court in only declaring the taxation on rents from real property, and interest on municipal bonds unconstitutional, laid the burden of paying the expenditures of the country on industry, and relieved property from its just proportion of the tax. Partial failure signalized the triumph of capital, and unworthy action will probably result in the repeal of the unhappy statute. At a critical time when the eyes of the whole country were watching the conflict, when broad minded men hoped for a crushing defeat of the pet schemes of the scum of Europe, there was a voice heard, lamentation and weeping, Rachel weeping for her children and would not be comforted because they are not (hers). The holdings of the court are simple and clear, in so far as the construction of the Constitution as to taxation are concerned. They

are:

1. That, by the Constitution, federal taxation is divided into two great classes: Direct taxes and duties, imposts and excises.

"2. That the imposition of direct taxes is governed by the rule of apportionment among the several States 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 to be and was preserved in the Constitution by the establishment of the rule of apportionment among the several States, so 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 it the concurrent power to levy direct taxes in reliance on the protection afforded by the rules prescribed, and that the compromises of the Constitution cannot be disturbed by legislative action.

"5. That these conclusions result from the 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

by the general government, except under the pressure of extraordinary exigency, and such has been the practice down to August 15, 1894. If the power to do so is to be exercised as an ordinary and 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 income of real estate, which is 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.

66

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."

And in relation to municipal bonds it is "the court is further of opinion that the act of 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 the representative of the State and one of the instrumentalities of the State government, the property and revenue of municipal corporations are not the subjects of federal taxation, nor is the income derived from State, county and municipal securities, since taxation on the interest therefrom operates on the power to borrow before it is exercised, and 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."

Turning from the unsatisfactory disagreement in relation to the rest of the act to the opinion of Justice Stephen J. Field, we may find a brilliant, intellectual and learned discussion of the power of the government to levy taxes; in speaking of the history of taxation in this country Justice Field says:

66

The subject of taxation in the new government which was to be established created great interest in the convention which framed the Constitution, and was the cause of much difference of opinion among its members and earnest contention between the States. The great source of weakness of the confederation was its inability to levy taxes of any kind for the support of its government. To raise revenue it

was obliged to make requisitions upon the States, which were respected or disregarded at their pleasure. Great embarrassments followed the consequent inability to obtain the necessary funds to carry on the government. One of the principal objects of the proposed new government was to obviate this defect of the confederation by conferring authority upon the new government by which taxes could be directly laid whenever desired. Great difficulty in accomplishing this object was found to exist. The States bordering on the ocean were unwilling to give up their right to lay duties upon imports, which were their chief source of revenue. The inland States, on the other hand, were unwilling to make any agreement for the levying of taxes directly upon real and personal property, the smaller States fearing that they would be overborne by unequal burdens forced upon them by the action of the larger States.

In this condition of things great embarrassment was felt by the members of the convention. It was feared at times that the effort to form a new government would fail. But hap pily a compromise was effected by an agreement that direct taxes should be laid by Congress by apportioning them among the States according to their representation. In return for this concession by the inland States, the States bordering on navigable waters consented to relinguish to the new government the control of

duties, imposts, and excises, and the regulation

of commerce, with the condition that the duties, imposts, and excises should be uniform throughout the United States. So that, on the one hand, any thing like oppression or undue advantage of any one State over the others would be prevented by the apportionment of the direct taxes among the States according to their representation, and, on the other hand, any thing like oppression or hardship in the levying of duties, imposts, and excises would be avoided by the provision that they should be uniform throughout the United States. The Constitution, accordingly, when completed, divided the taxes which might be levied under the authority of Congress into those which were direct and those which were indirect."

In continuing, Justice Field says, concerning the tax on rents and income of real property: "As stated, the rents and income of real

property are included in the designation of direct taxes as part of the real property. Such has been the law in England for centuries, and in this country from the early settlement of the colonies; and it is strange that any member of the legal profession should, at this day, question a doctrine which has always been thus accepted by common-law lawyers. It is so declared in approved treatises upon real property and in accepted authorities upon particular branches of real-estate law, and has been so announced in decisions in the English courts and our own courts without number. Thus, in Washburn on Real Property, it is said that 'a devise of the rents and profits of land, or the income of land, is equivalent to a devise of the land itself, and will be for life or in fee, according to the limitation expressed in the devise.' (Vol. 2, p. 695, § 30.)

