiderable argument the view support that it so. ought me
Now let from this view of pass general grounds, reasons and motives which by of taxation are systems fashioned to the conditions in shaped, which we in the United States at stood the period immediately preceding enactment of the law before us. Ve were collecting annually for expenditure governmental and $500,000,000; striking to which I impressive call fact the attention of the court is that- no one dollar this amount was collected in accord- ance with that first fundamental of taxation to principle which I alluded, have that it namely, should proportioned
POLLOCK FARMERS’ LOAN & TRUST CO. Argument Appellee
Mr. Carter’s in 894. to bear the burden. according ability The whole of $500,000,000 collected a rule which is a confessed upon from that departure which does not principle, regard It was collected slightest degree. duties con- upon sumable duties commodities; which went into and increased of the articles price were they imposed were thus paid them who every purchaser purchased them for consumption. alleged by counsel for the appellant
income tax-—and this consider its most form monstrous — falls injustice two cent per population of the United States; but what must think we of the fact that this two cent have per been but a trifle more than paying two cent of per while of annual the-$500,000,000, income after nation, what would be sufficient to deducting furnish a for the have been living people, they receiving more than probably cent? At the same time fifty per another not adverted to impressive fact, them, startling *72 has also been more and more of the attention of receiving — I people mean the concentra- country growing tion of masses of large wealth in an ever number diminishing of persons.
It was to avoid the that there was impossible suggestion some between connection these and it facts, was striking also should not form the of conflict impossible they point around which would contentions did political gather. They succeed in the two finally dividing political great parties At of these last the country. complaining things party an and efforts gained counsels, ascendency législative were made to devise a This income is a part remedy. that remedy. The view the tax law taken which passed
i,n to face. The was redress question its object plain upon in some which the great degree flagrant inequality mass of the all the re- were to furnish made people nearly and venue, to furnish little leave the classes very very wealthy of it in with course, their means. Of. comparison nothing, labor, therefore, was or from to taken from the wages TERM, 1S94. Appellee Argument ior
Mr. Carter’s in 894. incomes other sources than small proceeding labor. very further the should much be carried exemption Plow was a difference of existed, great opinion much contest. there was of the law was very naturally greeted
Upon passage burden whom the was those with principal imposed by. on the Efforts those who much dissatisfaction. can part to throw off the efforts burdens of afford to make such taxa- before tion made, passage law, were but only form after in another the law were resumed they passed. are the result. These suits criticisms made
Some to by way general objection sufficient to be to condemn law, it, supposed wholly amount to merit: clamor It is said to lacking only. to class and make distinction between the rich legislation, be. It does. It is class certainly poor. certainly legisla- in that That was its sense.
tion very object purpose. is a distinction which should This be looked into always of taxation. business heretofore it Unfortunately has been as I direction, observed have the-wrong already pointed out, and the class over-burdened. poorer prodigiously be sectional
It is said also that too is true. legislation, not in terms, but it so, effect; is so operation has become because wealth sectional. If either of the alluded could be allowed two it would objections prevail, for this be forever income tax impossible country lay any whatever. Such features nature of an in- belong very tax. come
There are two principal objections law. urged against First, is said that the income tax is a direct tax, there- infraction of fore an the constitutional that such requirement taxes should be apportioned States among according *73 and in the next it is said that if it population, place is not a tax it direct must be a duty, excise, then inva- impost, lid because not uniform the United States. There throughout a third is, besides, to income objection drawn from a applying particular description and muni- property, state namely, bonds, which cipal insists that objection that form of property & TRUST FARMERS’ LOAK CO. 519 Appellee Argument for in 894.
Mr. Carter’s Federal withdrawn jurisdiction gov- is a subject ernment. whether taxes are direct to the first of these questions,
.As it to is not debate I open or not, saying begin a at rest solemn it is If possible put question court. for in and undisturbed a decision, series long acquiesced Judicial the reach of as further this should be beyond regarded years, a am of those who make fetich of the I not one agitation. tribunal, Even this it has often stare decisis. doctrine liable and. has on numerous occasions err, told us, for corrected them error. its decisions and revised supposed few after a Constitution arose very years The question arose a into It upon dispute went whether operation. tax within the of the tax was a direct Con- meaning carriage the counsel the other As is admitted stitution. freely such a tax direct tax, their side, interpretation, according A to be court, therefore supreme apportioned. ought deliberations three of whose members had participated decided, without dissent, convention at Philadelphia, within the not, that such a was contemplation the most The case Constitution, direct tax. argued by with the was considered eminent of the time. great- lawyers entitled to the these reasons deliberation. It is for highest est that which these but it an far ; beyond has authority regard who had the decision men would It was reasons furnish. of these had in the very provisions themselves a hand framing which debates had who Constitution, participated there- had their and who qualifications, preceded adoption, than far fore, its meaning superior construing now found. be, ever or can since been, have and after the that time, passage has since period internal revenue laws during subsequent pf tribunal. come before this war, cases, several distinct for the which the learned counsel In views instance the every have and the views have been here rejected; urged appellant have Court Hylton case, announced by Supreme a court undertakes considered "When been and adopted. so of its does predecessors
review correct opinions and. *74 TERM, 1894. £20 Appellee Argument Mr. Carter’s for in 894. a that it
upon assumption occupies superior position better for assistances the ascertainment enjoys lights truth than those which were at the time possessed enjoyed the decision was made.. Will this court think after that, of a hundred can Constitution be lapse construed years, a better than at the time when upon the instru- disputed point ment itself was framed?
And then what tois be a reconsideration ? good gained Has it been found that the law as declared operation v. Hylton United States has been productive injustice which demands a And what is the new mode of remedy? a tax like this which the learned counsel for the laying appel- lant to substitute in of the one propose place required doctrine hitherto established ? this: demand Simply that the tax shall be an the States apportioned among when the according taxation population, very subject not be found at all in some and in may others found extent, a others found in over- very slight measure. And all this to burden whelming prevent slight from lifted who have borne being poor, shoulders it so shoulders of the rich long, placed who have been comparatively exempt! ” It is said that the term direct tax had a distinct and well-understood at the time of the meaning adoption Constitution, and that such should therefore be meaning But into the literature of the accepted. time looking we find that this is far truth, at least so far being use of term any is concerned with which American statesmen and to have been legislators may supposed We find that acquainted. the economists of that were day divided, as been they'have from that time to their this, views as to the incidence of taxation. Some faint support for the appellants found writings Turgot, the celebrated French trans- economist, his book was not lated at the time, and we can to have been hardly suppose known, select few of the members of the con- beyond very Smith, vention. And as to Adam also there was to, referred doubtless considerable the most very acquaintance among & FARMERS’ TRUST LOAN CO. 521 Argument Appellee in 894. Carter’s statesmen of the constitutional of American period prominent writer. But does he make the works of illustrious with as that he draw distinction insisted Does such upon? any between direct indirect ? of division taxes as line being *75 of He considered distinction whatever. evidently None of until have and it no value economists value, no certainly of tax- of the incidence so become agreed upon subject defi- it made to far more can be ation import something hitherto done. nite than has which framed the Constitution the
In the convention ques- “What is a direct was asked without answered: tion being no the learned distinction, tax?” No such such definition, n counselfor to be now insist anywhere appellants the time, in the constitutional debates of if there is or, found short, has to disclose it. In 'their research failed any, eager of a and determinate term distinct meaning place Is this find and the sort we but doubt obscurity. nothing n clear law which the us assum- of words justifies signification are the words found ? to have intended wherever been ing law which the follows in What is the true such pathway find clear ? When it cannot ordinary cases meaning a correct to determine the words sufficient to furnish guide scrutinizes instrument real itmen, thoughts carefully and seeks to inform itself itself which tois be interpreted, which the framers of purposes principal objects it had in such a view, meaning upon language puts as will best out those carry things purposes. employed we at once We this sound gain light. Acting principle that' the the Constitu- observe, the first injunction place, is that taxes shall be tion all direct among apportioned therefore such taxes States according population, as could reasonable not, justice with some approach be thus could between the equality apportioned, the Constitution as have been framers regarded direct taxes, if, opinion, even preponderating according economists, such taxes time among understanding, denomination of would more classed under properly direct. TERM, Argument Appellee
Mr. Carter’s in 1894. At time, the method of ordinary taxes collecting known and in use in this other than country, taxes, capitation was the tax on land. The revenues of the principal States were collected in everywhere this manner. The tax upon estate have had personal some feeble in some operation but no considerable amount of quarters, I revenue, think, was derived from anywhere it; most and, parts country, it amounted to at all. There was another tax nothing was resorted to aas tax to reach a partial class of designed who were to- persons able. tax, pay were not land- yet holders. That was a upon particular trades, occupations such as callings, lawyers, mechanics and trad- physicians, ers. This has been called an income tax. In some respects of that but partakes character, is so no more really than all-taxes character, t of that All taxes out partake eventually paid where a nation makes such incomes, ruinous except imposts as to encroach are not for that reason upon capital, income taxes. The true income tax is tax which disregards *76 the matter of occupations callings, personal property, or source from land, which the nor is any comes; income laid the net after the upon gross upon receipts, receipts it is the characteristic of payment expenses. Now, these taxes, other than the form of taxation then in use, general that is land taxes and taxes, capitation they partial. rest They upon particular and are the subjects taxation, incidental methods of supplementary the revenue raising In this designed complete system. resemble respect they duties and excises. imposts, are laid They particular upon or things, sources of upon particular revenue. A tax upon in the sale persons in- engaged intoxicating liquors may in deed one aas direct but in the aspect tax; regarded minds of men it is more viewed as an excise. Cer- naturally it could not have been tainly intended the framers of the Constitution, these taxes, partial supplementary use some and not in w-hich.fall places others, partic- ular which subjects, be found might, not, distributed might in some degree should be proportionately population, and such were not apportioned, therefore within their con- v. FARMERS’ & LOAN TRUST CO. Appellee Argument Carter’s in 894. direct taxes. did not intend templation They certainly limit raise either in power Congress revenue, this, other form of taxation. The broad any taxation, power in whatever form, we cannot granted Congress, limit it in their What, therefore, minds implications. any could not cannot be as direct within be-apportioned, regarded of that word as them. This is the meaning employed by which was the learned precise reasoning adopted by judges v. United States. Hylton
Let me now call attention to a consideration which I do not think has- as been adverted and which I do find yet to, of the briefs. It is wéll known from the perfectly of the time that of taxation history was one question, excited local and state greatly jealousies apprehen- A sions. source of then as had revenue, been principal since, derived from duties That the States should still imports. this means of their awas lost preserve defraying expenses That with all others concern, which touch hope. together the common interest, had to be surrendered to the necessarily new In it one care was government. taken, surrendering sbould not be so namely, used, as make distinctions between State and but should State, be exercised with the United States. But how uniformity throughout should these taxes be so toas bear imposed equally upon different members of the new government? Apprehensions were natural and were point very very strong. One would be to test and distribute good general apportion them to the wealth of the But how could according country. the wealth-of the be ascertained country by any reasonably correct assessment ? This was an obstacle in the insuperable that criterion. The next best way criterion as adopting *77 between different communities is of course relative numbers.
But here a difficult and that was whether arose, slaves should be treated as thus property, persons, of taxation involved with the subject subject became. The Southern representation. States that in preferred taking for the of taxation the slaves population should purposes not be did The North not wish to an counted. impose injus- TERM, 1894. Appellee Argument Carter’s for in 894.
tice but it was South, determined that the upon slaves not be counted for the should purposes representation, left out for the of taxation. The South felt that it purposes an additional burden if it allowed the slaves to taking (cid:127) it to assume it counted, rather than preferred but lose the The same rule dearly prized representation. therefore was as was for and a provided adopted representation, comprom- ise effected that. upon
Now in all this we that while the perceive minds of the members convention were intensely engaged upon of how taxation should fall subject did upon they — — not much indeed did not at very all apparently consider how it was to fall and affect different going of individuals-in classes the States themselves. I cannot find that this even anywhere any proof their subject at- engaged tention, was most one. I yet cannot important help that this omission to attention thinking to this considera- give tion arose, the fact that the wholly minds of the members of the convention were bent chiefly upon securing their States from undue respective burdens, but also from the fact that the term direct taxes they looked to those only methods of revenue general raising at prevailed that in time, and their minds the words embraced those and universal taxes laid general which were upon subjects found wherever necessarily was found, population namely, taxes, taxes land. capitation upon- I to the other -now-pass principal objection against tax, and that is that if it be an duty, impost, excise, invalid because not uniform the United throughout States. It is in- our sisted adversaries that uniform throughout, United States” means two First, that itself things. should have a certain character; and, that when that second, character has once been it, it impressed should operate the same precisely throughout We on the country. say, other that-in hand, no making'this grant limit was as to the imposed by character of the tax itself, that, whatever or method should be plan adopted laying the same it, method should plan alike all the operate *78 & TRUST FARMERS’ LOAN CO. -525 Appellee Argument in for 894.
Mr. Carter’s the same sub- is taxed Whatever anywhere, subject States. and at the same rate. This be taxed everywhere, must ject of the is demanded by plain meaning phrase construction on its face. and the consid- reinforced moreover,
It is, strengthened by while alluded, I have to which that already namely, eration studied attention to the matter the most the convention gave it did not as between States, fairness of equality securing of the like equality operation attention securing give The notion citizens each State. the individual between of this was the -that it is, provision our adversaries design between individuals to secure .the Constitution equality whom the burden the tax was really whom imposed — from one set of an which consists exacting rests equality the same sum and no circumstances under certain just men of men is exacted another set who that which more than that We must see this could same circumstances. when we consider this word the intention have been ” “ and ex- case duties, is imposts applied uniformity cises alone. to this constitutional
The true require- interpretation give territorial to secure that it was is, uniformity ment designed what taxation. This is plain meaning operation and the real error of our on their face, of the words requires words is that read out provision they opponents States.” United “throughout from this aside admit, however, that, requirement quite
.1 to observe, is bound Constitution, laying rule or ex- a certain excises, principle, duties, imposts word uniformity,” ill yet tremely expressed that word. This indicated of the elements some having times declared one which has many been principle our that under .is, and that system government, court, for the exercise is no there room state, whether national All govern- of what is called arbitrary powers power. held in trust sense, in a certain ment are, given and on for objects public grounds will be exercised public ¿reasons. exercised, It What is arbitrary power power? TERM, Appellee Argument in 894. Carter’s if
not as a but as it were trust, pos- private personal who it. It is a exercised of those exercise session idea those who exercise it are morally disregard in short, to those from whom it is, accountable proceeds. *79 a exercised than and other upon public grounds public power bur- reasons. The business of what particular determining of dens taxation shall fall of classes particular people, upon and how the shall made and is the classes prov- arranged, ince and of the and alone, legislature, legislature to do it tribunals have with except judicial absolutely nothing there, limit, a is some constitutional where provision imposing- method, exercise of taxa- imposing upon tion. Whenever creates a class for the purpose, legislature and' taxation, differentiates class rea- by grounds which are in their nature, which, sons whether public unwise, wise or are and reasons right wrong, grounds which it within act, is its intelligent legislators might honestly it is it is province; arbitrary not.exercising power; proceed- and its action cannot be reviewed ing upon public grounds, tribunals. this rule to the judicial Applying provi- sions incomes to the amount of $4000, and to the exempting of successions realties, we that it mat- exemptions is a say ter within discretion. entirely legislative
Then there are to certain objections of a exemptions quite different character. I mean those exemptions examples which banks. to these savings is, Indulgence many forms, and under all everywhere, taxation, ex- systems tended, and such have times exemptions received the many tribunals, the judicial approval practice making small old provision and dis- savings against sickness, age, which effected is ability, of sav- through instrumentality is one of banks, those ings tendencies practices which State, every It ought raises condition of encourage. individual who in it. every him makes engages property holder, therefore him a makes friend instead of an enemy institution an institution which lies at the property, basis of our very and which civilization, to be ought encouraged in every manner, and to be ppssible particularly encouraged FARMERS’ LOAN & TRUST CO. Appellee Argument
Mr. Carters’ for in 89A those who have interests and who are so large apprehensive the future. Moreover, furnishes a relief to indirectly great the whole burden of community general taxation, means of individuals make for themselves for provision their in old without support which age disability, provi- sion would become a direct burden All State. statesmen economists are that here ais most use- agreed — ful field for the exercise of discretion that here legislative is a in which from the particular burden of taxa- exemption tion be made to the most solid' and most bring general public advantages.
Another objection against favor of exemption business on the mutual companies doing whilst plan stock the same are not companies doing business Here it exempted. is a distinction withoüt a strenuously urged difference; but there ais very difference, one which palpable furnishes a clear public ground may properly attention engage *80 of when legislators burdens of employed taxation. laying So far as life insurance respects companies business on doing the mutual- there are some distinct plan, reasons in favor of .The business of life exemption. insurance a similar performs function in the State to that which- is performed by savings banks. It is a not mode, same its details, but very similar in which are principle, by induced to save individuals from time to time small sums from their incomes for the pur- of sometimes for pose making provision, themselves, sometimes far their children or those who are dependent upon them, of old cases All age, disability, this is in the death. a matter of highest degree of public importance in- public It is a which should be disposition terest. favored. It is a if which, disposition leads men to look indulged, forward to of even it acquisition property, a small though may It makes them friends to the property. institution instead of enemies. It secures to them the of blessings enjoyments Much ado private is made on property. the other side about the enormous accumulations these life insurance companies. said amount to a They sum in the case of a com- single $200,000,000, pany intimation is that it is a gross TERM, 1894. Appellee Argument for Carter’s an to leave such immense amount reason of. departure from taxation. But those who exhibit property exempted these to the court enormous accumulations of pictures did at the same time state vast number of property not are interested in that and to whom a who people property, sense it and' its benefits are whom distrib- just belongs, among utable. If accumulated reserve of the life insurance com- referred to it is exceeds pany $200,000,000, probable number of interested in it and to whom it persons equitably to time whom will from time be distrib- belongs, among amounts to hálf a million. uted, probably But it is insisted that the made mutual distinction between pf and stock other in. such as those kinds, companies engaged business has not these consideration» insurance, ordinary that it i» all; consideration at it, nor, indeed, support a distinction without a but this is difference; so. There ais well-founded distinction between these classes corpora- tions. for Take, instance, case business marine insurance which is conducted both stock and mutual by What is its nature when conducted a stock companies. ? Its whether conducted stock company nature, general or a mutual is the loss serious, and, company, prevention ruin to a individual the occurrence of a. perhaps, single insured if the when, same loss were distributed against, peril number it would not be felt. Private among large sensibly whether underwriters, when incorporated unincorporated, in such a business take from the other they engage callings and from life, a certain amount of productive employments, asid¿ a sum from which to losses capital put pay from time to time arise from particular perils. insure such such They against perils, charge price *81 and make a insurance, for themselves which profit they upon live. The of a mutual is to enable those who- object company this insurance to of em- with the require dispense necessity this outside interest on ploying it, capital by paying themselves and, their number organizing together being -very a fund small contributions creating by large, money in the *82 TERM* Argument Appellee Mr. Carter’s for in 891. I but what have
taken, said will already sufficiently dispose will be obvious them. when come to be considered that there is nothing arbitrary them. any all of They them stand public grounds upon public reasons, and the is to extend aim of all of them benefits— small very benefits — indeed but still benefits have a powerful tendency to make encourage disposition savings, encourage ambition and desire to become owners of and thus to property, at its foundation the basis strengthen which the upon pros- and even the perity existence of states So much for depends. question uniformity. There is another made ato distinct feature of this objection law, resting, a failure to observe uniform upon grounds ity, upon allegation subject-matter upon income of which the tax is has been withdrawn from imposed the field of federal and cannot be touched authority directly This is the case of indirectly. state and bonds, municipal the income of which, is said, taxed under this law with I do not authority. doubt that it intention was the out the law to tax this income. It would be unfortu extremely nate and unwise if, .upon any view, species property were withdrawn from the of federal taxation. The sphere reasons which the claim to are drawn upon exemption-is put from a series of decisions this court upon of a state to tax the and instrumentalities right agencies of the Federal for as United States government, such, instance, bonds, the United States banks. think
I because if objection untenable, first, the tax ais tax state it is a tax upon any agency, borrowing and this is not or even to power, municipalities, necessary ip s-uch sense or it is necessary degree, war, United States. The which is the great prin- exigencyof case for an exercise of the if cipal calling power, borrowing not the one which loans are does absolutely necessary, not rest the States. Their with all their func- existence . can tions be maintained means of revenue derived from taxation, and it .would be better if no other means had perhaps ever been resorted to them. the next In this court place FARMERS’ & LOAN TRUST CO. Argument Appellee
Mr. Carter’s in 894. must true, what each has held State has undoubtedly bonds state municipal other every right it be that the and shall said United States do not have State, *83 of to tax a the other species property every State power of in has the the Union taxing? in conclusion the
A few words of this upon general aspects relate the to of uni- case, and, especially, question formity. am not one- of those who
I believe in what is called a of the construction of and who latitudinary powers Congress, seek to circumscribe within the narrowest limits' the power to sit in of this tribunal of judgment con- validity action. is a Ours of gressional government delegated limited I never will when powers, hope come day will hesitate to this court declare that the limit has been it is when convinced of fact. I passed, But also clearly it will forever decline the office of in hope judgment cases does where not assume a question purely judicial form and that will ; refrain when there is especially mingled with the element of any discretion which question legislative cannot be from it. separated of this court are powers well limited as as those of and those limits are Congress, when it already finds itself even transgressed considering whether this that view of a of question political economy, or of the wisdom of taxation, a one. sound all are suggestions more
These weighty important in those controversies like which, are calculated to present — — arouse the interests, almost the of feelings passions the- form the of people, subject public discussion, class array class, and become the in our -against points turning general elections. such Upon believes that he subjects every freeman has a to- form his own and to right effect to opinion, give his vote. could more opinion unwise Nothing more of nothing dangerous— foreign spirit — Constitution than an to baffle and defeat a attempt popular determination a a lawsuit. When judgment oppos- forces millions sixty have become ing people arrayed ranks hostile which all feel is political men question . TERM, 1894. Appellants. Argument for
Mr. Choate’s but of only path law, legislation, safety not as final. The American the voice majority is to accept nor trusted not commit can-be permanent injustice; people an in which recorded instance history governments has yet undue many been lay have destroyed attempts the few. The taxation on history burdens teachings of. direction. other all been have for for Pollock, H.
Mr. Choate appellant Joseph F. was on Charles Souihmayd appellant Hyde, his brief. from those this with different case very eyes
I look upon who has General or his associate just of either Attorney here I believe there rights private property closed. court and have a come we ; right be protected has and that this court with- their right, ask protection, counsel, leave General out Attorney asking *84 act of we are which hear our impugn- to plea. The. tendencies, is communistic in its before you purposes ing social- communistic, -is defended here as upon principles — I ever have been call them what shall populistic istic— the world. to' any political assembly addressed has said law? Carter, what is this Mr. Now, My friend, created, there convention which the Constitution in the that him as fear. I with There was; one agree was ever-present an was that a of States unjust by that. to combination a a small State group upon might put single all us about act which, Let see this exempting of States. under of individuals, exemp- incomes $4000 denying income to their drawing tion persons corporations stated been as has sum, seeks from corporations, raise are sources $50,000,000. There $30,000,000 of from here, which I law strike, as to how such a will' information of the attention of the to direct court. wish last and the law, 'year was income-tax There formerly an. then was was the in force exemption year were such that tax In that collections for year $2000. Massachusetts, New States of York, Pennsylvania, & v. FARMERS’ LOAN TRUST CO. Appellants. Argument for Choate’s four that even that those with then, New Jersey exemption, is their four-fifths of the entire tax. What politi- States paid in the lower What is their representation cal political power? secure the can initiate and of House Congress, hundred out three revenue bills ? Eighty-three passage who than little less Anybody one-quarter. fifty-six, about income-tax laws these knows anything operation effect of $2000 exemption changing under the that of burden will, knows $4000, inequality four States with act of those vastly greater press upon most has been about This result force. iniquitous brought violation of two of the restraints an leading express Constitution. Honors observe what learned counsel claimed,
Did your minimum of have been made the $20,000 namely, might taxation been law, of this and there have would exemption If this law, it ? with no you exemption help approve and this communistic march and five $4000, years goes $20,000 an comes to with hence statute you exemption in excess and a tax of 20 cent all incomes having per how can meet it view of amount, decision you There is ask now to render ? whicli pro- my opponents you of this now or never. If it out'as the edict tection judi- goes numerous, States, that a however cial tribunal combination unanimous, can unite however against provided safeguards a tax which is to be the Constitution imposing paid in four or in three States or two States people while which the combination is to no but of almost pay part, control, it will of it to have whole spending cannot here- You to take backward step. impossible *85 un- after if now that exercise say Congress check any you cannot friend trammelled and says you My uncontrollable. does, if what Congress enforce no matter limit. He any says — sociology, in did he call its what views of so-called it?— minimum of limit of a political establishes economy,, noth- have will $20,000 this court $100,000, or a minimum of to to it will have say about it. that nothing I ing say agree — a law law about it if it now lets its hold upon upon go TERM, O.CTOBER Appellants. Argument Mr. Choate’s for for such a such a result and passed, purpose, accomplishing such means. that one of
I have the fundamental thought objects was all civilized preservation government rights I have that it was the .private thought property. very of the arch which all civilized keystone government and that this once rests, was at stake abandoned, everything what and in That is Mr. "Webster in said at danger. I that all civilized educated, men Plymouth, supposed in (cid:127)believed that. to the doctrines have that been According here this even that fundamental propounded morning, great has been scattered to the winds. principle It is not of our here to any part mission power to raise taxation. We Congress money by believe has the last Congress power plenary exigencies gov- ernment to reach man, inch of every dollar, every every ground, to secure the common defence and the welfare; that it general was the of the convention that created the Constitution purpose to and that it is one of the give Congress power, absolute coyer of a essentials which was to a conti- great sovereignty nent and to last for There is no doubt about untold'ages. that. We too, aware, the difficulties that lie in our perfectly that it is way; us first necessary show, place, either that the act was power not conferred pass .this or that Congress, passing has exceeded the Congress entrusted to it power Constitution.
