high attribute. The principle announced in certain of these adjudications requires some modification of the speculative doctrines upheld in preceding sections. Following out the theory that the United States is, within the sphere of its attributes and functions, supreme, I reached the conclusion that the power of taxing held by the nation could be exercised upon all species of property, to the exclusion, if need be, of the states' subordinate power. I did not claim that the national power could be used upon or against any of their governmental machinery, means, or instruments, nor upon property belonging to the states; I carefully limited. its exercise to private property. The Supreme Court, however, has practically created a further limitation. It denies that the United States government is supreme in respect to this particular function. It declares that the Congress on the one hand, and the several states on the other, are coequal within the domain of legislation belonging to each. Neither can trespass upon the province of the other. The same restraints which, from the necessity of the case, are applied to the exercise of the taxing power by the states in respect to the agencies and instrumentalities of the national government, are also to be applied to the exercise of the taxing power by the nation in respect to the agencies. and instrumentalities of the state governments. In short, these implied limitations are entirely reciprocal.

§ 295 b. There are implied limitations upon the national power of taxation which prevent it from infringing upon the governmental functions and attributes of the states. The United States is not supreme in this respect, but its government and those of the several states occupy a position of equality, except so far as the latter may be expressly restricted by certain provisions of the Constitution. The doctrine that states may not lay taxes upon the agencies and instrumentalities of the nation applies in the same manner, to the same extent, and for the same reason, to the exercise of the taxing power by the United States. Congress cannot lay a tax upon any of the agencies or instrumentalities which are necessary or appropriate for the legitimate governmental

acts and operations of the states. Applying this principle, it is now established that Congress cannot impose an income tax upon the salary of a state judicial officer, even though the salary is not subjected to the impost by name, but the statute is general in its terms, applying to all incomes greater than a certain specific amount. In accordance with the same principle, the United States cannot tax a municipal corporation in respect of its revenues, for such corporation is a part of the governmental machinery of a state. Although the question is not raised nor even alluded to in either of these two adjudications, their ratio decidendi clearly embraces within its effect the case of stamps upon the process and other papers used in judicial proceedings before the state courts. Such modes of excise, as a means of taxing by the United States, are plainly condemned. It would seem also that the provision, formerly contained in the Internal Revenue Act, prohibiting conveyances and agreements in writing from being offered in evidence in trials before the state courts unless duly stamped, was equally invalid.

§ 295 c. A most important principle has been announced in a very recent and well considered case. No unlimited power, it is said, exists in any department of the government, state or national. Even in the absence of express restrictions, there are certain limitations arising from the essential nature of all free governments. The power of taxation, whether wielded by Congress or by a state legislature, is subject to these restraints which inhere in the function itself, and control its use and operation. Every tax, to be valid, must be imposed for some public object, an object that is within the purposes for which governments are established. The taxing power cannot be exercised in aid of enterprises strictly private, for the benefit of individuals, although in a remote and collateral manner the local public may be benefited. This principle, if settled, will be fruitful of most important results. And recent decisions fully 1 Collector v. Day, 11 Wall. 113.

2 U. S. v. Railroad Co; 17 Wall. 322.

8 Loan Asso. v. Topeka, 20 Wall. 655, 663, per Miller, J.

confirm the doctrine laid down in the foregoing case. Thus, in Cole v. La Grange,1 a statute of Missouri was held unconstitutional, which authorized a city to issue its bonds to aid a private iron and steel company; such bonds being payable like other municipal obligation by taxation of its citizens.

Second. What Powers of Taxation are held by the Several States.

§ 296. We are now brought to the consideration of a subject which is as important as it is interesting, and which has repeatedly come before the Supreme Court of the United States for decision. What are the relations of the nation and the several states in the exercise of the taxing power by each? Is either subject to the other, and if so to how great an extent? It is evident that the Constitution expressly places some limits upon the capacity of the states to tax. They may not lay duties on imports and exports, except such as shall be absolutely necessary for the execution of their inspection laws, or lay any tonnage duties, without the consent of Congress. In addition to these express, are there any implied restrictions upon the taxing power of the state? The whole subject may, therefore, be separated into two divisions: (1) the implied limitations, and (2) the express limitations.

I. Implied Limitations upon the Power of the States to Tax. § 297. The United States government, within its sphere of action, is paramount, and the states are subordinate. This proposition is contained in the express language of the Constitution, and has been fully illustrated in Part I. of this work. Because the nation is thus paramount, its taxing power is supreme; it may be applied to all subjects; it may be exerted upon all individuals and upon every species of property; and its demands must first be satisfied before the states can resort to the exercise of their function.

On the other hand, the states, because they are bodies pol\ 1 113 U. S. 1. See also Parkersburg v. Brown, 106 U. S. 487. ED.

itic, have also the power to tax, which they may exert in all instances, upon all subjects, and in all methods, except so far as they are restrained by the national Constitution.1 In addition to the express restrictions upon it referred to in § 271, this power of the states is limited by the very nature of the entire political society; by the dual division of governmental attributes; by the supremacy of the nation, and the subordination of the local commonwealths. This implied limitation consists in two separate and distinct features. (1.) The state power to tax must be exercised second to that of the general government; or, in other words, the claims of the nation upon persons and property have priority and must be satisfied even to the exclusion of those of the states. This feature is involved in the very idea of supremacy. (2.) The state power cannot be exerted upon the property of the general government, or upon means which that government has adopted to carry on its public affairs.

§ 298. These propositions are fully sustained by the fol

1 And the Constitution does not prohibit any state from including in the taxable property of its own citizens any bonds, debts, or claims due such citizens from some other state, although the latter state may exempt them from its own taxation. Bonaparte v. Tax Court, 104 U. S. 592. In an earlier case the doctrine had been laid down in these words by Harlan, J.: "It may, therefore, be regarded as the established doctrine of this court, that so long as the state, by its laws, prescribing the mode and subjects of taxation, does not intrench upon the legitimate authority of the Union, or violate any right recognized, or secured, by the Constitution of the United States, this court, as between the state and its citizen, can afford him no relief against state taxation, however unjust, oppressive, or onerous." McCulloch v. Maryland, 4 Wheat. 316; Bank v. Billings, 4 Pet. 514; St. Louis v. Ferry Co. 11 Wall. 423; State Tax on Foreign Held Bonds, 15 Wall. 300. "Our duty is to inquire whether the Constitution prohibits a state from taxing, in the hands of one of its resident citizens, a debt held by him upon a resident of another state, and evidenced by the bond of the debtor, secured by deed of trust or mort gage upon real estate situated in the state in which the debtor resides. It is for the state to determine whether such property shall be taxable." The taxation of it violates no provision of the Federal Constitution. Kirtland v. Hotchkiss, 100 U. S. 491. So a state legislature may remit, or order a restitution of a town or county tax, without violating the Federal Constitution. Board of Commissioners v. Lucas, 93 U. S. 108. ED.

lowing decisions of the Supreme Court. Congress had chartered the Bank of the United States, a branch of which was established in Baltimore. The legislature of Maryland passed an act which had the effect to lay a tax upon this branch. The question as to the validity of this tax was presented in McCulloch v. The State of Maryland,1 and decided in the negative. The state law, as it applied to the bank, was held to be unconstitutional and void. The opinion of the court, given by C. J. Marshall, is so long and elaborate. that it cannot be quoted here, but it should be carefully read by all students, professional or general, who desire to understand the nature of our government. It is reported that William Pinckney said of this opinion, that in it he saw a pledge of the immortality of the Union. The argument is, that as the United States is paramount, all the means which it may lawfully adopt for carrying on public affairs are supreme and free from state legislation. As the state could not repeal or alter the charter of the bank, so it could not do anything which tends to hinder or impair the efficiency of that institution. But the right to tax implies the right to destroy; for if the state may tax at all, it may tax to such a degree as to prevent the operation of the bank; and any amount of taxation has that tendency.

The same question was afterwards again brought up in Osborn v. The Bank of the United States.2 The state of Ohio had laid a special tax of $50,000 a year upon a branch. of the bank, for the express purpose of destroying it. The case showed the results which might be apprehended from the exercise by the states of a power to tax the means of carrying on the general government. The Supreme Court adhered to their former view.

§ 299. The doctrine was applied under very different circumstances in the case of Dobbins v. The Commissioners of Erie County. A captain of a United States revenue cutter had been taxed in Pennsylvania upon his salary as a national officer. The sole question was as to the validity of the state tax; and the court unanimously held that it was void, as be1 4 Wheat. 316. 29 Wheat. 738. 3 16 Pet. 435.