"In Jarman on Wills it is laid down that 'a devise of the rents and profits or of the income of land, passes the land itself, both at law and in equity, a rule, it is said, founded on the feudal law, according to which the whole beneficial interest in the land consisted in the right to take the rents and profits. And since the act of Vict., ch. 26, such a devise carries the fee-simple, but before that act it carried no

more than estate for life, unless words of inheritance were added.' Mr. Jarman cites numerous authorities in support of his statement.

(South v. Alleine, 1 Salk. 228; Doe, d. Goldin,

v. Lakeman, 2 B. & Ad. 42; Johnson v. Arnold, 1 Ves. 171; Baines v. Dixon, 1 D. 42; Mannox v. Greener, L. R., 14 Eq. 456; Bland v. Bill, 2 D. M. & G. 781; Plenty v. West, C. B. 201.)

"And what answer do we receive to the adjudications? Those rejecting them furnish no proof that the framers of the Constitution did. not follow them, as the great body of the people of the country then did. An incident which occurred in this court and room twenty years ago may have become a precedent. To a powerful argument then being made by a distintinguished counsel upon a public question, one of the judges exclaimed that there was a conclusive answer to his position, and that was that the court was of a different opinion. Those who decline to recognize the adjudications cited may likewise consider that they have a

conclusive answer to them in the fact that they also are of a different opinion. I do not think So. The law, as expounded for centuries, cannot be set aside or disregarded because some of the judges are now of a different opinion from those who, a century ago, followed it in framing our Constitution. Hamilton, speaking on the subject, asks: 'What is property but a fiction without the beneficial use of it?' And adds: 'In many cases the income or annuity is the property itself.' It must be conceded that whatever affects any element that gives an article its value in the eye of the law affects the article itself. In Brown v. Maryland (12 Wheat. 419) it was held that a tax on the occupation of an importer is the same as a tax on his imports, and as such was invalid. It was contended that the State might tax occupations, and that this was nothing more, but the court said, by Chief Justice Marshall (p. 444): 'It is impossible to conceal from ourselves that it is varying the form without varying the substance. It is treating a prohibition which is general as if it were confined to a particular mode of doing the forbidden thing. All must perceive that the tax on the sale of an article imported only for sale is a tax on the article itself.''

The clearness and conciseness of the opinion as to the question of uniformity of levying indirect taxes is a special feature; on this question Justice Field writes:

"But the law is not invalid merely in its disregard of the rule of apportionment of the direct tax levied. There is another and an equally cogent objection to it. In taxing incomes other than rents and profits of real estate, it disregards the rule of uniformity which is prescribed in such cases by the Constitution. The eighth section of the first article of the Constitution declares that the Congress shall have no power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defence and general welfare of the United States, but all duties, imposts and excises shall be uniform through out the United States.' Excises are a species of tax consisting generally of duties laid upon the manufacture, sale or consumption of commodities within the country, or upon certain callings or occupations often taking the form of exactions for licenses to pursue them. The

taxes created by the law under consideration as applied to savings banks or to insurance companies, whether fire, life or marine, or to building, or other associations, or to conduct any other kind of business, are excise taxes, and fall within the requirements, so far as they are laid by Congress, that they must be uniform throughout the United States.

"The uniformity thus required is the uniformity throughout the United States of the duty, impost and excise levied. That is, the tax levied cannot be one sum upon an article at one place and a different sum upon the same article at another place. The duty received must be the same at all places throughout the United States, proportioned to the quantity of the article disposed of or the extent of the business done. If, for instance, one kind of wine or grain or produce has a certain duty laid upon it proportioned to its quantity in New York, it must have a like duty proportioned to its quantity when imported at Charleston or San Francisco, or if a tax be laid upon a certain kind of business proportioned to its extent at one place, it must be a like tax on the same kind of business proportioned to its extent at another place. In that sense the duty must be uniform throughout the United States."