One thing certain, certain, that absolutely although was no power given tax, it to Congress power given confiscate; that, General and Attorney his associates admit, all If this is a confiscation the forms of law, under there is no power given the Constitution could enable it a law. possibility enact such validly
I can add to the wealth of the force nothing argument, of the claim two that this presented by my associates, n tax is void because wholly in all its a direct absolutely parts tax not the rule of imposed by But, as we apportionment. distrust, view of the former court, decisions of this of the court to come to such a willingness conclusion as *86 & LOAN TRUST CO. v. FARMERS’ 535 Appellants. Argument for
Mr. Choate’s levied all extent, tax in all its an income upon callings, the as well as rents land and all upon levied earnings upon the income of property, -meaning the personal I the tax, case as a direct to direct may present Constitution narrower consistent somewhat grounds, grounds taxes upon has been- decided this case that yet court, with by every uniform course of the Federal the maintained by govern- for half over after capacity ment its legislative century If should of the Constitution. conclude that the you adoption to condemn this entire law as it is not unconstitu- possible tax, a direct is to because my purpose tional entirely present, , the safe and alternative which then, practicable upon I believe," as decision, court can which is this any place, the distinction which distinction, the clear we find based upon direct taxes itself, in the Constitution between the one upon and excises the other. hand, and duties, Upon imposts, this I shall- for assume Therefore, argument, purposes it court, decided as has be so often by that may possibly all all duties, that all before, excises, been decided imposts of direct taxes from the class mean- by necessary out shut and that Constitution, are to be and effect ing the rule to be- uniformity, they ought administered by I claim, not. shall other hand, and are in this law direct, rate far as inevitable, that at so regards of real estate and of income, and outgrowth personal necessary levied direct tax tax is a estate, proper subject and is Constitution, tax within meaning of a direct invalid. therefore to the rules attention I desire to call
First, regulating taxation, and the methods power exercising which are the Constitution, laid down in absolutely imperative contrivance, no from employ- upon Congress no can name, escape. possibly ing 2 of article I of Constitu- of section
Under the provision declared that representatives it had been tion, already the several States among direct taxes should apportioned to numbers to as- census, according according a decennial census, census an certained by original TERM, Appellants. Argument Choate’s time to rolled on. The time, framers had years far as so concerns sections yet, arrangement Con- it was *87 drawn, to finally stitution given Congress general the first to tax. was a restraint provision That what power upon to was intended be clause, all of given subsequent course one with voice. the Then framers came speaking to finally the first of the which section, eighth described the .clause of naturally to power Congress, necessarily gave taxation, of which meet the plenary power might necessities, demands of at Government exigencies, any and under stress. I with the period agree- Attorney Gen- be could more that that other eral nothing comprehensive .no to could be used include tlie entire of taxation power language which, evident, obvious, it was the the necessary purpose “ framers new to bestow Con- government. have to shall and collect taxes, power lay duties, gress imposts,' “ added, to that however, and excises.” They clause, all and excises shall uniform duties, imposts, throughout I States,” which to mean United understand what it exactly all and excises shall duties, be uniform says imposts, —that uniform duties, uniform excises United imposts, throughout States. first that itself is these words suggests why “ ” in that form,
added the word taxes particular why especially in included and excluded from was grant power of it. I am not one of those who attri- particular modification or bute heedlessness dark in a ignorance acting the men who, maze to after four months sitting together, this' of work. evolved I submit that reason- piece every of construction, rule able view of the nature and character inmen, view those of the of the of the confed- history light and of ération were English history they acting, they intended their of methods' of exercising prescription cover absolutely the taxation, whole subject that the reason the limitation whj' pre- uniformity, - of method as to was to duties, scription uniformity, applied and excises was that the framers knew well that imposts, very they had the measure for all other already taxes prescribed &’ LOAN TRUST v. FARMERS’ CO! S37 Appellants. Argument Choate’s taxes,. direct The undoubted reason under the why term limited the the Constitution provision the framers of for the measurement taxes to duties, method of uniformity that that had understood and excises they imposts, all for the measurement of other taxes. already provided what General this, says In Attorney regard- respect from the conduct the uniform government begin- ing and I draw to our is entitled greatest respect, ning that me one what argument very strong appears have seen Your. I not remember to suggested. do heretofore. that Chase the case remember Mr. Justice Honors will that there threw out the States suggestion United Hylton the first clause about the word taxes” was some mistake neces- all and excises duties, section; imposts eighth there and he hinted taxes; were possibly might sarily not then he could think, be some kind of tax of which neither he did not intimate, nature of which might upon- *88 be a a the other an one hand be direct nor tax, duty, the upon in the has or That an excise. lingered suggestion impost, hundred until minds from about a years ago profession in the brief of the learned and find now, it you reproduced . that there associate. General or of his They say
Attorney a direct nor a one is neither on tax, be tax which on side the other side a or excise. duty, impost, draw from it: How about the for the that I
Now, argument of If that were such a ? upon (cid:127)corpus personal property tax, nor one hand or neither direct the duty, impost, upon n excise the What follow? Mr. Jus- what would other, then would rule tice Chase that neither apply; prescribed suggested, not rated either according that it would have appor- Would it not have tionment or sug- uniformity. according'to the connected with executive itself astute mind to some gested at time or the some of legislative departments government all the until now, since the of Constitution adoption that there was of the nation, and great exigencies emergencies out of a tax unlimited in to measure, meting respect con- ? that no Under there was restraint what has there of struction, that under imagination, theory TERM, Argument Appellants. for Mr. Choate’s been from prevent Congress beginning all raising for the of required purposes government from money of United property throughout personal States corpus without rule of without rule apportionment, of any uni- any it and exactly pleased, laying formity, coming every “ find I are worth so much citizen, you saying, personal prop- me two cent that.” No; this has erty; never pay per — — been dreamed of has never been to this hour suggested ? It is because who why everybody thought moment about this knew that the I have subject judgment ascribed to framers was Constitution sound right, that for direct direct taxes taxes namely, providing be collected should covered according apportionment, they a tax personal property. of all
The income accumulated it be whether the rent property, or the interest of of lands bonds the immediate outgrowth other form is specific personal under necessarily, property, Constitution, the of a direct tax and no subject other. One certain in this thing absolutely Constitution, taxation difference-between subjects and taxation the rule of was apportionment uniformity one considered of vast the framers of the importance by It was no Constitution. did not think trifling They thing. branch of this either taxation inconsiderable is that real estate itself unimportant. My proposition rent of the bulk it, and the in- personal property from was what it, come their minds under the sub- of direct taxation. I ascertain ject by comparing clauses of the these Constitution which I have studying already other clauses of the Constitution and the whole quoted *89 of them. The mere of talk this man or that scope purpose mere of convention, this talk man or that upon of unless bench it was a any court, solemn adjudication upon of office and the his oath decision of a case, is of little very I have found from a careful it little weight. study very the debates of the Federal help upon subject convention, I there are two think reasons no why force, conclusive said in the Swayne Justice can be drawn case, from Springer & TRUST CO. v. FARMERS’ LOAN Appellants. Argument Mr. Choate’s it was not a : it was body the first legislative them. In place, at the body, coming voluntarily a deliberative together merely and of its work to Congress, submitting invitation Virginia be submitted for with a finally suggestion Congress In of the several States. the conventions adoption secret. were its deliberations absolutely second place, I take as the first starting point my step that I am submit- of the proposition argument support included in the was or was not whatever else that, is ting estate in included, real real estate was tax, term direct distributed every- real estate was equally several neces- State, although where, found everywhere, every From the in value and acreage. differing sarily differing rested not been to tax land has upon beginning, land, the increment of distinctions between theories of land; or value and the land, improvement growth construction, to such it has been practical applied, according have been There real estate. improved unimproved been never direct which has tax, imposed three cases of a was there First, in cases great emergency: except France was 1798, appre- law of when trouble with direct-tax tax of direct ; then the land-tax act of hended on naked not taxes were All were of one type. They were taxes land; carefully improved upon arranged if tax, land please as a you upon unimproved property, just rented a direct tax now be so, prop- call it upon imposed did What and unrented and erty unproductive property. them all. ? a do Take the first tax as specimen real That is we will tax the houses. said, first, improved it not? it not? That real is rented property, property, value, ranging $3000 It taxed them to their according will we Then rate. to $30,000, all the at a way differing up a cents fifty it was I think tax the slaves so much head. dollar for land head. Then we will tax all the rest of there is ISo rule was. say a hundred acres or whatever the hundred these years an consensus, absolute confirmed by naked that a direct tax land a.purely history, all said, possible I have tax, land but was tax, of the property. improvements outgrowth *90 TERM, Argument Appellants.
Mr. Choate’s for we come to the second which it Now, proposition, seems establish, ih that to me easy rent equally from is of real estate from a tax issuing indistinguishable itself. As to this matter on the real of rent, is a property from a tax I tax on rent on.land? that a say distinguishable income whatever name is in tax on land by yielding reality, substance, tax rental. I effect speak now, upon- of rented I am mot foolish course, enough property. argue is the as a tax on land that a tax on rents same thing am at the nature of the however, rents. I looking, tax; nobody substance. Your Honors will observe form, law the- tax laid this is a tax by yearly upon yearly that be from a tax on land ? rental. Can How distinguished tax land to be out of the income ? is a on How paid, except I mean the common, busi possible? ordinary, practical of life which the court is bound to look We are ness at. living under a constitutional are we not? We have government, the measure of our own taxation the Constitution. regulated Was it intended that, could not an although Congress put tax real it could estate, an unapportioned upon put unappor tioned tax rent of real estate and so eat upon all the real estate can a ? How man this five up annual tax on pay years’ rent of real estate ? out of the Absolutely only rental. Would if free had tax, a land people, submit to a prohibited the rentals ?
We are aas deciding question law, not of political I economy. time say every the courts ever passed upon of an annual tax on land, whatever name you it, call whether call it a you real-estate tax or a land tax or an income tax or whatever it has been held to you please, be a tax on the immediate the immediate ownership, upon freehold, the man who was in thereof possession the income. What has been the law from receiving the begin- of the common law ? What do the ning old writers ? If say a man seized of land in fee his deed to another granteth of those lands profit to have and to hold to him his heirs and maketh secundum the whole livery chartce, formam (cid:127)land doth itself For what is the land but the pass. profits & FARMERS’ LOAN TRUST CO. Appellants. Argument
Mr. Choate’s ” That Littleton. has been law That is thereof ? Coke Christendom. It is court ever since English every applied *91 in the time of as it was Coke. It the same now just York the matter of a the New devise. State applied “ devise, rents or of the is'a A of the interest devise profits which interest itself, out of or those of the rents thing That the law as issue.” is administered profits may by Court of State of New York when late Supreme your Nelson, Mr. Justice was a member it. associate, Let me call attention what the General again Attorney He when a man has “Well, says: got money says. it his is no rent.” One I would about longer say pocket thing if is, that are as after rent the tax that, money, you going as I is on and should think personal property apportioned, I shall demonstrate But the answer is that the by by. tax not after rent in the does as go money tax-payer’s The a cardinal act of 1894 rents as pocket. specifies part man and element of this income who return, every goes to state under oath what rent he his return has make up difference between the fiction —this name last This got year. and the the substance and the between urged, thing, shadow— cannot tax rent, is that, though you General Attorney received from in the owner’s money can tax the you pocket one of a rent. there is one factitious argument, If pretence without a reason, a distinction difference to make one attempt with all its has this court stamped upon might, uniformly does the it is that. How corpus personal just principle ? I a real estate own house differ from a property piece its consideration a and take as to-morrow, and sell it to-day value $10,000, on for same mortgage property a kind of tax a tax house. a tax house one Is upon be; ? It cannot it is house another upon proceeds difference between real There no or‘substantial impossible. No real such a tax and on on property. general personal ever has been decided; no such has ever been thing thing has the elements of hinted A all at. tax on personalty real direct tax a tax estate. directly exactly borne it is is ultimately imposed; presently paid; TERM, Appellants. Argument Choate’s it. is no choice for him There owning party escape to run There is no volition the tax but about away. it, consumable in the case there is any commodities upon direct laid. excises levied Suppose upon, .real and could a man personal whose property was touched to the court with personal property appeal on success That tax say, hope my personal prop- but is an tax, is not direct excise or a erty duty impost. I will real my I will and I pay shall property, pay Court to free me from appeal Supreme paying por- tion the tax that rests my personal property.” court would overrule such I a contention. there certainly say is not the least distinction a case and between such that pre- sented here.
I think will have no you to the conclu- difficulty coming *92 sion that the of is included corpus within personal property of tax, the a direct and that taxa thereon be subject must How about income derived therefrom? I am apportioned. now, not of the and income from labor speaking and earnings trade, or business. I am any calling, profession, talking about the direct income of as illustrated personal property, the interest on bonds. by -Thus the United States issues certain bonds declares that the bond shall not be subject to taxation I State. am at the by any looking tax whether a on the of interest the in bonds is the same nat- ure a tax on bond itself. A levies a tax. State The that legislature the bond itself is recognizes protected cannot be but it taxed; to circumvent that inhibi- attempts tion to tax by the income after has pretending been collected on the that has lost its plea identity part of the owner of the personal bond. Would property that,' the act of you say said the bond although Congress should not be to all income therefrom subject tax, all its value eaten out the State might by putting the income of the ? bond Of an course, would be and it is decisive impossibility, of this The sub- question. what stance is the Constitution for. The substance provides is what the court is bound to right protect. & TRUST LOAN CO. FARMERS’ Appellants. Argument
Mr. Choate’s now to how the two rules, “We inquire appor- proceed intended were makers uniformity, tionment to in to their. the Constitution practical application work of taxation. It was then known perfectly subjects respective a rule necessarily well inequality. apportionment that a tax or could levied ever contemplate supposed Nobody result rule of would bur- equality apportionment words, to state it other that it would wealth, or, den as to that the distribution real be found personal property to the of the various was according population to on real a tax personal property apportioned according would not bear more some than on heavily population States. other had no remember that confederation power
You intense since that it had been the of an tax; struggle subject and that the confederation 1781, culminating finally of absolute when the consti- was then on point collapse convention came confederation had tutional together. it had of taxa- demanded impost, power demanded and the nation, in some form or other save States tion All remember the about the would consent. never quarrel and the not And it, getting getting impost impost, in the Constitution. came the then compromise to relate the how it compromise; necessary history was arrived at. came
Accompanying compromise, provisions taxation vested Congress, regard was a surrender we are here' there First, to-day expound. taxes the States to exclusive power levy *93 of revenue to all had been the source on great imports. That be an endless resource the seaboard it was known to. States; and with it for it The States absolutely, Congress. up gave too, the States Then, commerce. to power regulate foreign had had that surrendered afterwards the they forever right How States. of commerce between taxing regulating of taxing much much of sources revenue, of subjects how for Honors’ decisions let to, that has amounted your power decide. commerce the last ten interstate questions years TERM, 1894. Appellants. Argument Mr. Choate’s Then came the grant was one That compromise. part we call indirect as now taxes, of to lay power Congress — the rule by levy, them a grant and excises. duties, imposts of uniformity, was rule of this designed I that apportionment say in ? "What it result did. does as it eventually exactly operate for the benefit of in a law of it not, does results, protection as subject as contemplated the holders of such property I in New York. a house study I own the direct taxes? made the it can be only that subject and I see the Constitution tax is my If that applied tax. apportioned of an apportioned as tenth, a fifth or a half a taxes will be less quarter the law a tax be, if it were the case than applied and indefeasible right that an absolute Is not uniformity. if the much as Constitution State the owner every just no taxes should that as a had compromise part provided real estate in any levied the Federal upon government ? State that there is another clause representation
But providing did ? What that mean in hand. and direct taxes shall hand go ? it in the Constitution twice said was it that framers Why did it is the And twice. only they say said thing They when it in 2 of article I, section they provided represen- direct taxes should be tatives and apportioned according said in section 9 of the numbers, same article when they that no or other direct tax capitation should they prescribed be levied to the census. fresh except according were They about from the hand in hand struggles representation going taxation, with was for the of this protection property, this accumulated inroad property against of the vote mere numbers, and insisted they stipulated — funda- guaranty such was the upon apportionment mental condition of the States the Constitution. adopting was as clear ifas it had been written so purpose many that when the words State voted in representatives any the House where could Representatives, originate, law to direct tax or the impose property income of should do it under the State, property *94 v. & FARMERS’ LOAN TRUST CO. Appellants. Argument for Choate’s the as they political that according possessed restraint fall citizens of it should tax, upon State to vote that they represented. this is as lesson law an. these
What subjects object I have now tax that of, rents of- spoken direct namely, the income Here are the other land and personal property. all the States that that has representing region forty that new be carved come under provision might States who have voted to this direct tax Territories, out of the put of an income tax under the these seaboard pretence upon to the winds restraint that the Constitu- States, throwing them, and their own tion placed upon practically exempting York, have that New States. They provided Pennsylvania,. as I told Massachusetts New shall Jersey you pay, would if the five times the amount rule theyN pay beginning, Constitution had not. guaranteed by apportionment been utterly disregarded. a direct tax the income of real as to
This question been has never decided. Not personal property it has never considered; been has never been that; pre- learned friends on the other- When my sented to court. to debate we- here, there is nothing and say side up get on a tax rents is in whether real that answer the real different from property effect substance income of tax on the personal property and whether itself, has; on the corpus personal property a tax from is different here. been never presented our case in bound lose toto(cid:127) we are that friends say
.My to our adversely been adjudicated have because questions rely. cases upon five contention. There are case Ins. ; Hylton examined then Choate Pacific [Mr. Rew; Scholey v. Fenno ; Bank v.Co. Veazie Soule ; that questions; and contended States v. United ; Springer decided not been issue had here there.] which operate and the law of this provisions As the rest business or derived income as an excise or duty violation there is gross contend kind, we work anv void. law is the whole and therefore uniformity, VOL. clvii —35 TERM, Argument Appellants.
Mr. Choate’s What is meant in the clause uniform the United throughout ” States ? would seem that of solution capable *95 without heedlessness to imputing "Washington, Hamilton, and the Madison, Franklin, other men who sat with them in convention. word “uniform” Clearly means some- and for was inserted some definite thing purpose. In view there is no mistake pur as to what the meaning ”
“word is, uniform as an essential of a quality duty, impost, or excise. It must alike operate class or of things to it. The class subject be fixed persons and bounded by in its discretion. It is for the Congress courts to whether say this rule of has been uniformity within and applied through- out the class.
The contrast or antithesis between the rule of apportion- ment for direct taxes and rule of prescribed uniformity ” for duties, and prescribed excises was imposts, designed. The contrast was intended to be and between complete perfect each element of the two rules.
The rule of was known and intended to be apportionment rule This was and ex- inevitable inequality. inequality nature of the isted of which it out very compromise resulted. This in- as certain to inequality recognized crease as one State than faster grew another-; population hence the a "decennial to correct this census requirement far so as that do it. But there were features inequality, might as between different States which were radical inequality and incurable census. and There was there could by any such coincidence between and wealth no as the population rule coin- assumed, from divergence any approximate would as it with cidence has census. grow, every grown rule The on the other hand, uniformity, applied was known and intended to be excises,” “duties, imposts rule of and reasonable those approximate among equality — in the class affected at all embraced everywhere — and no or of wealth times changes anywhere population could affect its force and effect. would constitutions all the States have nearly adopted the United States Constitution this rule of uniformity, v. FARMERS’ & LOAN TRUST CO. ' Appellants. Argument
Mr. Choate’s its the courts of all practical application with speak voice as one to its that it is that for meaning, exactly we contend. another
But there is cardinal difference between the two rules which is even more radical and and com- far-reaching the construction of the rule of pels for which we uniformity contend. It must be observed that the first clause of section Article taken itself, I, gave Congress complete of taxation, limited to national unqualified power unlimited as to As it stood purposes, wholly alone place. extended to inch of the every territory within the dominion every person every of the- thing created the Constitution. government As stood alone could have laid and collected taxes of kind, every direct and for national indirect, without purposes, regard *96 or wealth or to state population boundaries,-restrained only tho'se fundamental limitations inherent in the very power of taxation and in the of a indispensable free government but it was no people; of them that part plan any this in the new should be absolute or un- government as to and qualified, except A.s to and place persons. place it should forever remain persons reach far unqualified and as wide as United States and touch territory every person therein. And so every thing they proceeded and to modify as to its extent qualify power, except place the (cid:127)whole space, of the nation, through territory as to its hold except upon every person thing by pre- the different scribing measures which the burden of the different kinds of direct and taxes, indirect, should be meted out. As to indirect taxes, modification or qualification was section 8. As to applied -by direct the measure taxes, section 2. prescribed by ; Thus-the Constitution, in rule prescribing measuring direct taxes, deals with the States and with therein. people It allots to each State its of the total amount to aliquot part be collected numl and the rs, of each is according quota levied and collected from the sub- States, property stance not in as other though form, state taxes are collected. TERM, 1894. Appellants. Argument Choate’s ”—
But as to taxes not direct— and excises “duties, imposts had. These, the situation was different. which wholly belonged to the States which had absolutely persistently — refused with, were now surrendered part ; the excises duties consumable absolutely imposts — commodities, to a extent because of the great impractica- State them with bility against competition maintaining “ ” other and and because of the States, commerce adjoining clause in clause and the “immunities” the Federal Constitu- tion which cut them off from all manner of excises inter- state commerce and incomers from other States who could no treated as longer foreigners.
In with these the Constitution no dealt with dealing longer with the States or States, citizens through directly — with the individual citizen the individual to be sub- thing to the tax. out all lines, state jected, wiped ignored n States went for the entirely, man directly thing, and whether he or it was found State or the. Terri- tories.-or District of Columbia was all one. On all alike the these was to for the purpose exercise of the provide the United taxing power throughout States” whenever it should be exercised at all. In each and every part of the United excise or territory laid or duty must rest and imposed operate.
Our construction of this clause has been acted on from the until government — no now. In tariff act beginning — and I call attention to this especial with all the infinite those, of classification of variety acts contain, goods never once has there been a clause in a tariff act which made *97 the rate of to be duty paid who dependent upon person whether, it imported was a a goods, or person corporation, whether it was a white man or a black whether was man, a rich a man or man. poor
Rich and old and and citizen poor, young, laborer, capitalist' foreigner, corporation have been accorded individual, same the same at the same right import rate, goods and we not do believe that from this rule of any departure has ever been in uniformity either house of Con- suggested FARMERS’ & LOAN TRUST CO. Argument Appellants.
Mr. Choate’s for of the discussion tariff any bill, this is the rule gress the United of States for throughout which uniformity we con- duties, excises, as to all tend imposts. tome a few words
This a new brings, say doctrine has been here presented of the representatives friend strongly government urged by Carter. my in General his' at Attorney brief, that says 83, page of has been rule violated in uniformity practically the act but that the law of must be not as regarded standing- a of but as our alone, of part general system taxation, its that effect is to about an so regarded bring approximation of taxation. of This as I understand is, an it, equality unequiv- that the in ocal admission law itself or uniform equal that we that its but it works may speculate operation, perhaps of tax burden some out or notion uniformity theory Has such a doctrine ever equivalents. compensation court ? It before ‘beenadvanced amounts to the claim that an act of on the violat- part government and utterly the Constitution lacking in-uniformity may ing act or the because some other tariff laws upheld general it true that under Is the Constitution unequally. you operate intentional burden one can inequality compensate others which excises, duties, set imposts by imposing element essential of uniform- every inherently lacking this court and to enunciate ? Is prepared go length ity ? This construction Constitution is doctrine such a Jacobin club France; proposed worthy govern with undis- of Czar Russia proposing reign worthy it cannot absolute be done under this power; puted Constitution. the breaches of here? I shall treat
What are uniformity the clear and forcible them in view of remarkably briefly Mr. Guthrie. In on the the first opening presentation with an income there is this everybody exemption place, does this amount less than What exemption really $4000. $133,000 with investments bonds to? A man living I we shall at 3 cent is subject exemption. hope per each in our children condition all be able to leave good *98 550 TERM, 1894. Appellants. Argument
Mr. Choate’s for as and not have claim that or he she that, should the lower be classed middle classes because his or among her does not exceed $4000. income friend oh the other My easier has, side made our because he has said argument as well have been $20,000, and exemption might just he it in he has said earnest. Thus conceded that if this classifi- cation can a man with stand, $666,000 3 cent or per at. fit $500,000 at cent was a for per subject exemption. is, for therefore, decide whether that áis reasonable you exemption. ' If now decline to you adjudicate upon, question reasonableness and hold that it is outside your province, no abuse hereafter when the limit fixed is at $20,000 more can checked. The reasonableness of exemption a of law. is v. Farmers' & essentially Loan question Reagan Co., 362, Trust U. S. The discretion is in 397-399. Con but the abuse that discretion' not is remediless. gress, One word as to the of the court to power adjudicate upon Milwaukee, the reasonableness an In the Chicago, exemption. c. Railway 134 U. S. Minnesota, Company & the court said that for rate of unquestionably charge a railroad as it transportation by does, involving, company, the element of reasonableness both as regards company for in regards public, judicial eminently due for vestigation, of law its determination. requiring process need I not refer like cases there those the Rea cited or case, have gan followed that doctrine. We applied claim that this court is it.is its and that duty competent as to "whether this is a exercise judge reasonable whether it is exemption capricious. arbitrary next, ground of which we complain exemption denial the $4000 because exemption simply corporations corporations. Could this court in a clause justify incorporation tariff act that a brand an individ- if given tea, imported ual, should of ten but if a cor- pay duty cents, imported by cents, and if a mutual poration, twenty nothing imported ? I association have never heard liv- any suggestion & v. FARMERS’ LOAN TRUST CO. 551 Argument Appellants. Choate’s I believe it man that could. must be con- absolutely ing cannot. If it cannot ceded do it to a. everybody *99 it how it do as to an tariff income excise1 can duty, Now I come another It is not for me ground. necessary dwell because of very upon this, elaborately very clear in and forcible manner which was presented opening , our Mr. Guthrie brief. I upon here was'a appears say deliberate, is entitled to worse arbitrary, capricious (it infinitely names and than of capricious exclusion cer- epithets arbitrary) tain from the of great wealthy corporations this operation without law, without warrant, without justification, any prin- whatever. of General in. ciple policy public Attorney says of these favored respect that there exemption companies It is is a humane acted on states. civilized policy always the United States of curious that these civilized states, very did not until now. None of America, discover these insti- tutions' were under the income-tax laws. exempted previous Take in its hun- for New wdth Trinity church, York, example, dreds of of real stores and houses and parcels property of millions from which it receives a fabulous income. property, Is there that at the any income public policy exempting of of sections ? expense poorer country Permit me to a few of the : Total number of repeat figures mutual banks 646 stock total savings ; exempted, banks,. savings 378. do the same business take in ; They they money for the it and it bear depositors purpose investing making are; interest with a it in the same and the 646 profit way, and the are taxed. Total exempted state banks deposits and trust total companies, $1,225,000)000; deposits savings banks, $1,748,000,000. That will some idea what you give covers? How ? are those used Are exemption deposits No, they invested kept vaults of banks ? they (ike else’s interest and to make anybody make earnings, on the profit money. n Now I come to the of mutual insurance companies. My friend, Carter, a new idea. He said mutual up got were companies for to save organized poor, sole That losses. purpose saving expenses dividing TERM, Appellants. Argument
Hr. Choate’s his I were those, think, his words. argument, We very had them taken at rate. Here are his down, words: very n “ “ An he to divide said, the losses.” I organization,” So, he thinks are benevolent and charitable suppose, organi- zations. I him should like to have to his Mend the go presi- dent of the Mutual Life Insurance New York, Company whose has real and accumulations company property, per- him sonal, $204,000,000,and tell that this was amounting an secured for the them to exemption purpose enabling divide the losses came them the transaction of their business. To divide the losses! Where is phrase lie uses ? Mr. Carter' on the said : business They carry to divide the losses themselves.” simply among if the court Why, the total please, property exempted these mutual on their business compánies merely carry *100 to divide the losses themselves census among appears by to be over ! reports $2,000,000,000 that within
Now,'is discretion exercise of a reasonable on or is it —is it arbitrariness? grounds public policy, caprice I have too the attention of trespassed altogether long upon the court. There-is that stands nothing way decision of this court which we I do not mean to urge. say there are not individual dicta. If drive a to case you try ¿ dicta it is like through barbed- trying yourself get through wire fence without but I injury your there garments; say has been no case decided in this court that the least will interfere. These have never have questions been never weighed, been considered; decided. have never been certainly they
I will one say word just about before I conclude these municipal bonds, on which state the we briefly grounds say they ought and that is exactly exempted, ground on United States from a state tax. bonds are exempted is because it interferes with the sovereign power the exercise óf States themselves. sovereign power by (isWhat the answer to ? the other side this friends on My if say, it in why tax it will not be you put income general felt. So said about the if them into rents, you put income tax it it not an is not a tax general rents, unap- v. FARMERS’ & LOAN TRUST CO. 553
Opinion of the Court. tax. What difference portioned possible there principle between a tax on the bond and a tax on its income? I have
But more than the kind trespassed indulgence of the court. I have felt the of this case as I responsibility have felt one before and never never I do expect again. not believe that member of this court ever has sat or ever will sit to hear and decide a case the of which consequences — will be so as this not even the venerable far-reaching mem- who ber from the survives of the civil early days war, has sat óf of national upon every reconstruction, question destiny, of state that has come destiny last up during thirty years. No member of this court will live to hear a case long enough which will involve a of more than importance this, of the fundamental preservation rights private property before the and the equality law, ability people these United States to rely Consti- guaranties tution. If friend said in true, that the my closing, pas- sions of the are aroused on this if it be true people subject, that a million citizens is to be in- mighty army sixty likely censed is the more vital to decision, future wel- fare of this this court country again resolutely declare, as Marshall did, that it has the courageously to set aside an violative of the Constitution, a.ct and that it will not hesitate no mat- executing power, ter what the threatened consequences popular populistic wrath be. With the earnestness and confidence deepest we submit that all Americans that our patriotic pray must views shall We could magnify scope your prevail. *101 decision, No mortal could whatever it be.' rise above “the of this height great argument.” the after case as above stating Fuller, Justice Chief the court: delivered the of
reported, opinion The of a court of threat jurisdiction equity prevent any ened breach or diversion of of trust in the the misapplication funds of a out of its payments capital corporation illegal v. sustained. profits Dodge has been Woolsey frequently , 331; 18 104 450. How. U. S. Oakland, v. hawes H
554 TERM, 1894.
Opinion of the Court. this bill v. on Woolsey, in proceeds As Dodge ground of defendants would such breach of guilty that the trust or returns for in voluntarily making imposition duty of, on tax; an unconstitutional also allegations paying, suits threatened multiplicity irreparable injury. at law remedy was not objection adequate raised nor is it now raised if it could
below, appellees, enter tained at all at so far as stage proceedings; and, within the of the was to do power government so, the for the jurisdiction, purposes case, was on waived The relief explicitly was argument. sought of- action the defendant voluntary respect company, not the assessment and collection them respect circumstances, selves. Under these we should not be justified in. the merits. declining Pelton proceed judgment Bank, v. National S.U. 143,148; National Cummings 157; Bank, 153, U. S. v. Dumont, 130 U. S. Reynes Since v. Madison, 1 Marbury 137, opinion Cranch, not has delivered, been cloubted that it is within judicial competency, by the Constitu express provisions tion or inference and by necessary to determine implication, whether a law of the United States is given or.is’ made and to hold it pursuance Constitution, valid or void “If,” said Chief Justice “both accordingly. Marshall, law Constitution to a so that case, apply particular the court must either decide that case to the conformably law, disregarding Constitution; conformably^ Constitution, the law ; the court must determine disregarding which of these rules the case. This is of conflicting governs essence very And the Chief Justice judicial duty.” “ added that the doctrine that courts close must their eyes Constitution, and see would subvert law,” foundation of all written very constitutions.” Necessarily to declare a law unconstitutional exer always with cised but the reluctance; in a so, case, do duty proper cannot be declined, must be in accordance discharged with the deliberate of the tribunal in which the judgment of the enactment is validity drawn directly question. *102 & v. FARMERS’ LOAN TRUST CO.
Opinion of the Court. The contention of is : complainant the law a tax on- the First. That question, imposing rents of real income or a tax the real estate, imposes upon and in a tax or other itself; estate interest imposing of bonds or other income held for the personal property of income or income, ordinarily .imposes purposes yielding estate that such tax is a direct itself; upon personal and void because without to the rule of tax, imposed regard and that law is ; reason thereof the whole apportionment invalidated. invalid, That indirect
Second. the law is because imposing taxes in violation of of uni- the constitutional requirement and therein also in limitation ; violation formity implied taxation all tax laws must equally, impar- apply and to all situated. Under the tially, uniformly similarly, second head it is contended that the rule of uniformity violated in that the law taxes of certain the income corpora- tions, and no matter how created or associations, companies, at a rate than the incomes of individuals or organized, higher derived from or busi- similar partnerships precisely property in; ness that it the act and from the exempts operation from the burden of com- taxation, numerous corporations, and associations similar panies, property carrying having on similar business in that it ; to those taxed denies expressly to individuals their income from in certain shares deriving the benefit of the corporations, associations companies, interested exemption $4000 other persons granted similar of $4000; in the property business; exemption associations, exemption and loan savings building banks, mutual insurance com- life, fire, and accident marine, panies, of their mem- for the existing solely profit pecuniary ; bers these and to be other purely exemptions alleged being and of arbitrary no capricious, purpose, justified by public such enactment; as to magnitude invalidate the entire other particulars.
Third. That the a tax law is invalid far as so imposing income received bonds. state municipal direct Constitution provides representatives TERM, 1894.
Opinion Court. the several States accord- among be apportioned taxes shall *103 tax shall be laid no direct and that except numbers, to ing all for; and also that enumeration provided according aijd uniform the shall be excises throughout duties, imposts States. United that instrument had and just framed adopted who men for whose the independence rallying from struggle
emerged “ and taxation representation go together.” that had been cry in the the con- colonists, had country taught The mother taxes could not that by establish imposed tests waged the were by as granted representa- they except the sovereign constituted the main that self-taxation realm, tives declared, in his As Burke speech oppression. against security defenders of the excellence the America, with on Conciliation inculcate, infinite took constitution pains of the English the monarchies, all that, people a fundamental as principle, themselves, immediately, effect, mediately possess must, own or no shadow of their money, granting power that consent of The principle could subsist.” liberty to the valid- it was essential were pay who expected those tax. ity embraced all national for about, were purposes
The States under the same united one, to become Constitution, in the the same laws. But as and authority, governed sovereign all and over persons things their retained jurisdiction still they to'the where surrendered limits, territorial their except within Constitution, they or restrained by general government taxation see to it representation careful to were should reserved so tnat the sovereignty should together, go and that especially not be when Congress, impaired, where it 'was specifically provided Representatives, House a tax must voted upon prop- all revenue bills originate, under- consciousness, be with the it should erty, would the tax so voted pro- so doing responsibility, those the immediate constituents fall upon portionately it. who imposed not only Constitution the States this, than
More to tax the Nation'the poncurrent power persons gave & FARMERS’ LOAN TRUST u CO. Opinion oí the Court. surrendered their own. but they directly,
property and to All the commerce. taxes on regulate imports levy varied in States, but maritime seaboard they were thirteen differences existed between them in popula- importance, character of of business in wealth, tion, .property looked forward to Moreover, they coming interests. West into vast of their empire States great new when the States between wealthier So anticipations. associates, less and all be- and their favored themselves come, and those who were to themselves tween gave up sources of revenue derived common great through good did so reliance on the afforded commerce, protection power. restrictions grant of taxation, matter the Constitution Thus, recognizes of direct classes and indirect tax.es, the two lays *104 great which their down two rules must by imposition governed, direct and The rule of as to taxes, namely: apportionment as to and .of .excises. duties, the rule uniformity imposts was rule of the exercise The uniformity prescribed the first of section paragraph eight, power granted taxes, because and collect the rule of apportionment lay laid had been down in the third to taxes already paragraph the second section. uf this view was Mr. Chief Justice Chase
And expressed by 5 Wall. when he “It is Cases, 462, said: The License Tax that the to tax is a extensive true very power. Congress' and Constitution, with one <?nly exception given it must cannot tax two exports, qualifications. the rule of indirect direct taxes by impose apportionment, and thus limited, the rule of Tims only, taxes uniformity. at be exercised discretion.” subject, may reaches every intima- there have from time time And been although not direct tax be some tax which was tions that there might “ excises,” the words duties, nor included under imposts exist- more one hundred of national such a tax for than years remained undiscovered, has as ence yet notwithstanding invited investi- circumstances has stress thorough particular into sources revenue. gation TERM, 1894.
Opinion of the Court. to be considered is first whether a tax on the question is a of real estate direct tax within rents or income the mean- all taxes Ordinarily of the Constitution. paid primarily ing the burden who can shift some one else, upon persons who are no are consid- them, under compulsion pay legal but a tax ered indirect holders taxes; upon property respect whether real or or of the of their income estates, personal, and the of which estates, such cannot be yielded by payment are direct Nevertheless, taxes. admitted avoided, may this of direct taxes is definition although prima facie and to be in the consideration of the correct, applied before us, Constitution bear a different .the yet and that such different must be meaning, meaning recognized. But in at conclusion we are at arriving point, to refer to the historical circumstances liberty attending of the Constitution as well as the entire framing adoption frame and scheme of the and the instrument, consequences attendant naturally one construction or the other. "We therefore, at what, the time the Constitution inquire, framed were as direct taxes? adopted, recognized did What those who framed and it understand the adopted terms to and include? designate
We must remember that members of the con fifty-five stitutional convention were men of con great fully sagacity, versant with governmental conscious of the problems, deeply nature of their task, convinced that were profoundly the foundations of a vast laying future To empire. many work of assembly the French great magistrate *105 £ of of Laws,’ which Spirit with hand his own Washington had an abstract copied Madison, was the favorite by manual; some of them had made an of all federal analysis governments in. ancient and modern in a few were well versed times, and the .best English, Swiss, and Dutch writers on government. had They of Great before them the immediately example Britain; and had they a still better of wisdom school political the republican of constitutions their several many of them had assisted to frame.” 9. 2 Bancroft’s Hist. Const.
The Federalist demonstrates Hamilton, the value attached & v. FARMERS’ LOAN TRUST CO. 559
Opinion of the Court. and to historical shows that Madison, experience, Jay they forms of had made many careful study government. versed in the of the framers were literature Many particularly Wilson, Hamilton for Franklin, of the period, example. his work on had 1764 and in taxation,, Turgot published “The Formation and his on Distribution of 1766 essay Adam Smith’s “Wealth of while Nations” Wealth,” Franklin in had said his 1776. exami upon published that: An nation before the House Commons- external tax laid on commodities is a added duty imported; duty on the to the first cost and other charges and, commodity, of the offered to If when sale makes part price. not like it at that refuse it; do they- price,
people an internal tax is forced it. But from the obliged pay if not laid their without their own consent, people repre act we shall-have sentatives. no. commerce, stamp says, no with each neither other, make exchange property pur nor nor we shall neither debts.; chase recover grant, marry and such wills, nor make our unless we such sums; pay from it is intended to our or ruin us us, thus extort money 16 Parl. Hist. consequences refusing pay.” n familiar with the modes of taxation were, course, They From several States. Oliver report pursued when direct Wolcott, Treasury, taxes, Secretary 14, 1796, the House of December his most ^Representatives, Finance, State state (Am. Papers, 431,) paper, important laws then existing, appears prior the various state all the States nearly the Constitution to the' adoption of all kinds, on cattle on, land, taxes tax, imposed poll that, addition, kinds of various personal property, New Delaware, Connecticut, Pennsylvania, Massachusetts, their citizens assessed and South Carolina Yirginia, Jersey,. trades, employments. their professions, profits no actual had confederation articles of under the the States call It could of taxation. operative power previously contributions quotas for their respective or omission of failure but in case on; determined were no means there contribution, to furnish such States *106 TERM, 1894 560 Opinion the Court. had no whatever to lay any power compulsion, Congress demanded a ; individuals. This remedy imperatively of direct taxation hut the opposition granting power in addition exclusive im- substantially power laying the conven- so duties was required strong posts of taxation to the Federal effective tion, securing powers to so harmonize the utmost care skill use government, of the instrument the ratification interests conflicting could be obtained. thus described Mr.
The result situation and the v. Wall. in Lane Oregon, Chief Justice Chase County one nation, constitute “The of the United States 76: people within the under and this one government, government, with which it is invested, supreme. scope powers of each State On other hand, compose people all its and endowed with State, own having government, functions essential to existence. separate independent The States disunited continue to exist. Without'the might States in union there could be no such body political Both existed United States.' the States and the United States instrument, before the Constitution. The through people, a more union a national established perfect by substituting with the citi government, ample directly upon acting, power, of the confederate with zens, instead acted government, inBut restricted, the States. many powers, greatly only upon articles of the Constitution the existence necessary within and, their States, proper independent spheres, them States, is To authority distinctly recognized. the whole is committed interior nearly charge regulation to them and left; to the all expressly people powers the national are reserved. delegated governnient condition was well Madison stated general ‘ Federalist, are in thus: The Federal and state governments fact but different consti trustees agents people, tuted different with different powers designated "'themselves States; purposes.’ Now, existence of the to the existence of necessary States, the United taxation is function is an essential indispensable. LOAN & FARMERS’ TRUST CO. Opinion Court. colonies; exercised It was when
government. both before and after the forma- became the colonies *107 it was confederation, exercised the new by of the tion of the Articles Confederation the Under governments. in was limited the the United States exercise of government States, the while the this to of power requisitions indirect of and direct and taxation of persons whole power or duties oil or on whether taxes polls, imports, by property, was manufacture, or use, duties on internal production, States, without to the to exclusively belong acknowledged than of non-interference with cer- other limitation any true, it Constitution, treaties made is tain by Congress. of the this condition things. gave power greatly changed to national both the to tax, indirectly, directly govern- one of tax and, to thé ment, any subject prohibition in to of and to the conditions uniformity respect exports direct taxes, to indirect respect proportion reservation. On was without any express power given to or hand, other no imports exports, except power extent, an and to lay any duty purpose insignificant single however, the States. In respect, tonnage, permitted limits, within their business, respective property, persons, entire. It is their of taxation remained power .remains iq the indeed a case of tax on concurrent power, the claim the United same both subject by governments, be must authority, preferred; supreme it The extent which is absolute. with qualification it it shall be which shall exercised, subjects upon exercised, mode shall be exercised, and the in which which of the all within the discretion legislatures equally That discretion the States commit the power. exercise is restrained the will of expressed only by people condition elections, by state constitutions or through to burden or embarrass that it must not be so used There national nothing operations government. authorizes direct Constitution which contemplates To the national of this legislation. abridgment like as the in the States extent indicated is as just complete VOL. CLVII—36 OCTOBER TERM,
Opinion of the Court. within the limits power, Constitution, complete Congress.” 1787, Charles
On May his draft Pinckney presented constitution, provided proposed proportion taxes should the whole regulated direct number in- habitants taken description, every manner prescribed that no tax should be legislature; on articles paid from the Elliot, United-States. 1 exported 147, 148. declared that the Kandolph’s plan right suffrage, the national to be legislature, ought proportioned quotas of-contribution, or to the number of free inhabitants, as the one or the other seem in different best, Elliot, cases.” 1 15,'Mr.
On June Paterson submitted several resolutions, *108 which was one that the United in among States proposing should be authorized to make in Congress requisitions propor- tion to the whole number of white other free citizens and those bound inhabitants, to servitude for terma of including and three-fifths of all other years, Indians not persons, except taxed. 1 Elliot, 176. 175,
On the ninth of that the July proposition legislature.be authorized to the number of accord- regulate representatives to wealth and inhabitants was and on the ing approved, “ eleventh it was voted that order to ascertain the altera- that and wealth of tions happen population ” a several census shall be taken ; the resolution although of this formed a was 5 defeated. Elliot part (Madison 1 295; Elliot, 200. 288, Papers)’, Goiiverneur
On Morris moved to add clause to the July to accord- legislature vary empowering representation the-amount wealth and inhabitants, to. number ing that taxation should be to proviso proportion representa- tion, and, that some his objections against admitting lay be removed which would to direct proposition, by limiting “ to taxation,-since indirect on with taxes regard exports the rule would be and on consumption, imports, inapplicable,” “ the word direct,” his motion by inserting whereupon varied “ Provided, that direct taxation as follows: always, it passed & v. FARMERS’ LOAN TRUST CO. Opinion of the Court. be Elliot proportioned representation.”
ought (Madi- son Papers), were Mr.
Amendments Ellsworth and proposed,by Mr. Wil- effect that rule of contribution son to direct taxation to the number should be white according inhabitants other three-fifths every description, order in the direct ascertain the alterations taxation which be might from to time census should be time required taken; out the clause, word wealth was struck motion of Mr. whole and the proportionate proposition, Randolph; represen- taxation, tation direct both white and' three-fifths inhabitants, and a census, of the colored requiring adopted. and after debates, In the course of the the motion of Mr. be the first census taken in Ellsworth three after years had been Mr. re- meeting adopted, Madison “ asked what was the cords : King precise meaning one direct taxation. No answered.” But Mr. imme- Gerry moved to amend the insertion of the diately clause that the first from meeting United States legislature until census shall all taken, moneys supplying taxation, direct shall be raised treasury by public several States the number of their according representatives first branch.” This left for the respectively time the' matter collection to the States. Mr. Langdon objected this would bear hard New unreasonably against Hampshire, and-Mr. Martin said that direct taxation should not used cases of absolute and then the States necessity, would *109 best the of the 5 mode. Elliot judges (Madison Papers), 451, 453.
Thus was the one of accomplished of the great compromises on the Constitution, doctrine that the of resting right represen-, tation to be conceded to ought every on which a community tax is to be but it in form such imposed, crystallizing to allay as. in of the future balance jealousies of to respect recon- power; cile in the slaves; views of respect enumeration of conflicting and to remove the in that, objection of adjusting system between the States, representation should be had to regard wealth, their relative since those who were to be most heavily TERM, 1894.
Opinion of the Court. in influence have a govern- taxed proportionate ought ment. taxation, of direct in power embracing compromise, in slaves in part
consisted not including simply in that as between providing enumeration population, taxation should proportioned and State State such for rule of the same The establishment representation. for proportion of taxes as regulating apportionment in 54 of the Feder- Madison No. observed Mr. representatives, for on the same founded no means principle, was alist, wealth, to the former it had reference proportion un- cases very that was ordinary of- although respect “ sanction obtained it had too measure, general fit recently with not to have found America, ready preference interests of the balanc- while the convention,” opposite in enumeration. would each other, impartiality ing produce wrote rule, this Hamilton No. (Federalist, 36) By prescribing “ shut and “the that the door was partiality oppression,” to have of taxation been abuse of this provided against ” and ; circumspection obviously operation with guarded resort to State tended to direct taxation every prevent and to under mode of necessity supply except pressure pro- mote and economy expenditure. prudence Federal We repeat right government its own at least until taxes, and collect after assess directly made and failed, States had been requisitions chief in rati- conflict, Massachusetts, one of the points of an in these recommended amendment adoption fying, do not direct but when the That taxes lay words: Congress from the insufficient excise are impost moneys arising shall have nor then the public exigencies, .until assess, made a the States to first levy, requisition their of such respective proportions requisition, agreeably pay, fixed said such Constitution, the census way States shall best.” manner as think legislatures South York, And New New Elliot, Carolina, 322. 329, and Rhode Island concurred. Id. 325, Hampshire, *110 & LOAN TRUST CO. v. FARMERS’ Opinion of the Court. communication the in his well-known to Martin,
Luther views of January, expressed-his Maryland legislature ‘‘ taxes, to and collect : they thus power lay may pro- By individual, to direct taxation on either ceed every by capita- their an assessment on their heads, tax on tion property. number, of the in the members, . . . myself Many were much of the that states better cirT thought judges of their and what sum of citizens, cumstances money'could the manner taxation, from them direct be collected with which it could be raised ease con- greatest their could citizens, than venience general govérnment not to have that be; ought government general case but in that of the direct taxes laying power Elliot, of a 369. 344, 368, State.” 1 delinquency Connecticut, Ellsworth Sherman' wrote governor “ wras that the that it 26, 1787, probable September principal on What be will be duties branch revenue imports. may be direct taxation is to be raised apportioned, necessary their inhabi States, several according the.number raise the their may money tants and ; Congress although be if yet authority-need own necessary, authority, furnish its 492. will Elliot, if each State exercised, quota.” in discuss- convention, And Connecticut Ellsworth, out that all taxes, lay pointed ing power to, still lay open sources of revenue, impost, excepting that the was necessary power insisted n extend to all should objects the general legislature all the be able to command should taxation, government tell what our no man can because resources of country; wars of the now become rather Wars have be. exigencies able be must therefore than of sword. Government purse . . Direct . to command the whole purse. To towards taxation little can raising way revenue. go they must provident; raise this way, people money the demands answer must constantly laying money up thus make But cannot people collector. you provident. must come do you If would purpose, you anything , them. . . with and take when part spending, 566' TERM,
Opinion of the Court. *111 All nations have and of seen necessity propriety raising a revenue indirect n duties articles .of con- taxation, . . . In the whole revenue is England, sumption. public millions annum.' The land tax about twelve per sterling and some about two the window other millions; amounts to more. The about two millions other millions are taxes, eight . This Constitution articles of . . raised consumption. the extent of defines powers general government. should at time their If the legislature overleap general check. If is a constitutional limits, judicial department if make a States their they beyond powers, United go it is authorize, not void; which the Constitution does law to secure who, the national and power, judges, judicial to made will declare are- their independent, impartiality, Jae Elliot, 191, 192, 2 196. it to be void.” which the Constitu- convention of 'Massachusetts In the of article I under ratified, the^second section being tion “ of this said: It is consideration, principle King Consti- should hand and taxation that go tution,. representation taxation and this rule are . . . By representation hand. it was the And it was because adopted, to be apportioned. confederation, ail America. of According language and defence welfare the Sums 1781, ratified general lands, to the surveyed should apportioned according that it hath in the thereon, States; several improvements rule, to follow that of been never so from the several States very imperfect:*’ returns being 36. Elliot, “ a con- have only Parsons observed : Congress Theophilus an not taxes, direct with each State, current laying right to direct taxa- State each exclusive right; right of Congress.” extensive and as the right tion perfect equalty Dawes,. Sumner, Sedg- Adams, King, 93. And John Id. last source be the that a direct tax would wick all agreed resorted revenue by Congress. pointed, York Chancellor convention, Livingston the New
In when the diminished expenses imposts out “ direct have recourse must increased, they the government & FARMERS’ LOAN TRUST CO. 56T Opinion Court. and- duties.” Elliot, land, taxes is, specific
taxes; direct in reference an amendment that Mr. Jay, And 341. until had made been imposed requisition, taxes should that the amendment in- would fruitless, argued proved and that to be considered difficulties, ought volve great of two Id. kinds, were direct taxes general specific. direct said: The Mr. John Marshall objects In Yirginia, are but what few; understood; ate well are,they? taxes few articles of kinds, all and a other stock Lands, slaves, . . will have the benefit of the . They domestic property. state wilt legislature. They experience knowledge collects its. manner in what Yirginia see legislature *112 as to- so . . . Cannot regulate taxes. Congress taxes Where is the absurd- on all of community? parts equal clash with, thirteen revenues? of Will-they ity having not, cannot thir- If make each other? why Congress injure, the taxes on the laws, and teen distinct general objects, impose that all State, so-as of taxation each persons society ”? 3 At Elliot, 229, 235. shall as they ought pay equally, were taxes taxed, and time, specific lands Yirginia, These were assessed on certain objects. objects specified to be taxes on houses lands, Wolcott in. stated by Secretary other towns, mules, stud horses slaves, jackasses, horses, tables, billiard four-wheel riding carriages, phaetons, stage- was; with two and it wheels; carriages wagons, riding the future Chief Justice to these undoubtedly objects referred. new there Constitution, Mr. said.: “Butin Randolph —
is a limitation a more rule fixed beyond just equitable taxes hand cannot go they gó. Representatives other be will the to the one hand; regulated. according num- by number of is determined representatives ber of to do but to taxes ; lay inhabitants have they nothing 3 121. Elliot, accordingly.” “ is taxes Nicholas said : George proportion fixed inhabitants, by number regulated extent of . . Each of soil. . State territory, fertility TERM,- 1894.
Opinion of the Court. from its its will know, population, proportion any general observed tax. As it was.justly gentleman over cannot exceed that .they way, (Mr. Randolph), possibly propor- limited and restrained to it. The ; tion they expressly have no check this kind. Their state legislatures 244. Elliot, is uncontrolled.” 243, “ remarked that will be limited to fix the Mr. Madison they must raise it State, of each most and they proportion manner to the 3 Elliot, convenient satisfactory public.” extended references, From indefi- .these might rule to each of the clear that the nitely, govern great classes-into which taxes were divided was view prescribed them between distinction commonly .and accepted the taxes levied under the of the States. directly systems that the difference between direct and indirect And taxation was de- congressional fully supported appreciated after the bates government organized. In the debates in the House of Representatives preceding “ of the act duties car- lay .passage 5, 1794, June conveyance persons,” approved riages Stat. c. Mr. said
(1 45,) Sedgwick capitation-tax, on land and on and taxes and income property generally, well in were direct the immediate as ultimate charges, sources of contribution. He had considered and those those, as direct taxes in their and effects. On the only, operation a tax on a other article of hand, imposed specific personal *113 and- if in the of as case property, particularly objects luxury, under he had had never been considered consideration, supposed a direct within the the tax, of Constitution.” meaning
Mr. Dexter observed that his “had stated the colleague of tax, direct taxes to be a or a meaning capitation general tax on all the citizens; the taxable and that a property from the mean- (Mr. gentleman Nicholas) thought Virginia are direct are was, that all taxes which the citizen ing without, paid by ; the consumer but where that, by being recompensed the tax was advanced and the the consumer, by repaid tax was indirect. He that both were thought opinions just, FARMERS’ 'LOAN & TRUST CO.
Opinion of the Court. the had differed about inconsistent, and not though gentlemen a all tax on taxable He them. thought general property it was recom- tax, direct because was a paid being without Annals 646. 644, consumer.”. 3d Congress, by pensed of the Mr. Madison debate, At a day objected subsequent “ unconstitutional but tax,” as an to the on carriages that it that he had satisfied himself Fisher declared Ames “ falls not direct on tax, not a as duty possession on the use.” 730. Apnals-, “And wrote to on 1794:
Mr. Madison Jefferson May in of the succeeded, Constitution, the tax on spite carriages the advocates for the being twenty, principle by majority “ Sopie adversaries to reinforced luxuries.” by to their motives which pre- they decoyed support ought barriers down the monish them of the breaking danger. By Constitution, sanction the idea of the sump- giving find defence wealth tuary may regulations, precarious is to be taxed, If such, great- shield justice. luxury, estate. Even on the is a Paine, est of all luxuries, says great to tax it found yield has been occasion, prudent present 2 Madi- funds and the banks.” transfers of stock son’s Writings, Finances in his Sketch of the But Albert Gallatin “ The most said: November, 1796, United States,” published direct taxes however, is, received opinion, generally on the are meant which raised capital those Constitution, raised on as are indirect, such or revenue of the people; and con- rational, is in itself their As that expense. opinion on the has taken subject formable to decision which place the sake it tax, and important, of the appears carriage more be not controversies, future preventing Union, than to fatal revenue tranquility will adopted, a fixed should generally interpretation the author to corroborate improper quoting He then have been borrowed.” whom idea seems to and- continues: Nations, from Smith’s Wealth quotes “ of the Constitution clause The remarkable coincidence ’ aas generic word with ‘capitation using passage *114 term, October 1894 570 Opinion of the Court. the different of direct an including taxes, expression, species word to believed, Dr. acceptation peculiar, Smith, leaves little doubt the framers of one had the other time, in view at the and that as well as he, direct they, meant taxes, those from and directly paid falling immediately indirect, on those which are indi- revenue; paid out of the revenue rectly by falling immediately upon 3 Gallatin’s (Adams’s 74, 75. expense.” Writings, ed.) “ act its first section that there shall be provided all for collected, levied, paid upon convey- carriages ance which shall be or for for persons, kept by any person or her own out his to be let to or for use, hire the convey- ance several duties and rates passengers, th.e following,” followed fixed then rate on coach every ; chariot; yearly and coachee; four-wheel and two-wheel phaeton every every other ; two-wheel top carriage upon every vary- carriage; to vehicle. according ing
In v. United Dall. decided in Hylton States, March, court held 1796, this the act to be constitutional, because a direct tax. Chief Justice Ellsworth and’Mr. Justice laying took no and Mr. Wilson Cushing part decision, Justice no reasons. gave Justice Chase said that he was inclined to but of think, a, he did that “the “give judicial direct not. opinion,”
taxes contemplated by Constitution, two, wit, tax, without capitation, poll simply; regard property, land;-” -or other a tax profession, circumstance; and on he doubted whether a tax, aby assessment general within the United personal property, included within term direct tax.” But he “an thought annual tax on for the carriages conveyance persons, may be considered as within the power granted duties. The term is the lay most next duty, comprehensive term tax; generical Britain, Great practically we our take (whence ideas-of general duties, taxes, imposts, excises, embraces customs, etc.,) taxes on tolls stamps, etc., and is not confined to taxes passage, importation to me, seems that a tax on is an indirect only. expense & LOAN TRUST CO. FARMERS’
Opinion of the Court. tax on a annual I an ; think, carriage convey- tax that because a is a kind; is of of carriage ance persons, tax is on the and such annual on it, commodity; consumable owner.” expense “ declares, Paterson the Constitution said Mr. Justice tax is a direct both tax; and, a theory capitation be a direct tax. . . . a tax on land is deeméd to practice, determine, a tax whether on is not product necessary tax. the immediate land be direct or indirect of a Perhaps, crude state, its land, ought original product it makes or else it; as the land itself; be considered part would be made exports easily taxing against provision of its is of no value. Land, eluded. produce, independently in the sense of the Whether direct taxes, . . . Consti- tax, other tax than tution, capitation comprehend . . . But as it is on land, taxes point. questionable be decisive it would court, give any not before improper “ All taxes on it.” And he concluded: expenses opinion upon tax is of taxes. A on are indirect carriages or consumption a direct tax.” This conclusion course is not and of kind, this from Adam Smith on the extracts he fortified by reading of consumable commodities. taxation necessfiw, no or “There is Iredell said: pro-
Mr. Justice direct, or not, or is indirect, what is determining priety, which we do difficulties occur in all cases. Some may tax in the sense of tax, a direct not at foresee. Perhaps present in-' tax on but a can mean Constitution, something nothing the soil; capable apportion- annexed to something separably tax land or a A poll under all such circumstances. ment In other ... regard be considered description. It is doubt. suf- be considerable there articles, may possibly satisfied, to be the court occasion, for on the ficient, present Constitution, tax is not a direct that this contemplated to affirm the order present judgment.” while that each of the suggest- It will be justices, perceived or a land tax but a whether doubt capitation anything ing Constitution, dis- within was a direct meaning an avoided opinion tinctly expressing TERM, 1894.
Opinion of the Court. but confined definition, his down a comprehensive laying before the court. case opinion influenced line observation obviously The general for the which he brief Hamilton’s government, Mr. “ to be the direct The following presumed said: taxes on lands and taxes, or poll buildings, taxes: Capitation whole of indi- whether on the assessments, property general All else real or estate. their whole viduals, personal indirect taxes.” 7 Ham- considered must necessity ilton’s Works, (Lodge’s ed.) If word Hamilton also meaning argued: ’ ‘ statute, it will be found in a British excise sought *116 on is there considered as include the which to duty carriages, ‘ this, . from excise.’ . . An results though an argument where so one, a conclusive important dis- yet, perhaps fair to seek it is realized, the is to tinction Constitution of the of terms in the statutory language meaning Id. 333. country from our derived.” which jurisprudence reference had tax, If the related to an income classed have been fatal, always would been as have such taxes law of Great taxes. Britain direct but before to two The above act be enforced for years, was. 28,1796, was act of May as was similar expired repealed 482. 478, which Stat. c. 1 37, 31, 1801, expired August was France of war with act July 14, 1798, when By of dol- to be millions a direct tax two of supposed impending, in the man- lars was to the States apportioned respectively, officers of ner which to tax was be collected by prescribed, houses,iands, the United States and assessed upon “dwelling to slaves,” and and enumerations to the valuations according “An 1798, entitled 9, be made to the act of pursuant July hpus.es dwelling act to for the valuation and of lands provide 1 States.” and the enumeration of within the United slaves dwell- c. 597, every these acts ; Stat. 75 Id. c. Under 580, 70. and value, house was assessed ato prescribed ing according and the enumerated, of the sum cents slave fifty upon every assessed to be of the sum directed residue was apportioned valuation to lands within each State according LOAK & FAJ&MERS’ TKUST CO. 573 Opinion oí tlie Court. act and at such rate centum per made .prior pursuant act said remainder. By be sufficient produce would tax of three millions of dollars a direct 1813, of 2, August to the States and ref- respectively, laid apportioned 1813, act of 22, July had to the provided, prior erence laid of tax should be a direct authority whenever and laid on the same should be assessed' United States their with lands, all lots of improvements, ground the value which several articles slaves, houses, subject dwelling and valued be enumerated respective shall taxation of them is worth in rate each at money.” assessors 9, 1815, 22, c. 16. act January 3 Id. 53, c. 37; Stat. which was dollars, of six millions appor- a direct tax laid on lots act all lands, laid as assessed, prior tioned, houses, with their dwelling improvements, grounds the war are attributable acts slaves. These c. 292, 294, Stat. 5,1861, (12 45,)imposed The act August which was dollars, millions apportioned twenty in- levied taxes estate, real also on levied wholly trade, or derived profession, whether property comes the acts of and this was followed by Stat. vocation, (12 309,) 1863, c. 119 March 432, 473, 3, Stat. (12 1862, ;) 1, (12 July Stat. c. 30,1864, 223, 281, c. (13 ;) June 723, 713, 74;) Stat. 1866, c. March 469, (14 479, 10, Stat. 3, 1865, ;) March (13 Stat. c. March 1866, 98,137, 13, (14 c. 15 184;) 4, ;) July Stat. c. 477, 14, 1870, (16 Stat. 2, 1867, (14 169;) July *117 latter acts and 256, differences between the c. The Stat. 255). in remark this connec- for no 1894, that 'of call 15, August the rebellion, war out tion. These acts grew of. Miller, of Mr. Justice “part to use the were, language and profits adopted incomes, earnings, system taxing after that "war soon abandoned late war, during Railroad Company be.done was ended as it could safely.” 595, v. 100 U. S. Collector, distinction 1. That
From the is apparent: foregoing understood by well was indirect taxation between direct and it. who adopted and those of the Constitution framers all taxes taxation under the 2. That state systems TERM, 1894. Opinion of the Court. . or the rents or income
real estate thereof personal property as direct taxes. 3. That the rules of were regarded appor- in were tionment and view of uniformity adopted 4. That and those- whether distinction the tax on systems. indirect was direct or but the tax was disputed, carriages and an a tax on the use excise. 5. That sustained as the orig- of direct inal was that taxation would expectation be exercised in down to extraordinary exigencies, only has been realized. The act 1894, this August expectation in that date was a time of and if we passed profound peace, that no assume called for unusual special exigency legislation, resort to this mode of taxation is to become an ordi- and usual means of that fact furnishes an additional nary supply, reason care in of the case. circumspection disposing We then to of this examine certain decisions court proceed of 1861 and in it is under the acts which following years, that this court has heretofore that taxes claimed adjudicated taxes and like those under consideration are not direct subject are bound to to the rule of and that we apportionment, accept thus asserted to have been made as conclusive the rulings Is founded this contention well premises. respects under doctrine now examination ? Doubtless the and to be to on all one, of stare decisis is adhered salutary but it in arises of decisions occasions, proper respect in issue. directly points Marshall,
The Chief Justice Cohens Vir- language 264, 399, Wheat. ginia, may profitably again quoted: “ It is maxim not to be expressions, disregarded, general with the case are to be taken connection every opinion, in which If those beyond are used. expressions they go control case, they may respected, ought in a suit when the judgment point pre- very subsequent sented for maxim is obvious.. decision. The reason of this with before the court is question actually investigated care, considered its full extent. Other principles to illustrate relation to the serve are considered their it, cases is decided, case but their on all other possible bearing seldom completely investigated.” *118 v. 575 LOAN & TRUST FARMERS’ CO.
Opinion the of Court. 16 Carroll, 275, v. Lessee How. 286, So Carroll when of State of came under Mr Maryland review, a statute “ If the construction Curtis said: the court oi put Justice was its statutes not a matter in one of judgment, State either been decided without it have if way affecting, might then, into to the question, any according princi right brought law, an is not of the common such opinion question pies must been an so, make there have decision. To applica mind to the the tion of precise necessary judicial question fix decide determined rights parties And therefore contestation whom belongs. property the common courts court, law, and other this under organized bound of an held itself has never by any part opinion, not needful ascertainment case, which was right title in between parties.” of Mr. Chief Justice Taney is the Nor inapposite, language 12 How. wherein 443, 455, in The Genesee Chief, expressed waters that the lakes it was held navigable connecting thé and maritime them are within scope admiralty jurisdic States understood United when tion as known and case of The was Constitution adopted, preceding 428, 10 Wheat. was overruled. The Chief Thomas Jefferson, “It was under the of these said: .influence Justice precedents of The the case Thomas Jefferson, usage, in this and the decided court; jurisdiction Wheat. 428, to be the United States declared the court's of admiralty . the tide The Or ebb and Steamboat limited flow followed this case, afterwards leans 11 Pet. Phoebus, in- It is the decision the case as a decided. merely point the court embarrasses The Thomas which mainly Jefferson We are sensible great weight present inquiry. time we are convinced the same which it entitled. But at into an decision if erroneous that, it, we follow we follow ques which court when the fell, great importance foreseen; not be tion could now itself presents consideration did not therefore receive subject deliberate emi to it been at this time would have given decided. case was men when that nent here who presided TERM, 1894. *119 Opinion of the Court. in the 1825, was made when commerce on For the decision in and its West on Lakes was of the rivers infancy, and but little little regarded compared and of importance, the nature of the Moreover, day. that present with the extent of the admiralty concerning jurisdiction, questions were in this not calculated call its court, have arisen which the one we are now considering.” attention particularly with the and this court is clothed power, Manifestly, to maintain the fundamental law of with duty, entrusted not it Constitution, duty requires discharge if con- a it is constitutional extend decision upon question any vinced that error might supervene. principle of these the cases referred to examine .light Let us observations. Soule, Wall. Co. v. 7 validity Insurance
In Pacific
an
which was described as
business of
tax
“upon
of a
”
it was
was sustained on the
ground
insurance company
within the decision
and came
excise,”
Hylton’s
or
a duty
were elabo
for the insurance
company
case.
arguments
but the
rested on narrow
wide
decision
took a
rate and
range,
an
distinction between
excise duty
turned on the
ground,
the former a
so termed,
charge
and a
strictly
regarding
without
the transaction of business,
or on
for privilege,
to the amount of
reference
belonging
propei’ty
necessary
fall,
whom
although might
on
charge might
those
which the
diminished
the extent to
privilege
increased
done. This was in accordance
the business
exercised or
was
In
6 Wall.
Provident
Coite,
594;
v.
with
Savings
Societyfor
Wall.
Hamilton Com
Massachusetts, 6
611;
v.
stitution
was
there
cases
Massachusetts, 6 Wall.
632;
v.
pany
(cid:127)
the tax
whether
difference
on the
opinion
was a tax on the
under
property
consideration
v. The Asses
Allen
And see Van
franchise
privilege.
134
York,
New
Wall.
Home Insurance Co. v.
573;
3
sors,
141
S. 18.
v.
U.
594; Pullman Co.
S.
Pennsylvania,
U.
was
a tax
544, 546,
v.
In National enact- Statutes, 3413 of Revised the constitutionality § “ association, bank, state or national banking every ing a tax of ten on shall centum association, per banker, pay or or town, city, municipal corpo- of notes any the amount Bank v. Fenno was cited Veazie them,” out by ration, paid undertaken that Congress, having to the with point approval to secure the whole country, might, currency provide enactments, suitable restrain, by people, benefit under not issued its *121 on relied 602, chiefly U. S. us as urged upon n .decisive. an action of on a tax deed ejectment That brought States on United sale defendant’s real issued estate taxes. The. defendant that income contended deed the tax tax, because was direct levied in was void not accord- with the Constitution. tax Unless the were ance wholly the defence failed. invalid, case shows that
The statement report Springer amount as a certain his net income for the particular returned not does details what his income, give gains, year, in. consisted .and profits record discloses that the income was not
The original v. FARMERS’ LOAN & TRUST CO.
Opinion of the Court. real but was in estate derived any degree part profes- and the rest interest on United States attorney-at-law sional as that would seem court did not feel bonds. probable to the distinction between to advert the latter and called upon as the income, the former source the tax as to validity the action. would sustain either thus concludes: Our conclusions that are, opinion within taxes, direct meaning Constitution, only in that taxes, instrument, taxes on expressed capitation the tax and that of which the real estate; error plaintiff of an is within excise category complains duty.” is broad to cover While this the interest enough language as well as the case would have been earnings, professional if the as a distinction' more had been significant precedent and commented on out at brought report arriving on for a tax be treated professional judgment,- receipts might as an 'excise or therefore indirect, when a tax on duty, the income of be held to be direct. personalty might it it is conceded in all these
Be from that may, cases, that of taxes on land are direct Springer, Hylton none of them is determined that taxes, taxes on from land are rents income derived not taxes on land. admit that it be said
We unreasonably logi- on rents, If taxes issues and of real estate are profits cally, on real and are estate, to taxes therefore direct equivalent thq on income of taxes, as such are personal property taxes to taxes such and therefore direct equivalent property, taxes. But we are the rule stare and we considering decisis, decline to hold ourselves'bound to must extend the scope — none decisions of which discussed the whether tax on the income from to a tax on personalty equivalent but all of which held real estate liable to personalty, — taxation direct so as a tax on the income of sustain on the an excise or realty ground being duty.
As no or other tax laid other- was to be capitation, direct, wise than in direct some other proportion population, tax than a well capitation (and might enough argued some other tax of the same kind aas must be capitation tax) *122 TERM, 1894
Opinion of the Court. has been considered that a tax it to, always upon referred or its owners thereof is eo nomine upon respect estate real of the the Constitution. But is within meaning tax direct the real estate or its between itself distinction there any the rents or income of the real in respect owners natural and as the owners the ordinary estate coming ? their ownership incident not had should provided Congress
If Constitution citizen of State, estate real any any tax upon levy any an could annual tax Congress put be contended could rent or other number years upon five now if, real estate? And as Constitution of the income estate, be real no reads, upon tax.can imposed- unapportioned nevertheless taxes without can apportionment impose an estate under the annual tax such real guise upon income ? its rents or law, the whole beneficial interest
As feudal according to take the rents and in the land consisted profits, right been, Coke, rule has always language general of land in fee his deed if a man seized (cid:127)that granteth and to to him of those have hold lands, another the profits chartoe, and maketh secundum and his heirs, livery formam what is land but land itself doth For whole pass. ”? 45. And that a thereof Co. Lit. devise the profits lands land the income of rents passes profits and in on both at law Jarm. Wills, (5th itself ed.,) equity. cited. *798 cases The is that direct Constitution requirement no. — be laid than
shall otherwise prohibi- by apportionment is taxes on from which land,- tion' direct against land drawn indirect taxes on implication sought —taxes constitutional, it is all direct would against and, a direct tax. it is admitted on estate is that a tax real therefore, out of rents or income a tax Unless, issuing itself from a tax on land lands is so different intrinsically taxes taxes, different such that it ato class wholly belongs a tax within the same category must be falling regarded of the tax nomine. name unimpor- real eo estate *123 & TRUST CO. v. FARMERS’ LOAN 581 Opinion of the Court. which is there basis is, The real any
tant. upon one the that real estate two rest the contention belongs income which the rent or is the classes of taxes, great the other? We incident its to. ownership belongs for the distinction. unable to alleged perceive ground annual user of real tax annual value An annual the upon an as annual tax on us the same substance estate appears the rent or out of income. estate, real which would the paid and the from land law income received This taxes the growth Paterson observed in of the land. Justice produce its is of no case, land, produce, Hylton's independently ” that direct were no taxes ; value had certainly thought land. confined unproductive form the it that the substance
If be true varying would remain it is not to see that anything easy changed, or of the rule of taxa- Constitution, thé limitations of the tion so carefully guarded recognized representation, But constitutional the each State. favor of citizens of the evaded. is substance cannot be thus provisions controls, the indeed been established form which as'has v. Thus Brown decisions of this court. Mary- by repeated held that the tax on the land, 12 it was 419, 444, Wheat. a tax on an was the same as imports occupation importer And Marshall said: “It is and therefore void. Chief Justice that this the ourselves, is conceal from impossible varying form, It is without the substance. treating pro- varying if confined to a it were hibition particu- general, All lar must mode of perceive, thing. doing .forbidden sale, that a tax oh an article, the sale of imported a tax'on the article itself.” was held a tax 449,
In v. 2 Pet. it Charleston, Weston was a tax securities on on income of States United inadmissible. ordi themselves, and equally securities involved that case was of Charleston nance city Justice Of Mr. obscure; but Thomp opinions exceedingly make clear dissented, son and who Johnson, Mr. Justice and not the interest of the bonds upon levy upon tax, and bonds, held that it was an-income TERM, 582 Opinion of the Court. such but the sustainable; Justice court, Chief majority Marshall overruled that contention. delivering opinion, v.
So Dobbins 16 Commissioners, Pet. it was decided 435, that the income from an official could not be taxed if position itself was office exempt.
In How. was held that a Almy 169, California, on a bill of was the same duty as a on the lading duty thing article which it in Railroad v. Jackson, Co. represented; Wall. 262, that a tax interest bonds was upon payable a tax not debtor, and in security; Cook v. 97 U. S. Pennsylvania, *124 upon amount of sales of made an auctioneer was a tax goods by the sold. upon goods
In Co. v. Philadelphia 122 U. S. Steamship Pennsylvania, and Mobile, 127 U. S. held that Leloup 640, was a tax on income received from interstate commerce was a tax the commerce itself, therefore upon unauthorized. And it is so, settled that where although thoroughly by way duties laid on the of the of interstate transportation subjects and on the commerce, derived or on therefrom, receipts or business of a tax occupation on, is levied a carrying by State on interstate commerce, such taxation amounts to a of such cannot be regulation commerce, sustained, yet and. in a State to a property whether belonging corporation, in domestic, or domestic foreign com engaged foreign merce, and when the tax may taxed, a substantially mere tax on and not one on the property imposed privilege interstate commerce, the exaction doing be sustained. may “ The substance, and not shadow, determines the validity of the exercise Postal Co.v. power.” Telegraph Adams, of 698. S. 688, U. n can be clearer than that what Nothing the Constitution intended to was the guard exercise against general - of the government power directly taxing persons prop- within State erty made through majority up other States. It is true that the effect direct taxes requiring to be apportioned States among their proportion popu- lation that the amount of taxes on the necessarily individual LOAN & TRUST v. FARMERS’ CO.
Opinion of the Court. State the taxable in a having subject-matter taxpayer than its another State extent proportion population larger be less than such other State, would has, inequality been held to have must be manifestly contemplated, to restrain the exercise of the designed operate and to an. direct taxation to extraordinary emergencies, prevent attack, force accumulated mere of numbers. property owners It is not doubted contribute-- property ought the; As to expenses government. just measure.to this is reached States their municipalities, largely through direct taxes. to the Federal As government, imposition it is attained excises indirect taxes part through to which direct luxuries taxation consumption generally, be added to the extent the rule of allows. apportionment other, And one mode or the the entire wealth of the- through real and as it should made, country, personal, may to» be, contribute to common defence and welfare. general But the of the rule was one of acceptance apportionment which made the of the Constitution compromises adoption creation of that secured the dual form of possible, govern- ment, so elastic and so which has far thus survived in strong, If, unabated tax indirect when it is essen- vigor. calling the rule of direct, could be tially frittered pi-otection away, one landmarks between great defining boundary *125 which it Nation the States of is would have composed, and with it one of the bulwarks of disappeared, private rights and private propertjc
We are of in the law so far as it lev- opinion question, ies a tax on the or income rents of real is in estate, violations of the and is invalid. . Constitution,
Another the record directly by as to the presented of tax levied the act the income validity the by derived in bonds. The averment the bill is that the municipal defendant owns two millions of the company bonds municipal of the of from which it York, New derives an city annual in- and that come the directors the $60,000, intend company to return and the taxes on the income so derived. pay
The Constitution exercise contemplates independent by TERM, 1894. 584 Opinion Court. of the constitutional and the of their Nation State, severally, powers. or the tax
As the States cannot the powers, operations, em- States, of the United nor the means property held so it has been execution, their into carry powers ploy under the United States have no Constitution to tax or the of a State. either the instrumentalities property State
A is' the corporation representative municipal and one of the instrumentalities of the state government. determined that and revenues long ago property taxation. are not of Federal subjects municipal corporations 11 v. Railroad 113,124; Collectorv. Wall. United States Day, it was ad 322, Wall. In v. 17 Collector Day, Company, had an act all no even by taxing judged power, officers of incomes, the salaries levy judicial held State, similar on which it had been reasons to those could Commissioners, in v. 16 Pet. that a State 435, Dobbins Mr. Jus not tax. States. the salaries officers of the United “ Nelson, tice said : The general gov delivering judgment, within the same and the both exist ernment, although limits, territorial and distinct acting separate sovereignties, their of each within other, respec separately independently ; tive former its is supreme spheres. appropriate sphere not States within the limits of their granted, powers ‘ are as of the tenth or, amendment, reserved,’ language as that independent general government government within its States.” sphere independent This is Van U. S. Tennessee, 151, Brocklin quoted 178,and same continues : opinion principles, Applying Wall. court, United States v. Railroad Company, that a could held a State within municipal corporation be taxed interest United on the dividends by States of stock bonds held it in a railroad or canal company, because was a municipal corporation representative State, created of its the State to exercise a limited portion those revenues, like therefore its government, powers of the State States. itself, were not taxable the United The revenues thus taxá- from Federal adjudged exempt *126 & TRUST CO. FARMERS’ LOAN
Opinion of the Court. not themselves any specific public were appropriated tion held the State or by by derived from nor use, property but were use, for any specific public corporation municipal held for the of that income corporation, general part Qther income, than all sense no property use public must be held. character, so it in its municipal belonging and income of all the reasons exempting The property which a division is political or of a State, corporation, municipal the ex- taxation, Federal State, from equally require and income of national of all the govern- property emption taxation.” ment from state 162, S. York, 138, New U. Bank v. Mercantile In
n court.said: York, the State of New issued “Bonds by are means bodies, its municipal under its authority by public and are not the work of government, for carrying States', and is not even United part taxable them to them which issues subject policy'of government its to taxation for .own purposes.” Court, v. Tax 104 U. S.
The Bonaparte from State, debt of one exempt whether registered public there, taxed was taxable State or that actually taxation by latter, a citizen of the when owned another State no of the Constitution held that there was it was provision such taxation. The States States which the United prohibited done, whereas, not be this could had not covenanted to borrow law, fundamental as to money, power under nor the States on hand, on the one the United States neither each other, can interfere with possessed by power each. and an essential element sovereignty “ that herein law under consideration nothing provides counties or shall municipalities.” contained apply or revenues of the property is contended although cannot be neverthe- taxed, instrumentalities or their .States state, derived from income county, municipal less "the we think' the same want of taxed. But securities can be or revenues of the tax the States their property to a tax on the in relation income instrumentalities exists and that reason, and for same reason their securities, *127 TERM, 1894. 586 Opinion. Field’s Mr. Justice in Weston v. Marshall Charleston, Justice Chief is given to tax the said : The contract where he 468, 449, right Pet. the must made, power when extent, operate upon to any have a sensible influence on and exercised, it is borrow before on this the influence, of depends extent contract. The the however extent, To incon- any distinct will of a government. of the on siderable, operations government. it is a burthen arrest extent shall them to an be carried stock is tax on thought . . . The government entirely. a tax on the contract, the be tax on power this court to and of the United con- on the credit to borrow money to the Constitution.” to be sequently repugnant Applying it is obvious that securities, these municipal language the would the taxation on interest therefrom on operate power and would exercised, to borrow it is have sensible before the tax in is a contract, influence tax on the of the States'and their instrumentalities to borrow to the Constitution. money, consequently repugnant each of the other at the bar, wit,
Upon questions argued "Whether the void as to rents and income from 1, provisions real invalidated the estate whole act? as to the Whether income from as such, the act is unconstitu- personal property tional as direct taxes? '3, Whether laying any part if not considered tax, as a tax, direct for want of invalid — on either of the uniformity grounds justices suggested? who heard argument divided, and, therefore, equally no opinion expressed.
The result is that the decree the Circuit Court is reversed and the cause remanded with enter a decree directions to complainant the volun- respect only favor of tary payment on the rents and income tax.
real estate that which company, defendant holds trust, on the income the municipal owned bonds or so held' it. Justice Field. I also desire to place on record some my opinion important questions discussed direct and relation indirect tases the income proposed by tax law of 1894. v. FARMERS’ LOAN & TRUST CO. Opinion.
Mr. Justice . Field’s suits have been Several instituted in state and Federal both and in at law courts, to test the equity, of validity law, determination of provisions which will necessi- tate careful extended consideration. in,
The of taxation subject new which was government to be established created interest great convention which framed the Constitution, was the cause of much difference of its opinion members earnest among conten- , tion between the source of States. weakness great was its taxes of kind inability confederation levy for the of its *128 To raise revenue it support was government: to make obliged which were requisitions States, or at their respected Great embarrass- disregarded pleasure. ments followed the to obtain the neces- inability consequent funds to on One of the sary carry the’government. principal new to objects was obviate this proposed government defect of the confederacy by conferring authority upon new laid which taxes could be when- government by directly ever desired. Great difficulty accomplishing object was found to exist. The on the ocean States were bordering their duties unwilling give lay up right upon imports which were their chief The other source revenue.
on the other were to make hand, unwilling any agreement for the of taxes real and levying directly uppn personal prop- the smaller States would be overborne erty, fearing they burdens forced them the action by unequal by States. In this condition of embarrass- larger things great ment was felt It the members of the convention. was by feared at times that to form a new the effort government would fail. But was effected an by happily compromise that direct taxes should be laid agreement by Congress by them their the States apportioning according among repre- sentation. In of the States, return for this concession some other States waters consented on bordering navigable of duties, to the new the control relinquish government with commerce, and the excises, imposts, regulation the condition and excises should be that the duties, imposts, one that, the United States. So throughout uniform OCTOBER, TERM, 1894. .Opinion. Field’s Mr. Justice undue or like oppression, advantage any hand,-anything others would be over the prevented by one State appor- taxes the States the direct tionment of among according hand, on the other and, like their anything representation, of duties, levying imposts, hardship oppression avoided should would be provision they excises the United States. This uniform compromise throughout union and to the continued harmony essential State controlled in every States. being protected numbers of one or more other its taxation superior States. when divided the completed,
The Constitution accordingly, be levied under taxes which authority might were direct and those were into those which indirect. sense, in a be described Direct taxes, large general from the derived from real or as taxes immediately person, without recourse therefrom to other personal property, reimbursement. In a more restricted sense, sources they confined to on real have been taxes in- sometimes property, rents and income derived therefrom. Such taxes cluding to be direct however taxes taxes, are conceded on other prop- are to be erty designated, apportioned among to their the States of Union numbers. according respective of article I of the section Constitution second declares and direct taxes shall be thus representatives apportioned. *129 in had been a favorite doctrine and in the England colonies, of the before the that taxation and Constitution, adoption should The Constitution go together. representation pre- the several States scribes such apportionment among according to be determined numbers, to their by respective adding free number of those bound to ser- persons, including whole vice for a term of Indians not years, taxed, excluding three-fifths of all other persons. Some of this court have or thrown decisions doubts qualified “ the exact of the words direct Thus taxes.”
upon meaning in v. United U. it was held that a S. 586, Springer and income was an excise or upon profits, duty gains, tax within the direct the Constitution, .nota meaning.of POLLOCK v. FARMERS’ LOAN & TRUST CO. 589 Opinion.
Mr. Justice Field’s its was not therefore unconstitutional. And imposition Insurance Co. v. Soule, 433, Wall. it was held Pacific that an income tax or the amounts renewed duty upon insured, or continued insurance by amounts companies, upon gross received them and premiums assessments made upon them, and dividends and undistributed was not a sums, upon direct tax but excise. duty
In the discussions on direct taxes the Brit subject ish Parliament an income tax has been generally designated as a direct in that tax, from the decision of differing respect d this court in v. Unite But States. whether Springer the. latter can be as correct or it does not affect otherwise, accepted the tax real and its rents and income as a direct property tax. Such a tax is universal consent to be a recognized direct tax.
As stated, the rents income of real are included property in the of direct taxes the real designation part property. Such has been the law in and in centuries, this England from the country settlement and it early colonies; member of the at should, strange legal profession a doctrine which been thus ac day, question has always common-law It is so declared cepted by lawyers. approved treatises real authorities on property accepted real branches of estate been so an particular law, and has nounced in in the our own decisions courts courts English without in Washburn Real Thus, number. Property, is said a devise rents and or the land, -profits income of to a land devise of the land, itself, equivalent will be for life in fee, to the limitation expressed according 2, devise.” Vol. p. 695, § In Jarman on Vol. is laid down that Wills, 1, 740, page “ a devise the rents and income of land or of the profits the land itself both at it is passes ; rule, law and equity founded on feudal which the said, law, whole according beneficial in the land interest consisted in the take right rents and And since the act 1 Yict. c. such de profits. vise carries act it the fee but before that carried no simple; *130 more than an for inheritance were estate life unless words of TERM, 1894.
590 Opinion. Field’s Justice added.” Mr. Jarman cites numerous in authorities support his South v. 1 Alleine, statement. Salk. Doe d. 228; Goldin B. Lakeman, v. 2 & Ad. 1 30, 42; Johnson v. Ves. Arnold, v. Dixon, Ves. 171; Sen. Baines Sen. Mannox 42; v. R. 14 456 Blann v. ; L. 2 De M. & Greener, Bell, Eq. G., G. 6 B. West, v. C. 781; Plenty “ Littleton : If a man Coke seised of in says lands fee another his deed of those lands, granteth profit hold to him and his have and to and maketh heires, livery mam chartae, itselfe, secundum whole land doth passe; ” what is the land for. thereof ? Lib. 1, profits 1, cap. 1, 4b. p. § Tenterden, In v. Lakeman, Doe d. Goldin Lord Chief Bench, Justice of the Court to the same effect said King’s : “It an that a is established devise of the rents and profits rule a of the land.” And in Arnold, devise Johnson v. Lord Chancellor Hardwicke reiterated the doctrine that a “devise of the of lands is a devise of the lands themselves.” profits
The same rule is announced in this the Court of country; 259, of New York Ellis, Errors Paterson v. 11 Wend. “ that the devise of the interest or of the rents and holding a devise of the out itself, of which that inter profits thing est or those rents and and the profits may issue;” Supreme Massachusetts, Court of in Reed v. Reed, 372, 374, 9 Mass. “ that a devise income of lands is the same its effect a devise of the lands.” The same law view Anderson Greble, Ashmead 136, 138, expressed (Penn.) court, it to : I take King, president stating rule well-settled law, devise of the rent, profits, of land, income the land itself Similar passes.” adjudica tions almost One have might repeated indefinitely. of the courts examined for centu reports several English ries without dictum or even a finding single decision their conflict with them. And what answer do we judges to these receive ? Those them adjudications furnish rejecting no that the framers of the Constitution did not follow proof them, as the then did: body great people country An incident which occurred this court and room twenty *131 v. FAEMEES’ LOAN & TETJST CO. 591 Opinion.
Mr. Justice Field’s have a become To a may precedent. years ago, powerful a then made being on argument distinguished counsel, a of the exclaimed that there public judges was a question,-one answer his conclusive that that was position court was of a different Those who decline to opinion. recognize cited likewise consider that adjudications have they a conclusive answer them the fact that also are of I a different do not think so. The opinion. law expounded for set centuries cannot be aside or because disregarded some are now of a different from those judges opinion who, a followed init our century Constitution. ago, framing “ on the Hamilton, asks fact, : speaking subject, What, but “ without fiction, the beneficial use of property it?” And In adds: cases, indeed, income or many annuity 3 is the itself.” Hamilton’s Works, Putnam’s ed. property 34. It must conceded that whatever affects element that an article its of the law value, affects gives eye article itself.
In Brown v. 12 Wheat. it was held Maryland, 419, 444, a tax on an is the same occupation importer tax on his as such was invalid. It was con imports, tended that the State tax and that might occupations was court more, Chief Justice said, nothing Marshall It is to conceal from 444): ourselves, (p. impossibly the form this is without the substance. varying varying’ It is which is as if it were prohibition, treating general, confined to a mode of the forbidden particular doing thing. All must that a tax on sale of an article, perceive, imported a tax for article sale, itself.”
In Westonv. 2 Pet. it Charleston, 449, was held a tax stock issued was a upon loans United States the loans themselves and In invalid. Dobbins v. upon equally 16 Commissioners, 435, Pet. it was held that the an salary officer if taxed, United could not be States office was itself In v. 24 How. it 169, exempt. Almy California, was held that a on a bill of was the same' duty lading thing as a on the article In v. duty Cook transported. Pennsyl vania, 97 U. S. that a tax 566, was held amount upon TERM, 1894.
592
Opinion.
Mr. Justice Field’s
auctioneer
a tax
made
an
was
upon
sales
goods
v.
& Southern
Co.
In
Steamship
sold.
Philadelphia
goods
U. S.
Mobile,
But law is not invalid merely disregard rule of the direct tax levied. There is apportionment another and an to it. In objection taxing equally cogent incomes other than rents and of real estate disre- profits the rule of which is such cases gards uniformity prescribed the Constitution. The section first article by eighth declares that shall have Constitution collect duties, excises, to lay taxes, imposts, pay the debts and for the common defence and provide general welfare United but all ex- States; duties, imposts, cises shall throughout United States.” Excises uniform of tax are of duties laid species consisting generally upon or manufacture, sale, the' within commodities consumption or certain or often country, upon callings occupations, the form of exactions for licenses to them. taking The pursue taxes created the law under consideration as applied banks, insurance fire, whether of or savings life, companies,’ marine, to or other or to the conduct building associations, kind other and fall business, excise within taxes, so far as are laid requirement, they Congress, must be uniform the United States. throughout
The thus is the uniformity required uniformity throughout the United States of the and excise levied. That duty, impost, the tax levied cannot is, be one an sum article at one upon & FARMERS’ LOAX TRUST CO. Opinion. Field’s Justice a different sura the same article at another upon place received must be the same at all duty places place. the United States, throughout proportioned quantity or of the article the extent of the business done. disposed kind of wine instance, one. If, has a grain produce ,in laid certain to its New duty proportioned quantity York, it must have like to its duty proportioned quantity when at Charleston or San ifor a tax be Francisco, imported laid a certain kind of business to its extent proportioned at one it must be a like tax on the same kind of busi- place, ness to its extent at another In that proportioned place. sense the must be uniform the United States. duty throughout
It is contended that the Constitution government an its character. requires uniformity geographical That would if be satisfied the same were laid position duty in all the however variant be in different might .it of the same could State. But it not be sustained in places the latter case without which is an defeating .equality, essential element of the so far as the uniformity required, same is practicable.
In States v. 111, United 15 Wall. a tax Singer, in the nature of an distiller, imposed upon excise, whether in arose its different distil imposition upon lers of the tax and uniformity preserved, court wa^ *133 “ in : law our said The is not judgment con subject stitutional The tax the distiller objection. imposed upon is the the nature of an limitation excise, in. the of Of in taxes of this the power character imposition Congress ‘ is that shall be uniform the United States.’ throughout The tax here its that is, is uniform in it is operation; assessed all wherever equally uyoon spirits they are. of manufacturers law The 'does for not establish one rule one distiller and a different rule for another, but the same rule for all alike.”
In the Head 112 Cases, 594, U. S. 580, tax Money was the owners of steam vessels each imposed upon passenger landed at New York from' a and it was foreign port, objected that the tax was not levied rule of but by any uniformity, court, Miller, Justice : tax is uniform by replied when “The
vol. clvii —-38 TERM, Opinion.
Mr. Justice Field’s it with the same force in effect where operates every place of it is found. The tax in case, this far subject as which, can be called a an excise on is of tax, business duty from countries into ocean bringing foreign this, passengers is uniform and alike in navigation, operates precisely every where United States such can be port passengers that in landed.” In the decision in the Circuit case, Court, Fed. in Blatchford, Mr. 139, Justice addition to Rep.-135, “ not in out that the act was exercise of passed pointing of taxes,” power'of commerce, laying regulation used the “Aside from the tax this, : following language applies to all steam and sail vessels all uniformly coming ports all stheUnited from all with alien foreign ports,' passen- The tax tax on business, license the rule gers. being of observed tax extends all uniformity sufficiently persons if the class selected to all is, such by Congress; owners vessels. has the exclusive the class. selecting It has branch of commerce which con- regulated particular cerns the of alien and that shall bringing passengers,” taxes be levied such as shall be law. property prescribed by The of this was to object provision discrimina- prevent unjust tions. classified and taxed prevents property being different All classed, .as rules. kinds be must property taxed or be The must uniformly, entirely exempt. uniformity with coextensive to which the tax territory applies. Miller, Justice his lectures on the Constitution, 240, Y. said taxes levied pp. T891) (N. Congress: be uniform the must and it particular article; within uniform, constitutional meaning require- ment, if made to bear the it is same over all the percentage States.' That is United manifestly word, meaning used this clause. The framers of the Constitution could government, have meant reve- say its raising should not allowed to nues, discriminate between the articles tax.” In should discussing generally requirement found state constitutions, he said: ‘-‘The uniformity however, in the- of this difficulties construction way have, *134 obviated been of the word very largely meaning v. FARMERS’ LOAN & TRUST CO. 595 Opinion. Mr. Justice Field’s ‘ has been uniform,’ adopted, holding uniformity- articles must same class. That is, refer different at be taxed articles may amounts, the rate provided different on the same class with all everywhere, and at people, uniform all times.” One of the learned counsel when puts very he clearly says that the correct meaning provisions duties, requiring excises be “uniform imposts, the United throughout ” law that the is, States them should have an imposing equal uniform application the Union.” every part If there were doubt as to the intention of the States to make grant indirect taxes right impose subject to the condition that such taxes shall be in all uni- respects form and as said should impartial, doubt, counsel, resolved interest favor justice, taxpayer. from the aof create in-
Exemptions operation always Those must, bear an ad- equalities. end, exempted ditional burden or their more than share. A law con- pay can in no sense be termed taining arbitrary just exemptions In uniform. has no my judgment, Congress rightfully power, at the of a like expense others, property character, owning to sustain such as private trading corporations, building loan associations, and mutual fire, savings banks, life, marine, and accident insurance formed under the laws of companies, the various which advance no national purpose pub- lic interest exist for the of their solely pecuniary profit members.
"Where taxation, property exempt exemption, has been stated, must be some considera justly supported by tion that the and not interests will be advanced public, private, it. Private cannot be private corporations enterprises aided under the that it is the exercise of the discre pretence tion them. Loan Association v. legislature exempt 655; 20 Wall. Brown, v. 106 U. Topeka, S. 487 Parkersburg ; Trade, Barbour v. Louisville 82 Board Kentucky, 654, 655 ; Heirs, Dana, Lexington McQuillan's 513, 516, ; and 517 Sutton's Heirs Dana, 28, v. Louisville, in his 2d ed. Taxation, treatise Cooley, ( justly 215,) *135 TERM, 1894. Opinion. Justice Field’s difficult to conceive a ex- is justifiable that: It observes individuals or should select corpora- which single law emption them out of and, articles taking tions, property, or single make them subject which belong, they the class could make no favoritism favor. Such legislative capricious the semblance would lack legiti- pretence equality; mate tax legislation.” is consideratioii marked dis by law under
The income tax It discrimi whole law. affect which features criminating income of four thousand an receive who those nates between in vitiates, my It thus judg not. who do and those dollars the whole discrimination, legislation. ment, this arbitrary “ the Continentalist,) his (the in Hamilton one papers, says or .discre arbitrary everything of liberty reprobates genius a definite man, It in taxation. exacts every tionary his what know rule, property should proportion and general boast of in we whatever demands; liberty may the State assessments in while it cannot fact [arbitrary] exist theory, . The Works, 1885, ed. 270 legisla 1 Hamilton’s continue.” makes, is class When legislation. in the discrimination tion} in in the burdens a law or a is made imposes ever distinction birth, confers on citizens reason of their the benefits it any it is class wealth, or leads inevit or religion, legislation, and to abuses, unrest and dis general ably oppression It believed that the turbance hoped society. great civil the Constitution followed the late amendments to had rendered such for all future war legislation impossible act time. But legislation objectionable reappears is under consideration. the same essential character income statute of which taxed as that English at a Protestants certain a at double rate, Catholics, class, the rate of rate. Protestants, and another and Jews at separate Under wise and should constitutional citizen every legislation contribute his -however small sum, sup proportion, and it is kindness to no urge- port government, our If he contributes from that citizens obligation. escape have he will mite the smallest of his to that earnings purpose for the and more self-respect regard government greater & TRUST CO. FARMERS’ LOAN Opinion. Mr. Justice Field’s he is he is fact, though poor for himself feeling And it to be what- that, of his hoped government. pauper betide our and embarrassments woes may they ever people, manliness''and Those their never lose self-respect. qual- all will over reverses ultimately ities triumph preserved, of fortune. or in the nature of the asso-
There corporations nothing in their method of act, ciations present exempted which can be to be claimed business, public doing *136 nature. differ in no essential characteristic benevolent They from all or in their business other companies, corporations, business for the United States.” associations doing profit 349, Act of c. 15, 1894, August § them,
A few words as to some of the extent of their cap- to and made their ital business, taxations exceptions — income tax As to banks. Under law's 1st. mutual savings institutions were taxed. 1870, these specifically Under prior this class law, institutions of are the new certain exempt, in the do not shareholders profits, participate provided are interest and dividends depositors. only paid thus and'income limit is fixed to the exempted No property of the counsel or One $100,000,000. be $100,000 —it may from read to in this us during argument case engaged sent of the Currency, Comptroller report statement to 1894, 3, December President banks of mutual number savings exempted that the total effect the total number of stock banks was savings 378, and showed that did same character of business they for the took of mak- depositors money purpose it bear with same interest, way; ing profit upon taxed. the 646 are and the are He also showed yet exempt $1,748,000,000. that the were total banks deposits savings 2d. These com As to mutual insurance corporations.—: were income tax laws. do taxed under panies They previous business somewrhat from other they differently companies; in which the no conduct business has strictly private public interest, and to be been often held not benevolent or have OCTOBER, TERM, 1894. Opinion.
Mr. Justice Field’s for them under the sole condition exempting present The make loans to or divide their to be law is declared or or their members, depositors policy-holders. among profits for the benefit of carried on,'however, Every corporation or or stockholders, whether depositors, policy- members, its for the benefit of its shareholders, carried on If holders. if the ben- it is carried taxed; income is dollar of every who are but another its efit of depositors, policy-holders In the State it is shareholders, wholly exempted. class the income over the act New York exempts The lead- of these companies. of property $1,000,000,000 has insurance life company exceeding mutual property ing ex- the income of is wholly in value, $204,000,000 counsel is stated by exemption insertion empted.- other over $200,000 that institution have saved fully year similar associations, having property insurance companies other because such business, on the-same simply carrying their divide their among associations profits companies of their instead policy-holders. shareholders and loan associations. —The property 3d. As building extent from taxation to the is exempted of these'institutions or charitable no sense benevolent millions. They *137 conducted, the and are institutions, solely'for profit pecuniary exceed of Their assets stock their members. of capital Ohio, of the in One, national banks country. Dayton, and $10,000,000, $65,000,000 of has has a Pennsylvania capital in The submitted' these associations. census invested report their President, 1, shows May 1894, by to Congress $628,000,000. in the United States amounts to over property accumula- these institutions and their immense should "Why of Con- be out for the favor of property singled special tions be freed from their and and just, proportionate equal, gress names, different taxation when others under of share engaged law ? this are to taxation business, in similar by subjected associations, of the by amount to these The saving aggregate If $600,000 their over of exemption, reason year. law of of under exemptions
statement corporations of counsel taken from briefs carefully prepared Congress, v. FARMERS’ & LOAN TRUST CO. 599 Opinion. Justice Field’s will not inter- from Congress, satisfy parties reports act that the in this case almost question disregards, ested the rule of line and uniformity every provision, required “ neither will then Constitution, persuaded, though That should from the dead.” there one rose any question Take doubt on the my subject surpasses comprehension. any banks and of mutual stock banks. the case savings savings of character the same business, do the same way They it at of interest use the money loaning depositors, profit, of under the law before are them, us, 646 exempt yet income and are taxed taxation on their it. How of kind of these can tax on the income one banks be said of when the to be laid other upon any principle uniformity, I taxation, from all repeat, surpasses exempt my compre- hension.
But there are other considerations law against relate to the are decisive. They uniformity equally national and taxation, all State; required equality of taxation the United States the income of invalidity of the. and of States bonds securities municipal otheir taxation salaries of bodies; and the invalidity States courts. of the United judges counsel: There is no such As stated thing unlimited our national theory government taxation There are as he limitations,” Congress. justly “ of its out of the nature observes, essential arising powers all free there reservations individual governments; could not without which and which are exist, society rights, The of taxation is by every right respected government. Loan Association v. to these limitations.” Topeka, subject S. 20 Wall. U. Brown, Parkersburg inherent and fundamental nature and character of a tax is of a contribution to the support government, uniform levied equal apportionment principle other exaction does not taxed, the persons among come within definition of a tax. the legal *138 ' the forbids the This inherent limitation taxing power upon in their which are of taxes operation upon imposition unequal TERM, 1894 .OCTOBER Opinion. Mr. Justice Field’s and kinds strikes necessarily similar down the property, in the distinctions income law as arbitrary and passed gross have The as we law, seen, distinguishes by Congress. the by between corporations the taxation exempting property and taxation the tax on them from levying of some "the do not when corporations of others materially property in the character their business or one another differ from differ- government. Trifling required protection but not in their business, results, modes of are in their ences occasion of differ- and greatest possible made ground amount of taxes levied their income, show- ences them the action has power upon that legislative ing and sometimes fanciful. been merely arbitrary capricious in this which is another taken case There not position me of the advanced least to many upholders surprising if court declare and that that this shall that the is, law, from extended to taxation, the vari- exceptions exemptions and marine mentioned, life, insurance fire, ous corporations banks, mutual loan and to building, savings companies, violate the associations, requirement uniformity, can be the tax as such void, enforced, corporations therefore law will stand as had though and that exemptions This does not, never inserted. position been my judgment, solid foundation of law or rest The any principle. abroga- tion an unconstitutional or does repeal illegal provision force to give enactment or .create operate part of an enactment has not sanctioned pro- attrib- Seeming support mulgated. singular position decision of this uted to the court in Worthen, Huntington But the U. S. 97. examination will show that it case does not sanction to such a doctrine. There give slightest the constitution of Arkansas all had property provided be to its value, taxation should taxed subject according be manner should ascertained such assembly general the same and uniform direct, throughout making equal statute to was declared State, certain property public taxation, held which statute was subsequently exempt decided the unconsti- unconstitutional. court *139 & v. FARMERS’ LOAN TRUST CO. Opinion. Mr. Justice Field’s enactment, which was the from of the separable tutional part and the omitted remainder could remainder, enforced; which, sound, has that I never, am undoubtedly (cid:127)doctrine But that is been different from' of, entirely aware questioned. can taken, be taxed here exempted the things by position out their exemption. striking 1894 there shall be assessed, of says levied, law
The herein as otherwise two collected, “except provided,” per etc. If the amount, the are stricken out of exceptions (cid:127)centum to be assessed and collected Con- what there is nothing except ordered. otherwise less can affirmatively has Nothing gress court is of law. This to have the force impotent pass any It has no I law on the am power. unable, subject: legislative how we can, see an dr therefore, by declaring exemption effect to invalid, as thereby give provisions (cid:127)exception though never court the ex- were by exempted. declaring cannot conceivable invalid by any ingenuity give emptions clauses the force enacting exempting pro- operative is not within the of man. result visions. That power in its the invalid taxa- The law also provisions authorizing n and securities of the States and of their the tion of bonds that the It is cases before bodies. objected pending municipal to tax the bonds or threatened attempt us not do allege bodies the State, but only municipal securities kinds of bonds and securities, to both The law States. applies those of bodies, well municipal those States as nature', of public examining, being law we are of Congress, been before us brought community, having the whole affecting its we some provisions, as unconstitutional assailed to refer to other un- our I it is duty think are at liberty, notice in to our examining features constitutional brought of their objection may law, points particular though bonds securities counsel. These have mentioned by been of the duties of the are performance as important United States and securities State as like bonds and are as of their ex- duties, performance important as the former are States of the United the taxation empt As stated the States. Judge from the taxation exempt TERM, Opinion. Mr. Justice Field’s in his work Cooley of constitutional principles law: tax, “The whether the United States.or is to be construed in the of, and limited light by, the States and fact, the Union are and that inseparable, . Constitution contemplates maintenance of perpetual each with all its constitutional powers, unembarrassed and un- action the other. The impaired by any taxing power Federal doés not therefore extend government to the means or *140 the of which agencies by the States through employment their functions, essential if these within perform since, were its be and reach, they embarrassed, might perhaps wholly para- ‘ the burdens it should That by to lyzed, impose. power tax involves the to that ; power destroy destroy power defeat and render useless the may create; there power- is a plain one a repugnance power conferring government to control the constitutional of measures which another, other, measures, those very is declared to be respect supreme — over that which the control, exerts are not to- propositions It true be is not .taxation does and necessarily denied.’ ¿xcess and of unavoidably destroy, carry de- would anbe not to struction abuse be but the anticipated; very would from take of their States a intended power portion of action within the of their liberty independent pow- sphere would and constitute to the ers, danger perpetual, State embarrassment The annihilation. Constitution possible no such shackles state contemplates powers, by forbids them.” implication Internal Kevenue
The Act of 122,. June section 30, 1864, that railroad and certain other provided companies specified, for indebted which money issued, bonds had been interest was which to be stipulated should be to- paid, subject a tax five cent on the all amount of such per interest, pay to be them from .paid by deducted corporations by the interest to the holders of such and the payable bond's; arose in United States v. Railroad Co., 322, question 17 Wall. whether the tax could be thus collected from imposed the: of a revenues such bonds. This court answered city owning .“ follows: There is- no about dispute gen- v. FARMERS’ LOAN & TRUST CO. Opinion.’
Mr. Justice Field’s rules law to this The eral applicable subject. Federal government upon
taxation by subjects manner the act we are is prescribed considering, are, however, undoubted. certain departments There of the. general power. excepted right their own to administer affairs their States through legisla- executive, their own man- tive, judicial departments, their own is conceded the uniform ner through agencies, court, the Federal decisions practice This it an from its carries with organization. government tax- of those and instruments from the exemption agencies If be taxed the Federal they may government. ing power if be taxed heavily; justly, oppressively. may lightly, if Their destroyed, operation may impeded taxa- of such interference Hence, permitted. beginning on the other.” is not claimed tion is not allowed on the one side, like of Bal- And A city again: municipal corporation -the but it State, timore is a por- representative creatures, is one of its its tion of governmental power. a limited within made for exercise sphere specific purpose, these withdraw the State. The State may powers *141 local at may, through pleasure, powers government the local channels, its or other govern appointed legislature as it the at State large. may enlarge territory governs a its existence. As or contract or its portion destroy powers of a limited State the exercise powers portion of the are not sub- State, of the like those revenues, State, its to taxation.” ject 113, 124, the In 11 Wall. court, Collectorv. speaking Day, Nelson, said: .Mr. Justice government, general territorial within same both exist States, although are and distinct
"limits, sovereignties, acting sepa- separate within their of each other, respective rately independently is its The’former sphere supreme; appropriate spheres. limits of their not the States within powers granted, but. ‘ amendment, reserved,’ the tenth or, language .as government government independent general within its of the States.” sphere independent TERM, Opinion.
Mr. Justice Field’s to the' census tbe bonds and securities of According reports amount to the States sum of on which the $1,243,268,000, income or interest exceeds the sum of $65,000,000 annum, per and the annual tax of two cent this income or per upon interest would be $1,300,000.
The law of is also invalid in that it authorizes a the salaries of the of the courts the United upon judges States, declaration of the Constitution that their against shall not be diminished their continuance compensation during in office. The law declares that a tax of two cent shall per assessed, levied, collected and annually paid upon and income received in the calendar profits, gains, preceding citizen of the United whether said States, year, by every gains, or income be derived from kind of rents, profits, any property, or dividends, or from interest, salaries, trade, any profession, vocation, carried within the United States employment, or from source whatever. The annual elsewhere, sal- of a Court of the United States is ary justice Supreme ten thousand dollars, this act levies tax of two cent per on six thousand dollars of amount, imposes penalty those who do not make the or return the payment, amount for taxation.
The same to a objection, consideration of presented to the taxation of the bonds and securities of the objection as not taken in the cases us, before being specially here to a consideration of the to the taxation urged objection the law of the salaries of the courts of the judges United States. The answer to that given objection may also one. The law of given present Congress being nature, the interests of the whole public affecting community, and attacked for its in certain unconstitutionality particulars, be considered with reference to other unconstitutional called to our attention provisions law, examining noticed in the taken though specifically objections *142 records or briefs of counsel, the Constitution not be may n violatedfrom the carelessness counsel oversight any See O'Neil v. Vermont, U. S. particular. there
Besides, is a which owes to this court the one duty & LOAN v. FARMERS’ TRUST CO. Opinion. Field’s
Mr. Justice salaries, who have small other States hundred United. judges their reduced the tax and who compensation having may the law. . affected be seriously United States of the in the first
The Constitution provides III that: “The of the United of article judicial power section and in in- be one such Court, shall vested Supreme from time time ordain ferior may courts Congress both and inferior and The judges, Supreme establish. hold their offices and behavior, shall, shall courts, good during times, for their at stated receive services, compensation, i/n, their which shall not he diminished continua/nce during under The discussion act imposes, said, Congress office.'’’’ dollars of this a tax on six thousand there- compensation, each diminishes, fore provided year, compensation law of a similar How every Congress regarded justice. incident in shown by following thirty years ago were at of this court assessed three which the justices per- this Chief Justice salaries. cent their Against Taney then of the Chase, Treas- Secretary a letter to protested in the article Constitution, to the above' ury, appealing can-'be diminished that extent “If it salary] adding: [his same reduced from may, way, the means of tax, He time to at the time, legislature.” explained pleasure — the constitutional inhibition thus: in his letter the object “ three of the departments one great judiciary . Constitution. Its and established by created government of a set are char- forth, duties and powers specifically of the other independent acter that it to be perfectly require the reach, order beyond And in place departments. such influence, above suspicion, even withheld from is expressly to reduce their compensation their legislation. powers and excepted than- used in the be more could not plain Language its most' one of moreover, important Constitution. It is, limit the the articles powers For essential provisions. branches (cid:127)of and executive government, the legislative for the protection those which safeguards provide of little would be value- citizen his property, person *143 TERM, 1894. Opinion. Mr. Justice Field’s without a and maintain them which was judiciary uphold direct or influence, free that every indirect, might by in times of their excitement, possibility, political warp judg- ment. these I an act of grounds Upon regard Congress retaining of the of the Treasury portion compensation judges as unconstitutional and void.”
This letter of Chief Justice was addressed to Mr. Taney then Chase, the Secretary afterwards the suc- Treasury cessor Mr. as Chief Justice. It was Taney dated February but as no 16, 1863, notice was it, taken of on the 10th of March at the of the the Justice, Chief Court following, request ordered that his letter to the of the be en- Secretary Treasury court, tered the records of the and it was so entered. See 701. And in the Memoir of the Chief Appendix, post, Jus- tice is stated that the letter was, order, preserved “to to future in war, than in testify ages peace, no.less Chief Justice strove to the Constitution from Taney protect violation.” in 1869, and the administration of
Subsequently, during Grant, President when Mr. Boutwell was of the Secretary and Mr. Hoar, Treasury Massachusetts, Attorney there General, were several of the of the statutes United for the States, assessment and collection of internal revenue, the salaries of all civil provisions officers of taxing United their literal included, application, salaries of the President and of the United judges States. The arose whether the law which question imposed such a tax them was constitutional. The of the opinion General thereon was Attorney requested by Secretary Treasury. General, an Attorney elab- reply, gave orate opinion advising no Secretary Treasury income tax could be assessed ánd collected lawfully salaries of those officers who were office at the time the statute the tax was imposing on this passed, subject holding the views Chief Justice expressed by His Taney. opinion in volume XIII of published of Opinions Attorneys at .General, I am informed that page it has been fol- & FARMERS’ LOAN TRUST CO. Opinion.' Field’s Justice without ever since department super- lowed collection of the revenue. public directing vising I could less view of close say Here I my opinion. in. down to the foundation of such go gravity very questions If Constitution can. government. provisions an act of where is the course of aside be set Congress, *144 The assault is but to end ? upon capital present usurpation will to others, the the stepping-stone beginning. will be- more till our contests political sweeping, larger a; the rich war a war of the constantly come poor against and bitterness. intensity growing tax- sanctions the
“If the court power.of discriminating of mandate the Constitu- the ation, nullifies uniformity life a our has been all his student of as one who tion,” said by “ the sure it will mark the decadence institutions, hour when If the our will commence.” of purely present government can of law be sus- limitation present $4000 arbitrary of income than that amount none less tained, being having limi- or taxed for of assessed government, support at a much be fixed of future tation Congresses larger may dollars, at or ten or thousand parties possess- five sum, twenty bound to bear the an of that amount alone income being ing the limitation may designated burdens of government; ” “ as an amount a 'board of walking delegates may at such no limita- There is safety allowing deem necessary. with the man- tion to be in strict compliance adjusted except if taxation, its dates of the Constitution which imposed require the States taxes, direct to be among according apportioned taxes, indirect to be their and if representation, imposed uniform in so far as proportion and, practicable, operation the rule of their citizens. Unless all property, equal- upon fix the limitation at Constitution majority governs, their own number. will not such rate as include any law 1894 should be de- I am whole opinion — which force void and without part clared binding or income real relates the tax on the rents, profits estate, of the direct is, tax, so much constitutes as part the rule because, according- apportionment imposed TERM, OCTOBER. White, Opinion: Harlan, Dissenting JJ. States, the Con- prescribed by representation — stitution and that which a tax imposes bonds. part upon the several securities of bonds and bodies, and
securities of their the salaries of municipal the United States, of the courts of judges being beyond and that duties, part lays Congress; imposts, in not for the as void re- excises, providing uniformity in such cases. quired by Constitution with whom concurred Mr. Justice White, Justice dissenting. Harlan, me that the brief has convinced cus- My experience judicial
tom of is one more honored filing long dissenting opinions the breach than in the observance.” only purpose if which an elaborate dissent can is to any, accomplish, weaken the effect and thus opinion majority, want confidence in the conclusions of courts of engender last This consideration would me to content impel resort. with dissent in the my case, myself simply recording present were not for the fact that 1 consider that the result of the *145 of announced the.court is to overthrow a opinion just long and line of decisions, consistent and to deny legislative of the the of a con- department government possession ceded to it for universal consensus hundred and years, one which been has of this recognized by repeated adjudications court. The issues are as follows: presented as a stockholder in a avers that
Complainant, corporation, the latter will tax, the income levied under voluntarily pay recent act of ; that tax is unconstitutional; such- Congress and that its will affect his inter- voluntary payment seriously est his of the exaction, test defeating right validity a also lead to suits corporation. multiplicity against bill That follows: First. The-prayer may is. decreed that “The Income Tax known as provisions Law,” the act of incorporated August Congress, passed 15, 1894, That the null, and void. Second. unconstitutional, be restrained with the from voluntarily complying defendant of that act provisions statements, its returns by making v. FARMERS’ LOAN & TRUST CO. .609 Opinion: White, Harlan,
Dissenting JJ. therefore, The bill, the tax. two substan- presents paying : decision the for relief right tial plaintiff questions claims it; he his form relief on right the merits. of this court hold that the
The decisions
collection
a tax.
States,
United
will not be
levied by;
government
courts. Cheatham v. United
92
States,
its
U. S.
restrained by
109
S.
also
Marks,
v.
U.
189. See
v.
Elliott
85; Snyder
The
Swartwout,
137;
Pet.
v.
Col
City
Philadelphia
Collector,
v.
720;
5 Wall.
Hornthall
The
quently S. 450. Oakland, v. U. Neither Hawes 18 How. In authorities, submit, I in point. Dodge of these of a at issue was validity main Woolsey, involve the act did not that case tax, state *146 was a v. Oakland contro Hawes referred. which I have to no and a had corporation, a stockholder between versy taxation. whatever reference to relief to establish right attempt complainant’s the not a suit to enjoin tax, this is the ground
VOL. CLVTI—39 TERM, 1894. White,
Dissenting Opinion: Harlan, JJ. n oneto the enjoin corporation it, involves the paying — is, out fallacy already that a pointed can exercise party — which he cannot right indirectly assert that he directly can his of this compel agent, through court, to process violate an act of Congress.
The rule which the forbids of an granting injunction restrain the collection of a tax is founded on broad reasons of and should not be public policy In Cheatham ignored. v. States, 85, United 92 U. S. 89, involved the validity an income levied under an act- Congress prior issue, one here this court, Mr. Justice said : through Miller, “If there existed the state or courts, National, any or the general power collection of impeding controlling the taxes, incident to relieving hardship taxation, the very the existence of government might placed n ofa hostile Dows The judiciary. 11 Wall. City Chicago, 108. While a free course of remonstrance and appeal allowed within the before the departments money finally exacted, has made general government wisely pay- ment of the tax claimed, whether of customs or of internal a condition to a revenue, resort to courts precedent whom the tax is assessed. In the internal party against it revenue branch has further that no such suit prescribed until shall has been brought tried; remedy appeal if after it this, must be within and, six months after brought decision on We this as a condition on appeal. regard which alone consents the lawful- government litigate tax. It is not a ness hard condition. New original have conceded such condition. any governments right with this condition compliance requires party If. he must do U. 85, it.” 92 S. pay money, aggrieved 575, Tax 92 U. Cases, 613, Railroad S. the court Again, there That be no uni said: might misunderstanding in versality enacted, principle, expressly ‘ that no suit the assessment restraining purpose n collection tax shall be maintained in court.’ Rev. any- 3224. And sect. this was intended to Stat. though apply n alone taxes levied the United shows the sense *147 & v. FARMERS’ LOAN TRUST CO. 611 Harlan, Opinion: White,
Dissenting JJ. of the evils to be feared if courts of of justice could, with the interfere case, process the taxes collecting which the for its continued government depends existence. It is founded in It is a wise policy. simple philosophy from derived experience ages, payment has to be enforced taxes by summary means stringent a and often adverse reluctant sentiment; to do against this other instrumentalities and other successfully, modes than those which necessary, to- procedure courts belong v. vell, See Nor Cheatham decided at justice. term; this Wall. Nicoll v. States, 122; United 7 Dows v. 11 Chicago, Wall. 108.”
The contention that a
relief arises
right
equitable
from
fact that the
is without
unless
corporator
such
remedy
relief be
him I
is,
think, without
granted
foundation. This
court has
said that the
of a tax
repeatedly
illegality
for the issuance of an
ground
its
injunction against
collection
if there be an
at law
adequate remedy
open
payer.
Dows v.
108;
Wall.
City
Chicago,
Hannewinkle v.
Will it that, be said a stockholder cannot have although state corporation where the state enjoined paying statute him the to sue for its gives when right recovery, yet the United States not him such only but, gives right, forbids the addition, issue of an injunction prevent of Federal the court will taxes, allow to the payment stock-. TERM, 1894. «12 Harlan, White, Dissenting Opinion: JJ. States tax which the United a remedy against
holder the state tax ? refuses against a suit to the volun- assertion prevent’ of the tax that the court an may, by suggests
tary payment the defendant ac- order directly upon corporation, operating intended should which the statute a result manifestly complish *148 A suit in court. final any not be judgment accomplished the tax will from have the corporation paying forbidding for it could not be that collection, effect to its prevent a tax to be from court would collected a permit corporation it had I take it which to be enjoined paying. beyond collection the tax in cannot be question dispute restrained its whatever by any suit, form, proceeding the officer with the directly against duty charged collecting tax. Can such the’statute'be a suit between evaded, a stockholder, by corporation judgment forbidding tax, former from the collection which cannot paying of. suit in
be restrained court ? notwithstand- any Suppose, the final the collector just rendered, to ing judgment proceeds collect from defendant the taxes which the corporation court declares, cannot suit, be assessed it. legally If that final sufficient law judgment resistance justify such then collection, we have a case in which against a suit has been maintained to restrain the collection of taxes. If such does not conclude the judgment who collector, was not to the suit in which it was party then it rendered, is of no value to the In other plaintiff. words, no form of expression can conceal the fact that the real of this suit is to object the collection of prevent taxes notwith- imposed by Congress, “ the express standing statutory that no requirement suit for purpose, the assessment restraining or collection of any tax shall be maintained in court.” Either the decision constitutional or it is If not. necessary, it is then the necessary, court, by way ’granting equitable does relief, the yery which the act of 'thing forbids. Congress If it is then unnecessary, the court decides the act of Congress here asserted unconstitutional, without to do so being obliged case before it: requirements -y. & FARMERS’ TRUST LpAN CO. 613 White, Opinion: Harlan,
Dissenting JJ. me the consideration This merits of the brings cause. constitutional
The Federal taxation provisions respecting and are as follows: number, are four “1. taxes be shall Representatives apportioned direct the several included within this among to their Union, which shall be according numbers, respective the whole number determined of free in- by adding persons, bound term of those to service for a exclud- years cluding all taxed, Indians not three-fifths of other Art. ing persons.” I, clause 3. Amendment modified this 2, (The sec. Fourteenth so that the number of each State whole persons provision, ” not taxed counted, Indians excluded.) should.be “ and collect shall have lay taxes, duties, debts excises, imposts, pay for the defence welfare common provide general but all excises shall States; duties, United imposts, States.” Art. sec. I, uniform the United throughout *149 clause 1. un- be laid,
3 or other direct shall “No capitation enumeration hereinbefore to census or less proportion 4. 9, be taken.” Art. sec. clause I, directed to belaid, on articles from 4. “No tax shall exported duty I, 9, Art. sec. clause State.” the above ordain as that, It been provisions has suggested and authorize taxes, of direct the apportionment “ there- and excises,” duties, and collect taxes, imposts, lay and which are neither direct, a class of taxes there is fore, are éxcises, exempt duties, imposts, of uniform- one hand or on the the rule of apportionment need not this soundness suggestion the other. The on ity excises,” “duties, imposts,'and as discussed, words, be direct taxes, adequately with reference injunction Federal government. all of taxation convey power ,of the branch argument, It is not necessary pursue the Constitution it since provisions unquestioned taxation, is, in the States powers vest United plenary as such, except ato government all the belong powers TERM, 1894. White, Opinion: Harlan, Dissenting JJ. The court this case so
that of says, taxing exports. of this court, the language approvingly quotes speaking Chase, License Tax Mr. Chief Justice Cases, through 462, follows : Wall. as “ true that the to tax is a ex- power Congress very with It is Constitution tensive one given only power. two cannot tax qualifications. Congress exception only it and must direct taxes the rule of impose exports, appor-' tionment, and indirect taxes rule Thus uniformity. limited and thus reaches every subject only, at discretion.” exercised then,
In of whether the income tax deciding, violates to determine not Constitution, we have the ex- an sitence of whether admit- power Congress, unlimited to tax income tax not a tax tedly (the being on has been used to the restrictions as to exports) according exercise, methods its found in the Constitution. Not it must be borne in but the manner of mind, its use power, is the issue in this case. limitations in presented to the mode of direct taxation regard imposed by Consti- tution are that and other direct taxes shall be capitation to their States apportioned among according respective while numbers, be uniform duties, excises must imposts, the United States. The of the word throughout meaning ” “uniform in the Constitution need not be examined, court is divided no subject, expression opin- ion thereon is or intended to in this conveyed conveyed dissent. In whether we are to an income tax considering regard
“ ” direct otherwise, inwill, serve no useful my opinion, at this late purpose, our seek to period political history, ” ascertain the of the word direct in the Constitution meaning theoretical resorting taxation found in opinions *150 of some writings economists of prior adoption Constitution or since. These economists teach that ques- tion of whether a tax is direct or indirect, upon depends whether it is levied directly upon whether, person when so levied, it shifted from maj* ultimately person & v. FARMERS’ LOAN TRUST CO. White, Harlan, Opinion:
Dissenting JJ. thus consumer, to the while direct becoming, in question indirect final its its of be- results, the method application, who really pays it reaches person cause indirectly. useful examine serve no these it will purpose writers, I say been the value have of their whatever may because opinions “word direct,” of the sense cannot now economic its for criterion the Con- determining afford meaning an authoritative and inasmuch as conclusive con- stitution, been to that as there used term, has an struction by given after the formation of the adopted shortly interpretation department Constitution by legislative govern- Executive; ment, adoption approved time to without present interpretation its and enforcement exemplification many question, and its the authorita- enactments, acceptance by legislative ; on the Constitution the sanction tive text-writers of that in a of this court decision rendered interpretation, shortly ; the re- after the Constitution adopted finally by affirmance of that reiteration and so peated interpretation, in our that it has become imbedded and there- jurisprudence, almost fore be considered the written Constitu- part tion itself. counsel in their
Instead, therefore, references following and their discussion to economic writers motives not have or been may may thoughts present framers of the minds of some the- if the Constitution, as one,of before us first I shall confine were impression, to a the truth demonstration of myself propositions just laid down. 1794, the act of c. 45, 373, June Stat.
By levied, without reference to a tax on apportionment, carriages “ “ for the The act conveyance persons.” provided shall all collected, be levied, paid there carriages for which shall conveyance kept by, persons use, hire, for his own or to be let out to any person or her for the and rates several duties conveying passengers, ” came tax on coach, then following; yearly every chariot, four-wheeled and coachee, every phaeton, every *151 TERM, 1894. White, Harlan, Opinion:
Dissenting JJ. other two-wheeled two-wheeled upon every carriage, top to the vehicle. in amount according varying carriage,” that at the act The which took debates passage place from be inferred however, may, meagrely preserved. a tax was “direct” whether that, them that some considered whether the Constitution, or not in the sense of depended its The tax or on use. it was levied on carriage object that it was a tax on a defended few on was by ground it as unconstitutional, Mr. Madison opposed consumption. “direct” in word the' that the the conception evidently upon mean- the same to be considered as having Constitution economic to it some had been attached by as that which ing and the act sustained, passed by writers. view was not His It received the to twenty-two. forty-nine large majority— this The passed Washington. approval in its members who sat the con- law numbered many among which framed the It is moreover safe vention Constitution. each member of that even he Congress, although say had, in either had not been some convention, way, been an influential actor the events indirectly, directly to the birth of that instrument.. It is which led impossible up will an of this act which not show its to make analysis constitute economic construction rejection provisions direct,” follows, of the word this result whether equally laid on the itself or on use the tax be treated as its carriage then owner. If viewed one light, imposition by the owner of the because of owner- the tax on his carriage, constituted a direct tax under the rule as necessarily ship, economists. So, also, laid down of a bur- by imposition on the for den of taxation owner him of use his own the tax made direct to the same rule. The carriage according been without it follows having imposed apportionment, who that those voted for its enactment must have given direct, Constitution, word different significance that which is affixed to referred economists to. of this tax was validity considered carriage
court in
v. The
Hylton
United
the decision. his in favor of Court of expressed opinion Circuit Virginia, Chase, Mr. Justice Mr. tax. the constitutionality Iredell each Justice Paterson, expressed Justice I The tax have laid, conclusions. reasons- his though *152 held not to direct under the was be a tax on said, carriage, in the of who sat that case the Two Constitution. judges had Wilson) been dis- Paterson and Justice Justice (Mr. the convention. Ex- members of constitutional tinguished of are in observations the the from the justices given cerpts in addition to the Paterson, of the court. Mr. Justice opinion italics follows, there 177 (the p. quoted, language spoke being mine): the will never a doubt that 1 not
“7 entertained principal, the the Constitution con- the that say only, objects framers of the rule were within a apportionment templated falling of a Local considerations, tax and tux land. capitation of the circumstances and relative situation the particular the lead this view of States, subject. provis- naturally States. the Southern ion was made favor of They pos- number had sessed of slaves extensive tracts ; they of large and not A settled, territory, thinly very productive. majority of had but few and several them a slaves, of States lim- well and in a settled, ited state territory, high cultivation. if no had been introduced The Southern provision at the have been wholly would Constitution, mercy tax at case, in such slaves dis- other States. might Congress, land in Union cretion or after every part arbitrarily, a head first m'uch instance same rate or measure —so To them and so much an acre in the second. guard against the reason was these introducing imposition particulars that directs representa- Constitution, clause the States among be and direct taxes shall apportioned tives numbers.” their according respective with these coincided is evident that Mr. Justice Chase he not Paterson,
views Mr. Justice though perhaps convictions, said, : for he so in his settled p. quite firmly I think, I am but of this do inclined give' judicial TERM, Harlan, Opinion: White, Dissenting JJ. direct taxes Constitu-
opinion, contemplated tion a wit, or tax two, poll with- capitation simply, out other regard profession, property, circumstances, I the tax doubt a tax on land. whether aby general assessment of within the United property States is personal ” ‘ included within the term direct tax.’
Mr. Justice Iredell entertained similar certainly views, since he said, p. 183 : “ Some difficulties occur which we do not at may pres- ent foresee. direct tax sense of Perhaps Consti- tution can mean but a tax on nothing something inseparably soil; annexed to the something capable apportionment under all such circumstances. A land poll considered ... In to other description regard ar- there doubt.” ticles considerable may possibly These indicate real strongly convictions opinions were taxes and taxes on justices only capitation land were direct within Constitution, but meaning the. *153 some of a doubted whether other kindred nature objects in not that word. Mr. Justice Paterson might embraced had no doubt whatever of and Justice limitation, Iredell’s the doubt seems to to refer which were only things inseparably connected with soil, the and which therefore be consid- might ered, in a sense, certain as real estate.
That case, however, established that a tax levied without on an was not apportionment “ object personal property ” direct tax within the of the Constitution. There meaning can be no doubt that the enactment of this tax its inter- the as in court, well as the the pretation by opin- suggestion ions that within delivered, was a direct nothing of the Constitution tax and a tax on but a meaning capitation in was all land, conflict views of those who directly with the claimed at the time that in the “direct” Consti- word tution was to be the views of econo- interpreted according mists. This is Madison’s shown Mr. conclusively language. He that the act asserts had been contrary passed but that c'ourt was like- Constitution, the decision of the in that wise violation of announce- since the Ever instrument. & FARMERS’ LOAN TRUST GO. White, Harlan, Opinion:
Dissenting JJ. in that case the the decision ment of legislative department has as accepted opinions justices government as in itself conclusive the mean- well as the decision regard acted has “direct,” of the word ing assump- with in instances and Executive tion endorse- always many direct acts taxes ment. All confined' passed levying on land. True in direct them some levy practically included, tax on was this of these acts a slaves inclusion, based court, as has this was been said probably that these some with were taxable respects theory along indicated no their inclusion and,, therefore, the land, departure of the word direct,” from the necessa- by Congress meaning ease, in the from the decision Hylton which, rily resulting been elucidated had as moreover, suggested expressly limited to taxes taxes real being practically capitation in that who case. estate opinions expressed justices These direct taxes been acts confined having imposing slaves, their to real estate sub- exclusively operation of direct as the taxation indicated ject-matters proper object evidence are the case, Hylton possible strongest conclusive had as become accepted suggestion a settled rule of these acts were of law. Some at passed times of when revenue was great public necessity urgently The fact were selected for that no other required. subjects of direct those taxation, purposes except judges case had as therefor, Hylton appropriate suggested seems to me to lead to a conclusion which absolutely — irresistible thus affixed the word meaning “direct” at the was con- formation very government sidered if it been as had determined, having irrevocably been written terms. As I have the Constitution express writer who has authoritative dis- observed, *154 already every cussed has the Constitution from that date down this treated this ascertainment judicial legislative in the the word “direct” Constitution meaning giving it a constitutional to the theo- without reference significance made retical between “direct” and “indirect,” distinction Constitution, some or since. doc- economists to the This prior TEEM, OCTOBEE White, Opinion: Harlan, Dissenting JJ. has
trine become a the horn-book of American part constitu- has been tional in all interpretation, taught elementary never law has since then been schools, author- anywhere Of course, text-books conflict itatively questioned. in some con- particulars, indulge reasoning always effect but as to the of the decision sistent, the Hylton case, and the of the word in the direct,” result- meaning Constitution, therefrom, are a unit. I from them. ing quote briefly Chancellor his Commentaries thus Kent, states the prin- : ciple “ The construction of the relative to tax- powers Congress ation was before the Court, 1796, brought Supreme case of v. The States. Hylton United act of 5th By June, laid a for the Congress duty upon carriages conveyance and the was whether was a persons, question direct within the tax, the Constitution. If it was not a meaning direct tax, it was admitted to be under that laid, rightly part of the Constitution which declares that duties, all imposts, excises shall be uniform the United but if States; throughout it was a direct tax it was not for it laid, must constitutionally then be laid to the census, under that according part Constitution which declares that direct taxes shall be appor- tioned the several among States according numbers.
Circuit Court was divided in on the Yirginia opinion ques- but on tion, Court it was decided appeal, Supreme the tax on was not a direct- within carriages tax, the letter or meaning Constitution, was therefore constitution- laid. ally “ The was deemed of very great importance, was elaborately was held argued. general power and collect kind given taxes of lay every or nature, without restraint. had any They plenary over of taxable every species But property, except exports. there were two rules for their prescribed government: rule of and the rule of uniformity, Three kinds apportionment. of taxes, viz., duties, were to be laid imposts, excises, rule; first and other direct taxes, by capitation, second rule. If there were as the taxes, other species *155 LOAN & v. FARMERS’ TRUST CO. 621.
Dissenting Opinion : n White, Harlan, JJ. there that were not be, direct, court' seemed suppose might within the words duties, not included or excises, impost^ laid the rule or were to be as npt, Con- by uniformity think and reasonable. should proper gress no The Constitution taxes ás direct taxes, contemplated could census; as in to the but such lay proportion the rule of could not apply apportionment reasonably nor could the tax on be laid a tax on carriages, carriages rule without very great injustice. inequality by in census, were each to 8000 dollars If two states, equal pay a on and in tax one state there were 100 car carriages, 1000, another the tax on each would be riages carriage much in ten as one state times the other. While inA, would the one for state, his .dollars, pay carriage B, eight other would state, his pay dollars. carriage eighty In this it was shown the court that the notion way a tax on awas direct tax within the carriages purview and to Constitution, apportioned census, according would lead to abuse This grossest oppression. argu tfre ment was conclusive the construction set and the against up, on tax was considered as included within the carriages and the duties; better seemed to that the lay direct opinion taxes the Constitution were two, a contemplated by only viz., or tax on and tax land.” 1 Kent Com. poll 254, capitation on the same 1 Story, speaking subject, 955, Const. Story § on lands, houses, “Taxes and other says: real permanent or on or estate, have thereof, been parts appurtenances always is, deemed of the same character, direct taxes. It has if, been doubted sense seriously Constitution, are direct taxes taxes, those or on lands. except polls Mr. Justice Chase, United Hylton Dall. said: ‘I am inclined to think that the direct taxes contemplated the Constitution two, viz: a tax capitation poll without simply, other cir regard propertjq profession, cumstances, and a tax on land. I doubt whether a aby assessment of within general the United personal property States is included within the term “direct tax.”’ Mr. Justice (cid:127) Paterson the same case is not said: to deter- necessary TEEM, 1894. OCTOBEB Harlan, White, Opinion:
Dissenting JJ. direct or an be a of land on the a tax mine whether produce in its land, the immediate tax. product indirect Perhaps considered, state, to be part and crude ought original into manu- converted When *156 land itself. produce “ direct taxes,” etc. Whether new a facture, assumes shape, tax other Constitution, any in of the comprehend the sense land, is point, or a tax tax, questionable than a capitation I will a doubt entertained principal, etc. I never the Constitution the framers of objects say only, rule of within apportionment, falling contemplated, And he land.’ tax and a tax on proceeded were a capitation both as repre- regards to state that the rule apportionment, direct taxes, guard and as adopted sentatives regards undue oppressions the Southern States impositions against case in the same Iredell of slaves. Justice taxing ‘ Constitution, the sense tax, a direct said: Perhaps an- but a tax on inseparably can mean something nothing under soil; nexed to the apportionment something capable considered A land or all such circumstances. poll may so, to be considered The latter is partic- of this-description. of the slaves on account Constitution, under the ularly present a ratio in the who representation the Southern give Either of these of three to five. capable in the proportion there articles, to other In an regard apportionment. the Fed- doubt.’ The be considerable reasoning possibly to the same result.” eralist seems lead 5th Limitations, 595, in Iris work on Constitutional Cooléy, “ Direct the rule: thus states *480, ed., tersely marginal paging must be among when laid taxes, apportioned Congress, The States several representative population. according ’ £ has a tech taxes the Constitution term direct as.employed and land taxes only.” nical embraces meaning, capitation it: “Under on the thus Constitution, 237, Miller puts what is as to came up already quoted question provisions £ levied, to be it is tax,’ direct and also what property to this-it tax. In other as distinguished regard than a capi that it is that no other sufficient believed say direct tax tax is a tax of so much head and a land tation per v. FARMERS’ & LOAN TRUST CO. 623 Opinion: White, Dissenting Harlan, JJ.
within the of the Constitution of the United meaning States-. taxes, All are other called excise except imposts, taxes. properly within the Direct taxes, Constitution, meaning taxes, expressed instrument, taxes on capitation real estate.”
In Constitutional Law we read Pomeroy’s as follows (§ : 281) “It becomes therefore, a little necessary, more inquire : What are direct what and. indirect taxes ? New particularly cases on of taxation general have arisen and been decided Court reason Supreme simple until the few the United that, States has years, past generally been able to obtain all needful revenue from the source single of duties There can be no upon imports. doubt, however, that all the taxes for in the internal revenue acts provided now are indirect. operation
“This came before the subject Court of the Supreme States in United case, very early Hylton United *157 In the States. laid a tax of ten dollars year Congress on all and the rate was thus made carriages, uniform. The of the statute was it was claimed that validity disputed; tax was direct and should have been apportioned among states. The court decided that this tax was not direct. The reasons for the are decision and given unanswerable, would seem to cover all internal provisions present revenue laws.” in his Hare, treatise on American Constitutional Law (vol. 1, “ is to the like pp. effect: section 9 of 250), Agreeably ‘ I,
article no or other direct tax shall paragraph-4, capitation be laid census or to the enumeration except proportion hereinbefore directed to be while section 3 of the ;’ taken same article and direct taxes shall requires representation n . the several States . . apportioned among according to their Direct taxes in the sense of numbers. respective Constitution are land.” taxes and taxes on poll on Taxation takes the same “Di- view: Burroughs (p. 502) — rect taxes The kinds of taxation authorized are both direct and indirect. The construction given expression ‘ direct taxes,’ is that-it on land includes a tax and a poll OCTOBER' TERM; 1894. Opinion: White, Harlan,
Dissenting JJ.. this accord with the views of writers tax, upon politi- cal economy.” in his Constitutional
Ordronaux, Legislation, (p. 225), says: ‘ “ been and collect having given Congress lay duties, excises,’ above- three taxes, imposts, provis- limitations the exercise of this are : ions authority “. between direct and indirect 1st. taxes By distinguishing mode of assessment; as to their “ a freedom of trade 2d. between establishing permanent By States; n “ discrimination in favor of 3d. By prohibiting particu- ' revenue- laws States, lar a through establishing preference their those others. between ports “ be read should because These provisions together, they foundation our of national taxation. at the system rules for the The two prescribed government are those of taxes for direct taxes laying apportionment for indirect. In the first class are to be found uniformity taxes and taxes on land; second, poll capitation and excises. . . . duties, imposts, “The taxes was made relating provision capitation of the Southern and for the favor of slave protection While number of -of they possessed large property. persons had also extensive class, tracts of settled this sparsely lands. At the same time an con- unproductive opposite both as existed in dition, land-territory population, of the other States. Were majority Congress permitted and land in all slaves at uniform parts country Slave States must rate, Southern have been at a placed and to Hence, in- disadvantage. great guard against there circumstances, was introduced into the Con- equality *158 the further that stitution provision representatives ‘ shall be direct taxes the States apportioned among according numbers.’ to their This the of direct basis respective changed from a taxation standard, not/, which could strictly monetary be made uniform the to one equitably, throughout country, as the measure of population, upon resting representation. have taxed But slaves Congress might for. arbitrarily & LOAN FARMERS’ TRUST CO. JJ. Opinion: White, Harlan,
Dissenting as so much and land at its pleasure property, uniformly the Union differences in regardless throughout productive therefore, not ness. It is v. United strange, Hylton £ said that rule of States the court is radi apportionment and cannot be solid cally supported by wrong, reasoning. to be not, therefore, extended construction. ought an is on States and involves valua operation Apportionment which tions and assessments are and should not be arbitrary, but case of resorted to necessity.’ “ now Direct taxes well settled in their being meaning, left for the tax on use of owner is not a carriages capitation an ; nor a on the business of tax; insurance nor company a tax nor a tax on a bank’s on circulation; income; nor a succession not, tax. foregoing properly speaking, direct taxes within but Constitution, excise meaning taxes or duties.” on
Black, Law, Constitutional “But the chief writing says: has arisen what is the difference difficulty determining between as are direct taxes and indirect. such In general usage, according terminology political economy, a direct tax is one which levied is who is to upon person his or land or it, his business or pay upon personalty, income, as the case be. An tax is indirect one assessed manufacturer dealer partipular commodity, paid by him; falls since it really is consumer, added to the market which he must price commodity But the course of decision has determined pay. judicial ‘ direct,’ term as here to taxes, is to be taken in a applied more sense. The restricted Court ruled has ’ Supreme £ land taxes taxes are direct and no only others. capitation In 1194 levied a ten tax of dollars on all carriages and it was held that this was not a direct kept use, tax. And so also an income tax be considered direct. Neither tax on circulation of state nor a suc banks, £ cession devolution tax, of title to imposed upon every real ” estate.’ cited Opinions page Not have the other departments government to the word attached direct” accepted significance
VOL. CLVII —io *159 TERM, 1894. 626 White, Harlan, Opinion: Dissenting JJ. as to direct taxes, case their actions have also
Hylton conclusive in their relied on it as indirect taxes dealings-with which-the them in that solely upon objects by levying judges of direct taxation. ease declared were Thus the objects affirmance executive of the doc- legislature Federal case trine a result has been as two- Hylton established fold. income,
From 1861 to. laws taxes on 1870 many levying were Act of c. enacted, follows: August 5, 1861, 12 45, c. 309, 311; Stat. 12 Stat. Act July 1862, 119, 292, 1, 432, Act of March c. Stat. 12 473, 3, 1863, 74, 713, 718, 475; 723; Act Act of June c. 13 Stat. 223, 281, 285; 30, 1864, 173, March c. Act of March 479, 481; Stat. 1865, 469, 13 3, 10, 78, ; c. Act of c. 14 Stat. Stat. 14 5 July 15, 4, 1866, 13,1866, 184, c. Act of March 14 Stat. 140; 2, 98, 137, 1867, 169, 471, 477, Act of 16 Stat. 2Q1. c. July 480’; 14, 1870, 255, 256, The statutes above referred all cover income and every — conceivable of revenue from source which it could result rentals from real estate, products personal property,, of business or profits professions.
The of -these has laws been tésted before this court. validity The first on the was that of the case Insurance subject Pacific Wall. Soule, v. Company controversy 433, arose under the ninth section of -the case act of July 13, 1866, 14 Stat. a tax on all dividends in imposed 137, thereafter declared due, wherever and when- scrip money, ever the same shall be to stockholders, holders, payable, policy or or whatsoever, non-residents depositors parties including or whether citizens aliens, or part incomes, earnings, trust bank, and of institution, gains any company, savings or inland insurance fire,,-marine, life, either company, under whatever name or mutual, stock or or known style or called in the United States whether Territories, specially under laws, and on .all undis- existing general incorporated or sums made or added tributed to their sum during year funds.” or contingent surplus that the tax be seen was levied the in- imposed
It will as a insurance unit, come companies including every possible POLLOCK FARMERS’ & LOAN TRUST CO. White, Harlan, Opinion:
Dissenting JJ. from, source of whether or real revenue, personal property, business otherwise. The case was gains presented *160 here on a certificate of division below. One of the opinion “was whether the taxes questions propounded paid by be recovered in to this action are not direct plaintiff sought taxes within the of the Constitution the United meaning ” States ? The before this issue, therefore, necessarily brought court was act whether an tax on an income every imposing source of revenue was valid The possible or invalid. case was carefully, The brief ably, elaborately, learnedly argued. on behalf of Wills, filed was company, by supported another Mr. W. O. covered Bartlett, which signed by every of the It aspect contention. rested the its weight argument the statute the fact against that it included the rents of real estate the sources of income and therefore among taxed, put direct tax the land. Able- as have been the arguments at bar an then case, examination those present pre- will fact that disclose the view here sented was every urged there the court with the pressed upon ability, greatest .and after exhaustive but not research, equalled surpassed by which eloquence has learning accompanied presenta- tion of this case. that the Indeed, be said may principal authorities cited and-relied found on now can be in the argu- ments which were then submitted. It be added that the case on behalf of the government by Attorney presented General Evarts.
The court answered all the contentions by deciding of the of the generic tax, thus necessa- question validity passing (cid:127) issue rily raised, as the whole upon every includes necessarily one of I its every to parts. quote reasoning applicable matter now hand: n “ The sixth is: Whether the taxes paid by plain- tiff, to be back this action,, recovered are not sought direct taxes, within the Constitution meaning United In to States.’ considering subject proper advert to the several the Constitution provisions relating ‘ taxation and direct taxes shall Representatives Congress. be shall be in- several States apportioned among TERM, 1894. Harlan, White, Opinion:
Dissenting JJ. their numbers,’ this Union respective eluded according ‘ and collect taxes, have to lay shall etc. debts and excises, provide duties, imposts, pay of the United States; welfare the common defence general be uniform and excises shall duties, through- but all imposts, tax or other direct ‘No the United States.’ capitation out the census or enumera- unless laid, shall proportion taken.’ ‘No directed duty tion hereinbefore State.’ exported shall be laid-on-articles “ the entire taxing power clauses contain grant These which that instru- the limitations with law, organic ment imposes. its own within national supreme government, though one limited functions. jurisdiction specific sphere, has such Constitution it, as the given no faculties has intendment. or incidentally by either necessary expressly *161 done under its is act authority Whenever any challenged, in must be found its or act charter, sanction proper This test must be ex- vires is ultra applied void. If to which it of the before us. the tax amination ‘ it it laid in a direct is clear that has not been tax,’ refers is is, It Constitution. conformity requirements to which to ascertain therefore, necessary categories it in the section of the first article named belongs. eighth “ and con are direct taxes was What elaborately argued decided this v. United sidered court Hylton by Justice court, of the members 1796. One the year the convention had a member of been Wilson, distinguished was held framed It unanimously by the Constitution. taxa the four who heard the upon justices argument a not direct the owner for his own use kept carriages by ‘ think, tax. Chase said : I am inclined to Justice taxes con I not the direct do give opinion, judicial a wit, two, the Constitution are capita only templated tax tion or without profession, poll simply, regard property, Paterson, land.’ circumstances, or other and a tax on any ‘ He I said: followed same line of remark. Justice, — I will say a doubt that the never entertained principal FARMERS’ LOAN & TRUST CO. 629 'o. White, Harlan, Opinion: Dissenting JJ. — the framers of the Constitution contem- only object the rule of within was a apportionment
plated falling capi- . . . The tation tax a tax on land. Constitution declares direct both in that a tax is a tax; capitation theory tax deemed to be a direct tax. on land is In this practice the terms “direct taxes” and other way “capitation ” direct taxes are satisfied.’ “ The views in this case are Chancellor expressed adopted by Kent and Justice in their examination of the Story, subject. Duties are defined Totnlin to be due and recoverable things law. The in its widest term, is' less signification, hardly than ‘taxes.’ is comprehensive its most re- applied, stricted to customs and in that ; sense is meaning, nearly ‘of synonym imposts.’ “ is a and merchandise. In Impost duty imported goods tax sense, is Cowell larger imposition. says ‘ because custom custom, is rather distinguished profit which the makes on out.’ Mr. Madison prince goods shipped ’ considered the terms ‘duties in these clauses as ‘imposts’ Tucker synonymous. were Judge thought ‘they probably (cid:127) intended to or contribution comprehend every species ’ not included under the taxes and excises.” terms, ordinary “Excise is defined lo inland be an sometimes imposition, upon sometimes consumption commodity, upon sale; the retail sometimes and some- manufacturer, times the vendor. “ The most terms. taxing power given comprehensive limitations are: That direct includ- taxes, imposed shall be ing capitation tax, im- duties, apportioned; and excises shall be and that uniform; no duties posts, shall *162 be articles "With imposed State. upon exported any these the of the exercise all is, exceptions, respects, unfettered. “ If a tax for his own use the upon by owner,' carriages, kept is not a direct we can see no which a tax tax, ground upon the business of an held to insurance can be company to that class of revenue belong charges. “ It has been held that direct taxes Congress may require TERM, 1894. White, Harlan, Opinion:
Dissenting JJ. as the and collected in the Territories .well be laid States. “ which would follow the apportionment consequences of the the States and Territories the tax in among question must Constitution, the manner Union, by prescribed cor- are obvious. such very overlooked. They Where where it rich, are numerous might light; porations few and ; it not be collected where exist, none could to involve fall them with such it would weight poor, of the that the framers cannot be It annihilation. supposed tax should be Constitution intended that apportioned, with be attended of which on that would collection principle are fatal to such results. The proposition. consequences “ answered, must be it To the under consideration question but a tax, duty that the tax to relates is not a direct which it it. that it was excise; pay plaintiff obligatory to be sufficiently The other are deemed questions certified-up sixth answered the answers to the first and by questions.” given it This seems to the door to discussion me, closes opinion, word in the Constitu- “direct”- regard meaning tion, and renders a resort to the conflicting opin- unnecessary framers, ions of the or to the theories of the economists. that construction of it the word confines adopts cap- itation taxes a tax on land, necessarily rejects contention that that was to in accordance word be construed from, with the economic the shoulders a tax theory shifting of the to those whom was levied person upon immediately of some is of moreover, This decision, other-person. great because is an reaffirmance authoritative importance made case, there Hylton approval suggestions andean another justices, sanction given and.constitutes court Constitution adopted interpretation executive, and govern- legislative, judicial departments ment, thereafter acted continuously upon. 533, Not v. Fenno, Veazie Bank long-thereafter, Wall. ” “ direct
541, the word application was whether submitted to was this court. there again The issue tax on the within circulation of “direct” state banks *163 v. & LOAN TRUST CO. FARMERS’ White, Harlan,
Dissenting Opinion: JJ. n of the Constitution. It the was the meaning ably argued by Johnson Cush- counsel; most and Caleb Reverdy distinguished the Hoar the bank, General ing representing Attorney (cid:127) The brief of Mr. United States. presented Cushing again now our consideration. nearly every point urged upon the cited of Adam Smith and others. copiously opinions of the tax was The maintained the constitutionality by gov- ” “ ernment on the that the the word direct ground meaning Constitution, case, as en- the the Hylton interpreted forced the continuous and as sanc- construction, legislative the was' to, tioned consensus referred opinion already Those who the there settled. assailed tax finally urged, that the conclusive, done case was not because here, Hylton at decided matter issue, was only question particular dicta, were mere and insisted that suggestions judges and not to be followed. said that United They Hylton a tax States one which was that alone, point adjudged the utterances not a and that from tax, was direct carriage obvious it was ques- case general judges Thus a direct was but considered. tion of what was crudely view of court very there presented argument in the argument which has been reiterated case Hylton court did this say now. What here, and which is sustained these as to Chase, argu- Justice then, Chief through speaking ? from its ments I take opinion: very fully has Much always prevailed diversity opinion answer it by what are direct taxes? Attempts question, have been economists reference the definitions of political The enu- results. made, satisfactory without frequently which Congress of taxes the different kinds' meration of little, very with made authorized to was probably impose' of Adam work reference to their great- speculations. economy treatise on Smith, the first political comprehensive recently published; then been had English language, refer to but in this there work, passages though taxation, indirect direct and characteristic between difference use on the valuable light there which affords any nothing ’ ‘ Constitution. direct taxes words (cid:127). TERM, Opinion: Harlan, Dissenting White, JJ.
“We are therefore, resort to historical obliged, evidence, to'seek the of the. words in the use and in meaning *164 of those whose relations to the opinion means government, n of warranted them with in knowledge, speaking authority. “ in this And considered the light, meaning application direct taxes, as to rule, to us clear. appears quite we is, think, It as shown in of act distinctly every on the subject.
“In each of these sum was laid the acts, United gross aiid the States, total amount was to the several apportioned States to their numbers of as inhabitants, according respective ascertained the last census. been by Having ap- preceding "was made tax for the portioned, imposition provision the its total act, the sum. subjects specified fixing “ In when the tax 1798, first direct was the total imposed, amount was fixed at two of dollars; 1813, millions amount of the second at three direct tax was fixed millions; 1815, the amount the third at six and it made millions, an tax; 1816, annual the tax annual provision making of the first the act of section of was-repealed by repeal and the 1815, total amount was fixed for that at three year millions of dollars. No direct tax was until other imposed when direct tax of of dollars laid 1861, millions was twenty made annual; annual provision making tax, and no first laid, was ever suspended, except appor- In each tioned. the total sum was instance, apportioned and was assessed rule, constitutional among by at rates on the These the tax. prescribed subjects, subjects in 1798, 1813, were 1815, 1816, lands, improvements, dwelling and in dwell- houses, 1861 slaves, lands, improvements, houses Under the act of slaves assessed ing only. were on at cents fifty each; under other valua- acts, according tion assessors. by “ This review shows that occu- personal contracts, property, and the like been as pations, by Congress regarded have.never of direct tax. has been slaves subjects proper supposed must considered as But to this observation. exception an. is rather than real. As slaves exception apparent persons, LOAN & FARMERS’ TRUST CO. Harlan, White, Opinion:
Dissenting JJ. tax, of a which is described in capitation were subjects proper tax; a direct property were, they the Constitution most, if not the States classed as real some, laws to heirs. Under the first view descendible property, the tax as a 1798, tax; capitation would subject would be subject taxation of the under latter, they That the latter view was that taken as realty. other years after becomes acts, the framers highly prob- in the States that, where is considered slaves when able, the value which would otherwise at- have much held, were indeed, into the slaves. the land If, land tached to passed the land would slaves, have been valued without had been heavier those States to much proportional imposition subject no there were slaves; than in where States proportion was determined State each population, imposed *165 which, on it was to to the be assessed. without reference subjects were the valued, that slaves under “The acts fact, then, have some that referred far from to, showing, supposed, aas proper object regarded property personal that shows Con- Constitution, taxation under the direct for the slaves, taxation, after 1798, purposes gress, regarded as realty. the therefore, affirmed, It practical may rightly direct taxes have construction of the Constitution by Congress taxes and on been limited to taxes on land appurtenances taxes. polls capitation is entitled to consideration,
“And this great construction it in adverse to the absence of the anything especially framed con- discussions of convention . . . which ratified the Constitution. ventions this court two sanction of years “This view received the direct taxes first law before the enactment imposing eo nomineP case,
The court reviews the Hylton then repudiates on it attack made construction it, reaffirms placed executive, judicial departments, by legislative, case, in the insurance company adheres ruling expressly it said: to which I referred. Summing up, have TERM, 1894. Opinion: White, Harlan, Dissenting JJ. follows tax necessarily
“It without other to all extends Taxes objects. on other apportionment heads of under the taxes not included direct, objects duties, be laid and must and excises, collected imposts, by under The tax consideration rule of is a tax uniformity. on well be classed circulation, very under the may bank it is not, Head duties. sense of the Certainly Consti It be said to a direct tax. come within tution, the same of taxation as the on incomes insurance com category which this at the last court, term, the case of panies,. Insurance not v. held to be a direct Soule, Company Pacific tax.”
This case so far ’as the of direct taxation was, question an concernéd, decided undivided for, by court; although Justice Nelson dissented it was on opinion, that the tax was a direct another tax, on ground question. Some after this decision the matter came years here again case of 23 Wall. Rew, adjudication, Scholey there issue involved was the of a tax validity placed United States statute on the take real estate by right inheritance. The collection of the tax was resisted on the it was direct. The brief this expressly ground urged contention, and said the tax in a tax land, if referred, there ever was one. discussed case, Hylton used the various language judges, sought it the construction which are now we place urged and which has it, been often so court. give rejected ,court all This unanimous answered by-its again judgment I contentions. these its quote language: *166 to the first is to be drawn “Support objection attempted that clause the from Constitution which that provides taxes shall.be direct the several States apportioned among be included within the their which Union, according and numbers; also from the clause which respective provides or no other that direct tax be laid unless in shall capitation to the census or amended but it is enumeration; proportion that the or tax levied clear the act under considera- duty by not a direct tax is tion of either of those within meaning & v. FARMERS’ LOAN TRUST CO. White, Opinion: Harlan,
Dissenting JJ. it Instead is an excise tax plainly duty, provisions: of article which one, section vests the authorized eight and collect taxes, duties, in Congress lay imposts, and for the debts, and common .excises, provide pay' ... welfare. defence and general duties of and such as taxes,
“Indirect excises impost the' same, must other uniform, every description n must be laid direct taxes census proportion in the Fourteenth remodelled Amendment. enumeration as houses, and other real Taxes on estate have lands, permanent taxes, to be direct deemed capitation taxes, been always Constitution, of the are within the words express has decided never been same category, of the Federal other exactions the support govern- legal laid in ment the condition unless fall within proportion invalid. the assessment is numbers direct in the sense of taxes, Whether Constitution, tax and a other than a tax on capitation comprehend any is it not nor land decided, absolutely necessary as it is decided that it in the case, determiné expressly present tax on income which the term cannot be does include such a succession tax as the distinguished principle one involved controversy.” present
What could reaffirm forcibly' more clearly language of the court this What subject? previous rulings -to construction of endorsément could given stronger in the Hylton which had been Constitution; case, given had been all branches and adhered to by adopted from the hour itsof establishment? government,almost of note that'the court here treated the decision worthy ' that the direct case view Hylton conveying In, so taxes were “taxes land' appurtenance.” doing of, justices suggestion necessarily again adopted there conclusions of this thus them made, adjudged making , court. the force It is too late now to opinions destroy when in that dicta them as mere case by qualifying have court. been approved again expressly again established If to what this con- left a doubt as there were *167 TEEM, OCTOBEE 1894. 636 White, Harlan, Opinion: Dissenting JJ.
struction seems removed is, case entirely v. United U. S. was Springer Springer an income tax on his assessed for and on professional earnings the interest on United States bonds. He declined to pay. His real in The suit estate was sold involved consequence. for the of the as a basis sale. tax, validity Again every now this court. The was brief presented urged upon of the in made the most ref- error, plaintiff copious Springer, erences to the economic It Continental writers, English. cited of the framers of the Constitution. It con- opinions tained extracts from the of the mar- convention, journals shalled the authorities extensive impressive array. reiterated the an income tax argument validity against which included rentals. It is also asserted that the ease Hylton was not of the because authority, expressions judges, mere tax, were dieta. regard anything except carriage n The court adhered to the announced in the ruling previous cases and held that the tax was not direct within the meaning of the Constitution. It reexamined and answered everything advanced here, said, the case: summing up “ Our conclusions are that taxes, direct within the meaning of the Constitution, are taxes, as only capitation expressed instrument, taxes on real and that estate; the tax of which in error plaintiff within the complained category of an excise or duty.”
The facts, then, these: At the birth of briefly very a contention arose as to government meaning word “direct.” The was determined controversy and executive legislative government. departments Their action came to this court for and it review, was court who this an approved. Every judge expressed opin- made ion, use of showed he language clearly ” the word direct thought Constitution applied taxes and taxes on land. Thereafter capitation directly the construction thus given accepted everywhere definitive. The matter came to this again again court, and in case the was adhered to. every original ruling made in the ease were suggestions Hylton here, adopted and, FARMERS’ & TRUST CO. LOAN Opinion: Wliite, Harlan,
Dissenting JJ. all the decided, case here. others, the last reviewing *168 taxes within the of the said that direct Con- meaning court on land and taxes taxes. And were capitation stitution after hundred action after a long-continued now, years, by the and after of government, other repeated departments this court, of this overthrown, interpretation adjudications declared not to have a of taxation the time, as it has in the at some neces- which past, prove existence what to the By very government. sary is this to be done ? resort to theo- of By reasoning process the word “direct” in its economic in order to construe ries, in accordance with its in the Con- instead sense, meaning result of the which I have when stitution, very history to show that the economic con- recounted is thus briefly the framers them- the word was by struction repudiated and time this has been by time selves, again rejected and a framers a resort court; language by the facts show that of their plainly review although opinions, now which the court settled themselves of all that has taken In view unsettles. place virtually here court, of this matter at issue decisions many as closed forever. to be regarded ought result from and harm which must always
The injustice sanctioned and settled by a long practice overthrowing better illustrated than could not be court, of this decisions Under the income this case affords. which the example for years, many past laws which prevailed income, source of rentals conceivable covered every were collected else, vast sums estate, and everything real from The decision here States. of the United from people , taken, were that those sums wrongfully announces rendered creates a claim to me, equity it seems and thereby, an enormous for the government conscience against good view this from the Thus, change amount money. for the act of pur- that an passed Congress, court, happens with the in strict revenue, conformity practice of raising pose earliest, and in accordance time of the government the' court, of this furnishes decisions with oft-repeated TERM, 1894. White, Harlan, Opinion: Dissenting JJ. a claim
occasion for against government creating I dollars; hundreds of millions say, claim, creating inbe conscience bound because if the good government has been taken from the citizen in that which violation refund the technical Constitution, have although right may or because the decisions of time, lapse disappeared citizen to his grievous injury, court have misled equity to the conscience of the will itself endures, present govern- shows how is that the necessary ment. This consequence A its decisions. not overthrow court should past distinguished which must result out the writer wrong society aptly points He from a says: interpretation. judicial shifting maxims of law were to ebb flow with If rules and which in to assume that his the taste of shape judge, *169 of if the decisions one case times; best becomes the fancy at all former not be ruled deter- were to by, depend upon I nature, of a like should be to minations other cases glad an would venture to estate with- know what purchase person the of a court of out first judgment justice having respecting to ? the title which he means No identical reliance purchase former resolutions could be had titles ; precedents him of the same kind could afford no assurance at all. Nay, even a decision of a court of the identical justice upon very title be more than a would secu- nothing precarious temporary the which it founded ; was rity principle upon might, course of few become the years same title antiquated; might be drawn into the taste fashion of again dispute; times and on that a future improved, might ground judge himself at hold it not consider his liberty might (if duty) little maxims decisions his pay regard prede- cessor as that did maxims decisions predecessor those who went before him.” Fearne on Remain- Contingent ders, London ed. p.
The disastrous to flow from consequences disregarding thus settled decisions must described evidently cogently become in a case like when greatly magnified present, of the court affects fundamental opinion principles an of taxation essential government by denying power n & LOAN TRUST CO. FARMERS’ White, Harlan, Opinion:
Dissenting JJ. If exerted to exist and often conceded by Congress. long decisions of this court it was necessary previous amend the Constitution should repudiated, been of. case and should have availed Since Hylton existed Constitution has been amended. decided the repeatedly ” which confined the word direct The construction capi- these and land taxes was amendments, tation by changed not now be reversed what to me to be it should seems amendment the Constitution. a judicial of the court in that the inclusion of case, The finding it from real estate an income tax makes direct to rentals denied the au- that extent is, my judgment, conclusively which to which I establish have thorities, referred, of an income I the de- Hence, submit, itself. validity it rule which cision settled reverses necessarily seemingly that the doubt there be serious Can question adopts part. the rentals of real in which tax, of an income validity the decisions is covered included, say estate and that therefore it is indirect, an income tax is generically could there be mean, course, % I valid without apportionment of the court ? were not for such doubt present opinion I deem to answer this Before necessary undertaking made. advanced to consider some suggestions arguments and other econo- and Smith 1st. The Turgot opinions were known to the their views mists are and it is said cited, are then referred to the and we ; framers of Constitution the collo- themselves. object framers opinions to show that there of authority cation these two sources *170 of the word the to meaning was a “ them as concurrence between we are com- conclusion, this direct.” order to reach But, has as held, court that this always to overlook the fact pelled of the econ- the that cases, opinions from the appears preceding of the the no interpretation omists threw little or light ” “ And the whole word direct found in the Constitution. as the establish is to effect of the of this court proposi- decisions in the Constitu- tion that different the word has a significance it when have tion from that which given Smith Turgot to me seems Indeed, used in a sense. economic general TERM, Opinion: White, Harlan, Dissenting JJ.
that the conclusion deduced from this line of itself thought demonstrates its own unsoundness. What is that ? conclusion “ That the understood framers well the meaning direct.”
Now, it that framers, seems evident the who well under- stood the of this word, have themselves meaning declared in the most that it shall not be here positive way construed in the - sense Smith and Turgot. the passed act was men who carriage-tax composed had largely par- the Constitution. That act' ticipated was framing approved who had over the deliberations of Washington, presided the convention. himself, Certainly the ma- Washington of the if framers, well understood jority they sense ” “ which the word direct was would have used, declined to act, which adopt violated the approve taxing clearly ” “ of the if Constitution, the word direct provisions as therein had the used, which must be attached to if meaning it, read theories of and Adam Smith. light As. Turgot has been all who noted, already judges expressed opinions, “ case direct,” Hylton constitu- suggested tional referred to taxes on land sense, taxes. capitation Could have made if the word they possibly suggestion had been used % It is as Smith used immaterial Turgot whether the were dicta or not. suggestions judges could not have made this They if intimation, certainly “ that, understood the direct,” the word meaning being which it must if construed to the- have imported according writers mentioned. Take the of Mr. Justice Pater- language “: son 1 never entertained a doubt that 1 will principal, say Constitution only, objects framers within the rule were- contemplated apportionment falling and tax had borne a capitation on land.” He conspic- uous in the convention. that he part Can we understood say framers,- after of a hun- meaning lapse yet dred him fritter uttered years, away language, this bench in the court first case which this was called great ” direct ? of the word It can- interpret meaning not be said that his or without a used carelessly language of its The debate knowledge great import. passage- *171 & TRUST CO. v. FARMERS’ LOAN Harlan, White, Opinion:
Dissenting JJ. . of had manifested opinion the act divergence of carriage-tax “ direct.” The the word of magnitude as meaning all have is shown authority the issue contemporaneous by and its been felt far-reaching consequence appreci- deeply came here -settlement were Those controversies ated. full of the of. a importance then with knowledge determined not be now the issues. should reopened. They then-, me, reduces itself to this : it seems to The argument, “word the of the direct; That framers knew meaning the well it in- it that well interpreted so understanding they practically it that had a sense as to indicate a contrary such way plainly now the view court- to that adopted by given of the word thus they meaning comprehended Although their it at an is now early interpretation interpreted day, the economists to be whose con overthrown resorting It is them. thus demonstrable struction was repudiated deduced from the that the framers- the conclusion premise “ well of the word direct,” understood the involves a meaning a it draws words, In other conclusion,, faulty fallacy. which the even if the conclusion is rested be predicate upon But I do admit The admitted. views premise. fully show of the framers cited conclusively argument in' well but were doubt understand, did not as to great direct.” use of the word of the wrord was- meaning It was solution accepted result compromise. frustrate threatened to which those- difficulty hopes of a new who the formation abso looked government the condition weakness which necessary lutely escape had who shown. Those Articles Confederation accepted the word different and ex viewed compromise lights n its different This was results flow pected adoption. was terminated the natural result of struggle as to direct representation adoption provision had warfare of been That opinion taxes. engendered by in some of and was the con existence slavery of interest thus In- of the conflict about. brought sequence acted the minds those who settlement, reaching cause the main with the concerned were naturally vol. clvii —41 TERM, Harlan,
Dissenting Opinion: White, JJ. *172 with, contention and not the other which had been things, pre settled the convention. whilst there was in viously by Thus, all clearness of vision as to the of the probability meaning word in relation to on slave “direct,” its bearing property, in was inattention to other and there there things, regard were, diverse as to its therefore, That opinions proper signification. the in such was case other clauses the Con many regard contro-, been stitution has shown to be the case those by great which versies of the have been settled the past peacefully by of this court. Whilst this difference (cid:127)adjudications undoubtedly “ to the effect to be the word the con existed, direct,” given of the framers as of the to its sensus majority meaning the of the act. shown That consensus passage carriage-tax in the of the found expression opinions justices adequate and in the of this the decree court there case, Hylton rendered- that those that act, decree, The settled opinions passage that the word the taxes applied only capitation proposition land. and taxes the fact that there was difference in does the minds Nor ” “ as to the of the word direct
the framers weaken meaning force the word interpretation placed binding upon if such For, the difference existed, from beginning. to hold that a sound solution of a
certainly contemporaneous which has been often confirmed doubtful this question, not now be reversed. framers of should The the Consti- court, the members earliest the illustrious tution, Congress, called to the office of man first Chief the Executive, jurists sat this two of whom court, first had borne a who great all of convention, whom dealt with labors, part doubtful this question, surely occupied higher vantage its correct than solution do those of our Here day. ground the dilemma: if the framers then understood the meaning ” the word direct effect Constitution, practical undisturbed; should remain if which they gave as to in doubt since Were meaning, interpretation long affixed to it should be authoritatively upheld. do I think Nor is thrown
2d. any light tax here under consideration is direct indi- of whether & TRUST FARMERS’ LOAN CO. White, Harlan, Opinion: Dissenting JJ. “ taxation without
rect, principle repre- by referring of our forefathers for and the its sentation,” great struggle be said that the which enforcement. It cannot passed fixed the Consti- act was not the body this representative for the Nor can it be contended tution. struggle involved contention enforcement of the rep- principle in exact wealth taxed. resentation should be proportion If the order to draw inference that, used argument because the indirect will instance, imposed operate various therefore sections differently through country, that tax it seems to me unsound. be treated as it is direct, should not the which effects follow tax, right mayv this court its lawful is the which exercise, only judicial question is called indirect tax, to consider. If an *173 rule of Constitution has not subjected apportionment, to be held it will is be a direct because bear to tax, upon, of in sections the of different country, aggregations property to then the the extent of such according power aggregations, to the au- is denied to do that which Constitution Congress to thorizes, because the exercise of a lawful power supposed, in the not work out the of which, court, result opinion sound, fathers. If then every the this contemplated by now which in our has been determined past history question for of tariff still The justness reconstruction. open judicial on the one de- hand, has the turned assertion legislation upon nied on the on the that it other, inhabitants operated unequally of who different Those such sections of the opposed country. effect was have that its contended legislation necessary always not to also to the one section, whole burdén put upon the rest, enrich at the of certain of our citizens directly expense and thus build of the few and to the benefit fortunes up great the detriment of the this economic Whether conten- many. I inti- be true or Of oóurse, untrue is not the question. tion mate no that view on Will it be if to-morrow the said subject. the court it could should be personnel deny changed, the to enact has been admitted tariff which power legislation exist, the Congress ground beginning, such or one section set' of affects legislation people beneficially TERM, 1894. Opinion: White, Harlan,
Dissenting JJ. within others, the detriment spirit Constitu- a direct tax 1 constitutes and therefore tion, does force my any 3d. result from Nor, judgment, the framers direct taxes to be re- expected argument rarely as the tax was and, without to, sorted present imposed public void. be declared it should necessity, me that this
It statement whole seems begs question, that the act before us for it now levies a direct assumes tax, the tax is whether direct not whereas or is the involved, in If this case. issue now deems it very to certain forms of indirect to resort taxation advisable which have been availed of frequently, though continuously, cannot its so I see that affords reason doing past, an indirect into a direct tax in order converting nullify will. method any particular policy legislative an taxation, presence exigency its requires is a seems to me purely legislative question. adoption, distinction between it violates the the two elementary depart- an to allow ments of this government court opinion of a tax to affect or necessity expediency control of the existence of our determination it. impose from these But I considerations to pass approach ques- the inclusion of tion whether rentals from real estate an in- such come tax renders a tax to that extent “direct” under the because it constitutes the Constitution, imposition direct itself. tax on the land inclusion Does the rentals real the sum from, estate *174 to make income up order to
going aggregate {in arri/oe at tamable is to be deducted income) insurance, repairs, business, losses thousand dollars make exemption, four income so a the tarn on ascertained direct tax on such real estate ?
In must we answering question necessarily accept of the word “direct” interpretation authoritatively given by and the decisions of this court history government cited. To that for the just adopt interpretation pur- general tax, an income then it one because poses repudiate of which it of the elements is would violate composed, every v. FARMERS’ & LOAN TRUST CO. Harlan, White, Opinion: Dissenting JJ. rule of So, also, construction.
elementary seemingly accept then resort framers and interpretation in order limit its it a economists application give is to its different destruction and significance equivalent it amounts without so. Under repudiating directly doing settled word we ascertain whether interpretation a tax be direct or not whether it is a tax on by considering land or a tax. And the tax on to be within land, capitation direct; must be Therefore provision apportionment, have two we to take into account: it on land things it and is direct thereon or so on the land as to be immediately to a direct it ? To burden equivalent levy say on land, even indirect, must be is not though apportioned only a new incorporate is also provision Constitution, to obliterate' all the decisions which I have referred, by them as construing Constitution holding although forbids' a direct tax on land without apportionment, must be so as to an indirect tax on land interpreted bring within its inhibition.
It is said that tax on the rentals is a tax on the as if land, the act here under consideration an immediate tax imposed on the rentals. I This is a statement, submit, misconception of the issue. The involved is whether a tax on net point income, when such income is made all up by aggregating sources of revenue and losses in insurance, deducting repairs, business, extent to becomes to the which real etc., exemptions, (cid:127) estate revenues have income, entered into gross direct tax on the land does that which words, itself. In other reaches an income, reaches rentals indirectly, thereby reaches the land a double amount to direct indirection, levy on the land itself? thus It seems to me the when stated Indeed, furnishes its own accurately negative response. do not see how the issue can be stated logi- precisely I without cally face that inclusion on its making apparent of rental from real than income more property nothing an indirect tax the land.
It must be borne in mind that we are not with the dealing want of to assess real estate at all; *175 OCTOBER, TERM, 1894. 646 Opinion: White, Harlan, Dissenting JJ. as I have shown at the has contrary, outset, Congress to reach real estate both power directly
plenary indirectly. If real Constitution it taxes estate commands- directly, direct shall be such But because imposition apportioned. tax, an excise or other indirect without imposed apportion- has an indirect effect real estate, no ment, violation because the committed, the Constitution is Constitution has rule of left untrammelled by any Congress apportionment — to indirect taxes duties, excises. The imposts, opinions so often Hylton case, reiterated, approved unanimous views of the all text-writers, show tax on that a to be must be an land, direct, assessment .of the itself, land either or valuation. Here there nois such by quantity assess- ment. It is well also to bear mind, whether considering direct that if land, on fact land no yields rental it contributes to the income. If it vacant, nothing n the law does not force owner to add the value rental his taxable income. And so is if he it himself. occupies
The citation made counsel from Coke on Littleton, which so much stress is no laid, me to have rele- seems The fact that where one delivers or vancy. give agrees all or transfer land with th'e fruits and it will be revenues, land, be no conveyance presumed way supports an indirect tax on the rental of land is a proposition burden direct land itself. can I see the of Brown v. 12
Nor- application Maryland, v. 419; Wheat. Westonv. 2 Pet. Dobbins Erie 449; Charleston, 16 Commissioners, Pet. v. 24 County 435; Almy California, 169; How. C ookv. S. 97 U. Railroad Pennsylvania, 566; Jackson, Co. v. 7 Wall. Co. 262; &c. Steamship Philadelphia v. 326; U. S. U. S. Pennsylvania, Mobile, 127 Leloup 640 Co.v. Postal 155 U. S. All these ; Telegraph Adams, involve the if Constitution, cases under the whether, at no existed to tax either an all, power directly indirectly, tax would be indirect unconstitutional. These cases would if to this had no to- tax estate. real apposite Were case, such of an ex might imposition cise which reached estate real would by Congress indirectly v. FARMERS’ LOAN & TRUST CO. White, Opinion, Harlan,
Dissenting JJ. *176 because as it Constitution, the had violate no necessarily power to tax direct or would every attempt indirectly premises, it the is not denied that Here, contrary, be null. the but in the exists tax the is, tax Congress, question in the constitutional sense ? indirect or direct to follow the But it is if unnecessary further; for, argument of this court referred I understand the already to, opinions that an inclusion of settle absolutely proposition they an income does not rentals of real estate violate the I the risk of At Constitution. over repetition, propose go for the the cases this. In purpose demonstrating again it understood at the outset that I do let not so, ques- doing v. Virginia, Cohens Carroll Lessee tion the authority of the cases referred other Carroll, argument any of of that an hold adjudication These counsel. great opinions which it decides. need be extended beyond principles not if it decided cases that, submitted do this, Whilst' conceding and necessarily, principle, adjudicate affirmatively, directly, under then text involved, here very the very question court, the- should conclude referred opinions that of is there case, the first Hylton, this In question. reconcile the the subtlest decision ingenuity possibility was there established ? with what here announced v. Soule, Insurance case, Company In the second levy its dividends, its and net was company, premiums, case was certified to court, all this from sources. gains made explanation and the statement judges “ The amount of said says: they propounded were stated net said dividends, truly gains premiums, Record, p. returns.” lists or Original there that the issue was
It will thus seen not presented tax on business was valid, whether an income gains from business and all tax on other an income gains whether this Under state of facts net was constitutional. gains “ Whether the court : taxes paid by question put recovered in this back, action, to be plaintiff, sought direct within- the not taxes Constitution meaning States.” United OCTQBEE TEEM, 1894. Harlan, White, Dissenting Opinion: JJ. revenue
This tax covered nature, every possible that the therefore self-evident court could not have appears statute without that the income derived deciding upheld as well as that derived from other every source, realty, without be taxed is obvious apportionment. might if had considered that the court any particular subject-matter which the statute reached was constitutionally included, have been rule of would safe by every judicial con- obliged duct to its toas answer particular qualify, subject.
It is for me to conceive that the court did not impossible embrace in its an income tax ruling constitutionality which included rentals from estate, since, real without pass- it could not have decided the issue *177 ing upon question, And another reason it is why presented. logically impos- sible that this of the inclusion of the question validity rental of real estate in an income tax could have been over- looked the court is found the fact to which I could have adverted, that this was one the already principal its attention, and the points urged upon all argument covered — the which has been here ground occupied indeed, very citation from Littleton, Coke now upon conclusive, urged was there made also the brief of counsel. And although of income involved in return that case was made “in fact that the block,” burden of the very was argument that to include rentals real in income estate, subject made such tax taxation, tanto direct, seems to me to fro indicate that such rentals had entered into the return made corporation. in the case of Again, Rew, v. Scholey question was laid on the to take real inheri directly right estate by which tance, the United had right States no to control. power The case could not have been decided, view, any point without a tax that was not holding direct, right that, it therefore, could be levied without apportionment. is manifest that the court could not have overlooked whether this was a direct tax on the land or not, because in the of counsel it argument if was there was said, tax in the Avorld that was a tax on real estate which was FARMERS’ & LOAN TRUST CO. 649 Opinion: White, Harlan,
Dissenting JJ. that was the one. The court direct, said was not, the law. I that the tax sustained there was repeat put directly to inherit, had no right Congress power or control. The case was therefore regulate greatly stronger that here than has a to tax presented, Congress right real estate with That decision cannot directly apportionment. be that the court overlooked away by explained saying fact that had no to tax the devolution of real and treated it a tax estate, on such devolution. Will said of men then adorned distinguished who bench, them although argument pressed upon levied this tax was on the real directly estate, they the control of the ignored elementary principle inheritance of is a state not Federal function? realty But even if the case that the tax proceeded upon theory was on the devolution real estate and was therefore it not direct, is decisive of this absolutely controversy? If to a burden of taxation on the to take real put estate right inheritance reaches how can it realty by indirection, that a said tax on the the result of all income, sources revenue, after rentals, losses including deducting expenses, which, thus reaches the rentals and the real estate indirectly, rentals, is direct tax on the indirectly real estate through ? itself r it is manifest in the
So, case that the same Springe ques tion was decided. It seems obvious that the court necessarily *178 intended in that case to decide the whole question, including the to tax rental from- real estate without right apportion ment. that, was there as elaborately Carefully argued the law included the land in rentals of the income taxed, such inclusion this, was unconstitutional, therefore, destroyed that of the law which part the tax on the revenues imposed Will it in personal view the fact said, property. 9f that in this case four of the of this court think very judges that the inclusion of the rentals from real in an estate income renders whole law invalid, that the question inclusion of rentals was of no moment there, because return there did not contain a such ? mention of rentals Were TERM, Opinion: White,
Dissenting Harlan, JJ. who then this court so great judges composed neglectful that did not' see the of a they importance which is question now considered some of its members so vital that ..by in their result is to annul the whole opinion law, more espe- when that the court in cially question pressed upon argu- ment with all and earnestness? But I possible vigor think that the case opinion shows that the Springer clearly court did consider that it did importance, intend to it it, deemed had pass upon decided all the of an income tax in questions affecting validity the main which included the passing upon issue, others as the includes the less. greater
I can discover no which these cases can principle as considered less conclusive of any to include right of land in rentals the concrete result, than income, to the to income right levy tax. general5 Certainly, hold decisions which that an income tax such is not direct, decide to include the principle rentals of real estate in an income tax does not make it direct. If embracing rentals in income makes a tax on income to that extent a on the direct tax land, then the same word, the same sen tence of the has Constitution, two distinct constitu wholly tional one meanings, when signifies to an thing applied income tax and a different generally, when to thing applied of such a tax made portion rentals. up That part the word is to means say, one when to the thing applied and another when greater to the lesser tax. applied with My inability the court in agree the conclusions has causes just me much expressed Great regret. as is view it my respect I cannot resist announced, the conviction that its decree opinion this case virtu annuls its decisions in ally previous regard powers on the subject taxation, is therefore fraught Avith court, each and danger citizen, every The conservation and republic.' orderly development our institutions rests on our of the results of the acceptance and their use as past, our lights future. guide steps the lesson that Teach séttled be overthrown principles may *179 & v. FARMERS’ TRUST LOAN CO. White, Harlan, Opinion:
Dissenting JJ. and turmoil must and confusion time, at ultimately of its function the In the result. discharge interpreting It this court exercises an sits Constitution, power. august the contentions of and the removed from political parties me that the of factions. seems to animosities accomplish of its mission can the ment secured lofty by stability If its and the which surrounds them. teachings sanctity of its conclusions is depend upon per permanency from time to make who, time, sonal those opinions a theatre of its will become inevitably up membership, be without coherence or strife, and its action will political our constitutional There is no consistency. great principle such as the and extent of the commerce law, nature power, or the or other of the Federal currency power, powers ,has not defined which been government, ultimately by of this court after and earnest adjudications long struggle. If we are to to the of our back sources go political original or are to of the economists system, appeal writings all is lost order unsettle these great everything principles, indi saved to the every nothing people. rights have vidual are been guaranteed by safeguards thrown around our If these are to them by adjudications. law of income assailed and as is settled overthrown, taxation I it, rights opinion, understand is concerned, so far as the Federal Constitution property, of little forbid that I convictions take worth. My strong in a full of conclusion which seems to me so part peril I am to do without reference to the country. so, utfwilling of what question my personal opinion upon subject might be if the were a new and was thus unaffected one, action framers, government, history and the line wisdom of of decisions this court. The long our forefathers in a written has often Constitution adopting been of a impeached theory interpretation written instrument did not afford complete protection as would be under a made Constitution liberty enjoyed up the traditions of a said, free it has been people. Writing, does not insure than tradition while does, greater stability TERM, 1894. *180 Harlan, Opinion:
Dissenting J. has been that The answer the always by flexibility. destroys of our the construction written Con of the fathers foresight to this from which, confided body, was ultimately stitution could its relied structure, always the nature judicial from the influence of freedom fac with act perfect of consistent the benefits interpretation. tion and to preserve is that of of a one body judicial The fundamental conception, on which are the court binding about precedents hedged b}r its members. the Break without personality regard and let it be felt in belief continuity, down this judicial court is to this depart constitutional great questions and to determine of its conclusions settled predecessors, of those who tem them all mere according opinion in will, fill its our Constitution bench, my porarily and become a most be bereft value dangerous judgment, and liberties of the to the instrument people. rights to include in an income tax the In to the right regard I think the the bonds interest corporations, municipal court, of this that the Federal decisions holding government to tax the of the state is without power agencies government, and that this settled bonds, embrace such line authority here. conclusive determines the upon my judgment ques- tion that where there is no to tax for power any purpose no direct indirect tax can be whatever, imposed. in
authorities cited are decisive opinion question. to one case and not to the other, because, relevant They in the one there is full the Federal case, power govern- ment whether the tax tax, only controversy being no is direct or indirect in the other there is while '; imposed therefore, whatever and, Federal government, whether direct or indirect, is levy, taxing beyond power.-
Mr. Justice Harlan he authorizes me to concurs say in herein views expressed. Harlan Justice further dissenting.
Mr. I concur so views entirely by general expressed Justice White reference to the of by questions disposed & FARMERS’ LOAN TRUST CO. 653 POLLOCK v. Harlan, Opinion: J.
Dissenting will do no more that I majority, judgment opinion the conclusions reached without indicate, than argument, are: Those conclusions consideration. me after much that no suit due effect statutory provision 1. Giving or collection of assessment of restrainin'g’the for the purpose Stat. 3224, Rev. court,” be maintained tax shall any § bill be affirmed. As should below the decree dismissing could not itself main- Trust Farmers’ Loan and Company or collection of the either the assessment tain a suit to restrain the maintenance a suit act of Congress, imposed and its directors restrain that a stockholder to corporation tend to defeat the tax would such from voluntarily paying *181 be an evasion of its the statute, pro- manifest of object the of to forbid intended issuing any process visions. Congress collection of in with the would interfere prompt anywise to are mere devices The suits the taxes imposed. present to which neither decrees, law a revenue strike down by general of States could be nor officer the United any the government record. made parties rightfully under the doctrines announced by principle, Upon a cases, in numerous court duty upon gains, profits, ” “a direct from the rents of land is not derived and income of the constitutional within the
tax on such land meaning pro- or direct taxes to visions appor- other capitation requiring to their States, the several tioned according respective among in instrument. the mode numbers determined prescribed by without by apportioning Such duty may imposed States the same population. according among and income de- and the 3. While profits, gains, property, from corporations rived belonging private property, of taxation for the are individuals, purpose paying subjects defence and the for the common the debts and providing the instrumentalities welfare of the United general of their are States execution powers employed by more of taxation any by government, subjects general than States are the the instrumentalities United subjects taxation States; any imposed directly by interest from issued derived bonds municipal corporation TERM, 1894. Harlan, Opinion: Dissenting J'. under State whose authority
for purposes, public is a burden the exercise of it is, instrumentality the State corporation creating powers case it is immaterial In such inquire may impose. in its nature or its a direct is, the tax operation, whether — for the instrumentalities of the States tax; an indirect settled, is well which, municipal corporations, among the benefit of for holding property, exercising powers — form- of national taxation, are not any subjects public while private corporations purpose, property -any to taxation individuals is and of subject general govern^ it has been ad- ment for national So purposes. frequently no an one in this and the longer open judged, court. about which the members of this the several questions
Upon divided I deem court are opinion, appropriate equally because views, withhold my expression opinion is silent those the Chief Justice regard questions. Company.
Hyde Trust No. 894. Appeal v. Continental for the Court of United States Southern Circuit District of New York. Justice: This ease differs no essential respect Chief in the same decided, disposed
from that and must be way. just *182 Decree accordingly. Mr. Field entitled in Justice this case as opinion Company. well as Pollock Farmers’ Loan & Trust Hablan Justice White and Mr. Justice dissented given dissenting the decree in in their this case the reasons in Pollock v. Farmers’ opinions Company. Loan Trust notes form of and thus become insurers premiums, FARMERS’ & LOAN TRUST CO. Argument Appellee Hr. Carter’s for in 894. in other words, a other; of each loss which by distributing a instance, in the first one, a falls, upon particular great those who in number. mutual in- Accordingly participate in surance their in cash, cash and premiums, pay partly fund, in the and thus create notes; shape partly an immediate draft can be in made, which case of a particular an sufficient furnish loss, it, at indemnity against if, the whole amount end is not year, exhausted paid the residue is losses, distributed, back. paying paid do not make a dollar of -in themselves instance. They profit any Then is said that there ais inexcusable wholly exemption of individuals and favor against corporations generally, are not a deduction allowed corporations $4000 from incomes, their individuals although engaged precisely that, business it. Imndertake to same this discrimi- enjoy say nation is not founded considerations, but upon public that it is entirely indisputably right. and loan case has been alluded building companies to, and it is said some of them have accumulations of large What is and loan a'building is a property. company? number of contrivance which small people means large unite small their contributions may made together, from time from the to'-time, mainly savings labor, to- get fund which be. used large gether purchase and its houses for property improvement building members, and which becomes their occupation property when shall have completed it. requisite payments It is an institution of the same character with banks savings and life insurance and calculated to companies perform same useful services to the I wonder that public. large prop- holders should ever with look erty the exten- jealousy upon sion of as to such as this. indulgence are the enterprises They most efficient which can in- agencies possibly employed duce mass of the to make which great community savings will end in their eventually hold- becoming private property ers, and attach them to thus the institution and make them at time to defend all enemies. ready against There are other has been exemptions exception VOL. CL VII—34
Notes
notes individuals or state out ing LOAN & TRUST CO. FARMERS’ Opinion of the Court. be classed under the head of duties, well that might held same case, Soule’s within category as falling to be of same nature as declared Wall. bills of lading, on freight receipts, pas taxation excise railroad company. Referring issued by tickets senger which framed the the convention Consti the discussions observed that what was said Chase Justice Mr. Chief tution, as to the true meaning shows uncertainty doubtless there an but it indicates also understanding tax; term direct levied such as were capitation, direct taxes valuation or, perhaps, lands appurtenances; and on
notes the circulation as money for the Waite, Justice Mr. Chief speaking authority; “ on the laid is not obligation, tax thus court, said: The on its use in a way.” particular of a succession was the case Wall. Rew, 331, 23 v. Scholey ” “ or an excise tax to be duty held plainly which the court to become estate or right the devolution upon income thereof, same, entitled beneficially clvii —37 vol. TERM, $78 Opinion of the Court. was like the succession tax possession expectancy.” held constitutional State, v. 8 Mager Grima, How. 490; distinction between the of a State and power of the United States to the succession of regulate prop: to, was not referred does erty to have been appear 'in the mind of the court. The stated that the act of opinion from' which the Parliament, under particular con provision was had isideration received borrowed, the same substantially under (cid:127)construction, cases that act hold that a succession n duty a tax is not income or but on upon upon property, actual benefit derived the individual, determined as pre (cid:127) re H. scribed. In 3 & Elwes, N. 719; Attorney-General H, H.2 & C. S. C. 362; 1023; H. & C. (H. Sefton, L.) L. Cas. 257. In Railroad v. Collector,100 S. Company 595, U. of a tax collected of a validity corporation interest “ its bonds was held an excise paid essentially of the class of the business mentioned in the corporations And statute.” Mr. Justice Miller, delivering opinion, said : As the sum involved this suit small, and the law tax in under collected has since long case been little consequence repealed, regards any n it as rule of future involved action.” principle All these cases are from that in hand, distinguishable us consider that of :'this v. United brings Springer