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description. It has not a fixed character peculiar to itself. It admits of all degrees of comparison; and is often connected with other words, which increase or diminish the impression the mind receives of the urgency it imports. A thing may be necessary, very necessary, absolutely or indispensably necessary. To no mind would the same idea be conveyed, by these several phrases. This comment on the word is well illustrated, by the passage cited at the bar, from the 10th section of the 1st article of the Constitution. It is, we think, impossible to compare the sentence which prohibits a State from laying "imposts, or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws," with that which authorizes Congress "to make all laws which shall be necessary and proper for carrying into execution” the powers of the general government, without feeling a conviction that the convention understood itself to change materially the meaning of the word "necessary," by prefixing the word "absolutely." This word, then, like others, is used in various senses; and, in its construction, the subject, the context, the intention of the person using them, are all to be taken into view.
This clause, as constructed by the State of Maryland, would abridge and almost annihilate this useful and necessary right of the legislature to select its means. That this could not be intended, is, we should think, had it not been already controverted, too apparent for controversy. We think so for the following reasons :
1. The clause is placed among the powers of Congress, not among the limitations on those powers.
2. Its terms purport to enlarge, not to diminish the powers vested in the government. It purports to be an additional power, not a restriction on those already granted.
We admit, as all must admit, that the powers of the government are limited, and that its limits are not to be transcended. But we think the sound construction of the Constitution must allow to the national legislature that discretion, with respect to the means by which the power it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it, in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional.
After the most deliberate consideration, it is the unanimous and decided opinion of this Court, that the act to incorporate the Bank of the United States is a law made in pursuance of the Constitution, and is a part of the supreme law of the land.
It being the opinion of the court that the act incorporating the bank is constitutional; and that the power of establishing a branch in the State of Maryland might be properly exercised by the bank itself, we proceed to inquire :
2. Whether the State of Maryland may, without violating the Constitution, tax that branch?
That the power of taxation is one of vital importance; that it is retained by the States; that it is not abridged by the grant of a similar power to the government of the Union; that it is to be concurrently exercised by the two governments; are truths which have never been denied. But, such is the paramount character of the Constitution, that its capacity to withdraw any subject from the action of even this power, is admitted. The States are expressly forbidden to lay any duties on imports or exports, except what may be absolutely necessary for executing their inspection laws. If the obligation of this prohibition must be conceded-if it may restrain a State from the exercise of its taxing power on imports and exports; the same paramount character would seem to restrain, as it certainly may restrain a State from such other exercise of this power, as is in its nature incompatible with, and repugnant to, the constitutional laws of the Union. A law, absolutely repugnant to another, as entirely repeals that other as if express terms of repeal were used.
This great principle is, that the Constitution and the laws made in pursuance thereof are supreme; that they control the Constitution and laws of the respective States; and cannot be controlled by them. From this, which may be almost termed an axiom, other propositions are deducted as corollaries, on the truth or error of which, and on their application to this case, the cause has been supposed to depend. These are, Ist, That a power to create implies a power to preserve. 2d, That a power to destroy if wielded by a different hand is hostile to, and imcompatible with these powers to create and preserve. 3d, That where this repugnancy exists, that authority which is supreme must control, not yield to that over which it is supreme.
The power of Congress to create, and of course to continue, the bank, was the subject of the preceding part of this opinion, and is no longer to be considered questionable.
That the power of taxing it by the States may be exercised so as to destroy it, is too obvious to be denied.
The sovereignty of a State extends to everything which exists by its own authority, or is introduced by its permission; but does it extend to those means which are employed by Congress to carry into execution powers conferred on that body by the people of the United States. We think it demonstrable that it does not. Those powers are not given by the people of a single State. They are given by the people of the United States, to a government whose laws, made in pursuance of the Constitution, are declared to be supreme. Consequently, the people of a single State cannot confer a sovereignty which will extend over them.
We find then, on just theory, a total failure of this original right to tax the means employed by the government of the Union, for the execution of its powers.
That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to cre
ate; that there is a plain repugnance, in conferring on one government a power to control the constitutional measures of another, which other, with respect to those very measures, is declared to be supreme over that which exerts the control, are propositions not to be denied.
We are unanimously of the opinion, that the law passed by the legislature of Maryland, imposing a tax on the Bank of the United States, is unconstitutional and void.
Note.-Congress has by statute permitted the taxation by States of national bank notes and shares of stock in national banks under certain prescribed conditions, as follows:
Be it enacted, etc., That circulating notes of national banking associations and United States legal tender notes and other notes and certificates of the United States payable on demand and circulating or intended to circulate as currency and gold, silver or other coin shall be subject to taxation as money on hand or on deposit under the laws of any State or Territory: Provided, That any such taxation shall be exercised in the same manner and at the same rate that any such State or Territory shall tax money or currency circulating as money within its jurisdiction.
Act Aug. 13, 1894, c. 281, Section 1, 28 Stat. 278.
Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the State within which the association is located; but the legislature of each State may determine and direct the manner and place of taxing all the shares of national banking associations located within the State, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State, and that the shares of any national banking association owned by non-residents of any State shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either State, county, or municipal taxes, to the same extent, according to its value, as other real property is taxed.
Act June 3, 1864, c. 106, Section 41, 13 Stat. III. Act Feb. 10, 1868, c. 7, 15 Stat. 34.
DIRECT AND INDIRECT TAXES.
HYLTON v. UNITED STATES.
3 DALLAS, 171. 1796.
This suit was originally brought in the Circuit Court for the District of Virginia, by the United States against one Daniel Hylton to recover the penalty imposed by Act of Congress of June 5, 1794, for not entering and paying the duty on a number of carriages for the conveyance of persons, which he kept for his own use. Hylton defended the suit on the ground that the tax was unconstitutional and void. The argument turned entirely upon the point whether the tax on carriages kept for private use was a direct tax. If it was not a direct tax, it was admitted to be rightly laid, within the first clause of the 8th section of Article I of the Constitution, which declares, "All duties, imposts and excises shall be uniform throughout the United States.” If it were a direct tax, it was unconstitutional, under another clause of the same section of the Constitution, which provides, "no capitation or other direct tax shall be laid, unless in proportion to the census or enumeration of the inhabitants of the United States.” The Circuit Court was divided in its opinion, whereupon Hylton confessed judgment as a foundation for his appeal to the Supreme Court of the United States.
The court delivered their opinions seriatim.
The following opinion was delivered by MR. JUSTICE CHASE:
I think, an annual tax on carriages for the conveyance of persons may be considered as within the power granted to Congress to lay duties. The term duty is the most comprehensive, next to the general term tax; and practically in Great Britain, whence we take our general ideas of taxes, duties, imposts, excises, customs, etc., embraces taxes on stamps, tolls for passage, etc., and is not confined to taxes on importation only. It seems to me, that a tax on expense is an indirect tax; and I think, an annual tax on a carriage for the conveyance of persons, is of that kind; because a carriage is a consumable commodity; and such annual tax on it, is on the expense of the owner. I am inclined to think, but of this I do not give a judicial opinion, that the direct taxes contemplated by the Constitution, are only two, to wit, a capitation or poll tax, simply, without regard to property, profession or any other circumstance; and a tax on land. I doubt, whether a tax, by a general assessment of personal property, within the United States, is included within the term direct tax.
I am for affirming the judgment of the Circuit Court.
POLLOCK v. FARMERS' LOAN AND TRUST COMPANY.
157 U. S., 429; AND 158 U. S., 601. 1895.
This suit was instituted by Pollock and other persons, stockholders in the Farmers' Loan and Trust Company, to restrain the officers and directors of the company from paying to the United States the taxes assessed upon the net profits of the company and the incomes of all trust estates which the company held as trustee, exceeding $4000. The bill charged that the Act of Congress of August 15, 1894, relating to the collection of an income tax was unconstitutional and void (1) because it was a direct tax on real estate by being imposed on rents, issues and profits of real estate; also that it was a direct tax on personal property and was not apportioned among the several States as required by the Constitution. (2) If not a direct tax, nevertheless it was unconstitutional since it was not uniform as required by the Constitution, as incomes under $4000 were exempted from taxation, The Act of Congress provided as follows: "There shall be assessed, levied, collected and paid annually upon the gains, profits and income received in the preceding calendar year by every citizen of the United States, whether residing at home or abroad, and every person residing therein, whether said gains, profits, or income be derived from any kind of property, rents, interest, dividends or salaries, or from any profession, trade, employment or vocation carried on in the United States, or elsewhere, or from any other source whatever, a tax of two per centum on the amount so derived over and above four thousand dollars," etc.
It was held that the statute was unconstitutional so far as it levied a tax on the rents or income of real estate (157 U. S., 429). On other questions involved in the case the court was unable to decide because the judges were equally divided in opinion. A second hearing was granted by the court, (158 U. S., 601). The opinion was delivered by CHIEF JUSTICE FULLER.
As heretofore stated, the Constitution divided Federal taxation into two great classes, the class of direct taxes, and the class of duties, imposts, and excises; and prescribed two rules which qualified the grant of power as to each class.
The power to lay direct taxes apportioned among the several States in proportion to their representation in the popular branch of Congress, a representation based on population as ascertained by the census, was plenary and absolute; but to lay direct taxes without apportionment was forbidden. The power to lay duties, imposts, and excises was subject to the qualification that the imposition must be uniform throughout the United States.
Our previous decision was confined to the consideration of the validity of the tax on the income from real estate, and on the income from municipal bonds. The question thus limited was whether such taxation was direct or not, in the meaning of the Constitution, and the court went no farther, as to the tax on the income from real estate, than to hold that it fell within the same class as the source whence the income was derived ; that is, that a tax upon the realty and a tax upon the receipts therefrom were alike direct; while as to the income from municipal bonds, that could not be taxed because of want of power to tax the source, and no reference was made to the nature of the tax as being direct or indirect.
We are now permitted to broaden the field of inquiry, and to determine to which of the two great classes a tax upon a person's entire income, whether derived from rents, or products, or otherwise, of real estate, or from bonds, stocks, or other forms of personal property, belongs; and we are unable to conclude that the