It is contended by the government that the Constitution only requires an uniformity geographical in its character. That position would be satisfied if the same duty were laid in all the States, however variant it might be in different places of the same State. But it could not be sustained in the latter case without defeating the equality, which is an essential element of the uniformity required so far as the same is practicable.

Mr. Justice Miller, in his lectures on the Constitution, 1889-90, pages 240 and 241, said of taxes levied by Congress: "The tax must be uniform on the particular article, and it is uniform if it is made to bear the same percentage over all the United States. That is manifestly the meaning of this word as used in this clause. The framers of the Constitution could not have meant to say that the government, in raising its revenues, should not be allowed to discriminate between the articles which it should tax."

In discussing generally the requirement of uniformity found in State Constitutions, he

said: "The difficulties in the way of this construction have, however, been very largely obviated by the meaning of the word uniform,' which has been adopted, holding that the uniformity must refer to articles of the same class. That is, different articles may be taxed at different amounts, provided the rate is uniform on the same class everywhere, with all people, and at all times."

One of the learned counsel puts it very clearly when he says that the correct meaning of the provisions requiring duties, imposts, and excises to be "uniform throughout the United States," is that the law imposing them should "have an equal and uniform application in every part of the Union." If there were any doubt as to the intention of the States to make the grant of the right to impose indirect taxes, subject to the condition that such taxes shall be in all respects uniform and impartial, that doubt, as said by counsel, should be resolved, in the interest of justice, in favor of the taxpayer. Exemptions from the operation of a tax always create inequalities. Those not exempted must in the end bear an additional burden or pay more than their share. A law containing arbitrary exemption can in no just sense be termed uniform. We do not think that Congress has rightfully the power, at the expense of others owning property of the like character, to sustain private trading corporations, such as building and loan associations, savings banks, and mutual life, fire, marine, and accident insurance companies, formed under the laws of the various States, which advance no national purpose or public interest, and exist solely for the pecuniary profit of their members. When property is exempt from taxation the exemption, as has been justly stated, must be supported by some consideration that the public and not private interests will be advanced by it. Private corporations and private enterprises cannot be aided under the pretense that it is the exercise of the discretion of the Legislature to exempt them. (Loan Association v. Topeka, 20 Wall. 655; Parkersburg v. Brown, 106 U. S. 487; Barbour v. Board of Trade, 82 Ky. 645, 654, 655; Lexington v. McQuillan's heirs, 9 Dana, 513, 516, 517, and Sutton's heirs v. Louisville, 5 Dana, 28, 31.)

The discriminating features of the law are shown to be:

What

The income tax law under consideration is marked by discriminating features which affect the whole law. It discriminates between those who receive an income of $4,000 and those who do not. It thus vitiates, in my judgment, by this arbitrary discrimination, the whole legislation. Hamilton says, in one of his papers (the 'Constitutionist '): The genius of liberty repudiates everything arbitrary in taxation. It exacts that every man, by a definite and general rule, shall know what propor tion of his property the State demands. ever liberty we may boast of in theory, it cannot exist in fact while (arbitrary) assessments continue.' The legislation in the discrimination it makes is class legislation. Whenever a distinction is made in the burdens a law imposes, or in the benefits it confers on any citizens by reason of their birth, or wealth, or religion, it is class legislation, and leads inevitably to oppression and abuses, and to general unrest and disturbance in society. It was hoped and believed that the great amendments to the constitution which followed the late civil war had rendered such legislation impossible for all future time. But the objectionable legislation reappears in the act under consideration. is the same in essential character as that of the English income statute of 1691, which taxed Protestants at a certain rate, Catholics as a class at double the rate of Protestants, and Jews at another and separate rate. Under wise and constitutional legislation every citizen should contribute his proportion, however small the sum, to the support of the government, and it is no kindness to urge any of our citizens to escape from that obligation. If he contributes the smallest mite of his earnings to that purpose, he will have a greater regard for the government and more self-respect for himself, feeling that though he is poor in fact, he is not a pauper of his government. And it is to be hoped that, whatever woes and embarrassments may betide our people, they may never lose their manliness and self-respect. Those qualities preserved, they will ultimately triumph over all reverses of fortune.”

It

Justice Field also shows other considerations against the law: