Rensselaer Republican, Volume 27, Number 33, Rensselaer, Jasper County, 11 April 1895 — THE INCOME TAX. [ARTICLE]

THE INCOME TAX.

A Supreme Court Decision on the T ° TO ( That Portion Affecting Rent*. State, County and Municipal Bond* Declared Void. Tireiong expected decision 81 the United States Supreme Court on the income tax ease was handed down by Chief Justice Fuller, at Washington, Monday. The court knocked put'the law so far as it taxed incomes derived from rents and also from State, county and munlcipal By a tie vote of the court, the law was sustained in other respects. The court’s opinion in Charles Pollock vs. the Farmers’ Loan and Trust Company is as follows: —r-- ■■ . ' ' It is establish’©}*— 1. Thau by the Constitution, Federal taxation is divided into two great classes: Direct taxes£nd duties, imposts and excise. ■ _ -* ■•. ■ . - 2. The imposition of direct taxes is governed by the rule of apportionment among the severaLStates, according to numbers, and the imposition of duties, imposts and excises by the rule of uniformity throughout the United States. 3. That the principle that taxation and representation go together was intended tq.be, and was, preserved in the Constitution by the establishment of the rule of apportionment among the several States, io that such apportionment should be according to numbers in each State. 4. That the States surrendered their power to levy imposts and to regulate commerce to the general Government, and gave the concurrent power to levy direct taxation in reliance on the protection afforded by the rules prescribed, and that the promises of the Constitution cannot be disturbed by legislative action. 5. That these conclusions result from th text of the constitution, and are supported by the historical evidence furnished by the circumstances surrounding the framing and adoption of that instrument, and the views of those who framed and adopted it. 6. That the understanding and expectation at the time of the adoption of the constitution was that direct taxes would not be levied upon the general Government except under the pressure of extraordinary exigency, and such has been the practice down to Aug. 15. 1894. If the power to do so is to be exercised as an orlinaryatid usual means of supply, that fact furnishes an additional reason for circumspection in disposing of the present case. 7. That taxes on real estate belong to the class of direct taxes, and that the taxes on the rent or incomes of real estate, which if the incident of its ownership, belong to the same class. 8. That by no previous decision of this court has this question been adjudicated to the contrary of the conclusions now announced. 9. That so much of the act of August 15, 1894, as attempts to impose a tax upon the rent or income of real estate without apportionment is invalid. The court is further of the opinion that’ the act ot August 15,1894, is invalid so far as it attempts to levy a tax upon the income derived from municipal bonds. “As a municipal corporation is a representative of the State and one of the Instrumentalities of the State government, the property and revenues of municipal corporations are not the subject jf Federal taxation; nor is the incomederived from State, county and municipal lecurities, since taxation on the interest therefrom operates on the power to borrow before it is exercised ana has a sensible influence on the contract, and, therefore. such a tax is a tax on the power of the States and their instrumentalities to borrow money, and consequently repugnant to the constitution. Upon each of the other petitions argued Lt the bar, towit: (1) Whether the void provisions as to the rents and incomes from real estate invalidates the whole let. (2) Whether as to the krcome from personal oroperty as such the adt is unconstitutional as laying dlr.ect taxes. (3) Whether any parts of the tax. if not conlidered as a direct tax, is invalid for want >f uniformity on either of the grounds luggested. “The Justices who heard the arguments ire equally divided, and, therefore, no opinion is expressed. The result is that the decree <>f the Circuit Court is reversed ind the case remanded with directions to inter a decree in favor of complainant in respect only to the voluntary payment, of the tax on its rents and income of the real estate, and that which it holds in trust, and on the income from the municipal bonds owned or so held by it.’It is estimated by officials that the decision 6f the Supreme Court in the income tax will reduce the revenue receipts under the law about 50 per cent