apply to the establishment of parks, as it did to the improvement of streets. Another reason for declaring the act void was, that it was in conflict with the Constitution, which prohibits the formation of corporations by special act, except for municipal purposes. The purpose of this corporation was not municipal; to be such a corporation it must exercise some of the functions of government, local or general, such as are usually exercised by the subdivisions of the State.1 1 State v. Leffingwell, 54 Mo. 458. CHAPTER XXIII. FEDERAL TAXATION-CUSTOMS. $152. The Source and Limits of Federal Taxation.-Is the source inherent in the legislative department of the government, and the Constitution a mere limit on the power of taxation, as in the case of States? It would seem to be clear that it is not. In a State, the legislature is the direct representative of the people, the source of all power; it is one of the co-ordinate branches of government in which resides the sovereign powers of the State. The legislature has all legislative power. The Constitution limits the power; it does not. grant the power to legislate. Taxation is but one of the aspects of the exercise of legislative power. But in a federal government, created by sovereign States, not by the people directly, the powers of such a government are the result of compact or agreement; it has no inherent powers; it had no existence before the compact. All the powers of such a government are delegated; they originate in grants. The Constitution is that grant or delegation of power, and the power of taxation is one of those powers, whose source is found in the Constitution. That instrument provides: "The Congress shall have power, to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States." 1 "Representatives and direct taxes shall be apportioned among the several States which may be included within this Union, according to their respective numbers." 2 "No capitation, or other direct tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.s "No tax or duty shall be laid on articles exported from any State." 4 "No preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another; nor shall 1 Const. art. 1, § 8, par. 1. 3 Const. art. 1, § 9, par. 4. ? Const. art. 1, § 2, par. 3. + Const. art. 1, § 9, par. 5. vessels bound to or from one State be obliged to enter, clear or pay duties in another." 1 The confederation of States, which immediately preceded the present federal government, did not possess the power to tax the persons or property of the citizens of the respective States composing that confederation. For such sums as were needed it made requisitions upon the States, who exercised this important function which they had not granted to the confederation. It was the want of this vital power which made that government inefficient, and was one of the controlling influences that brought about the formation of the present government. That defect is now remedied, and the present government has a vast taxing power; but still we must remember that it lies in grant, and to that grant we must look for the power and all its express limitations. "The national government, though supreme within its own sphere, is one of limited jurisdiction and specific functions. It has no faculties but such as the Constitution has given it, either expressly or incidentally by necessary intendment. Whenever any act done under its authority is challenged, the proper sanction must be found in its charter, or the act is ultra vires and void." 2 3 Direct Taxes.-The kinds of taxation authorized are both direct and indirect. The construction given to the expression "direct taxes," is that it includes only a tax on land and a poll tax, and this is in accord with the views of writers upon political economy. The first case which arose under the Constitution was that of a tax on carriages, which was considered a tax on the expense of living, and not a direct tax; the second was a tax on income, which was also classed as an indirect tax. 4 The rule prescribed by the Constitution for the imposition of direct taxes is that they shall be according to the population of the respective States, as ascertained by the census previously taken. This tax may be imposed not only in the States but in the territories and in the District of Columbia. When the United States imposes a tax on land, the same principles apply to its collection, by the sale of land or otherwise as obtain in the case of State taxation. All the provisions of the act of Congress on the subject must be strictly complied with, and the deed of the marshal like that of a sheriff, is not 1 Const. art. 1, § 9, par. 6. 2 Swayne, J., in Pacific Ins. Co. v. Soule, 7 Wall. 444. Hylton v. U. S. 3 Dallas, 171, 180; Pacific Ins. Co. v. Soule, 7 Wall. 433, 444. See ante, Ch. 1, § 3. 4 Loughborough v. Blake, 5 Wheat. 317. prima facie evidence of title. The purchaser claiming under it must establish all the facts necessary to authorize a sale under the act.1 Under the act 1861, amended in 1862 and 1863, a land tax was imposed by the United States. This act, as amended in 1862, was considered a tax directly on the land as such, and not on the owner, to be measured by the value of his land, so that a sale for the non-payment of taxes, vested in the purchaser not merely the interest of the person assessed for taxes on the land, but an absolute title, cutting off a rent charge or any other interest in the land." In the same case it was held that the authority given to the commissioners to bid off the land for the United States, provided the amount bid did not exceed two-thirds of its assessed value, was one to be exercised in their discretion; that the statute was not mandatory; and that the provision was in the interest of the tax-payers. The former act only required them to bid it off for the United States, when the amount bid by others did not exceed the amount of the tax, with interest and costs. This allowed the commissioners to be competitive bidders up to that amount, but not to exceed the limit named. The question whether these acts forfeited lands for the non-payment of taxes has been discussed. The Supreme Court of the United States took the view that office found or some equivalent act was necessary to complete a forfeiture, and vest title to land, but that a legislative act directing the possession and appropriation of land is equivalent to office found. The construction given to these acts was that Congress did not intend to forfeit for mere non-payment, and that the forfeiture and the vesting of title were to follow a sale for non-payment." Under these acts the owner of the land, or any one for him, was privileged to redeem at any time before sale, and the restriction that the party redeeming should be loyal to the government applied only to redemption after sale; and where property was held in trust for a married woman, the trustee was allowed to redeem without taking the oath, that provision being restricted to the owner when he applies in person to redeem; and although the trustee did not have the legal title, owing to some defect in the mode of his appointment, yet as he regarded himself a trustee of the property, the cestuis que trust so regarded him, and he professedly acted in their behalf and for their interests, he was considered as coming within the description of 1 Parker v. Rule, 9 Cranch, 64; Williams v. Peyton's Lessee, 4 Wheat. 77, a case of sale under the act of 1798. 2 Turner v. Smith, 14 Wall. 553. 3 14 Wall. 553; rev'g Turner v. Smith, 18 Gratt. 830. Bennett v. Hunter, 14 Wall. 326. "trustee or other person having charge of the person or estate of the owner." 1 As to the question of forfeiture of lands for non-payment of taxes, Judge Joynes, in an elaborate opinion, deduces the conclusion that Congress possesses all the powers for the collection of taxes in general use either by the crown in England, or the States at the time of the adoption of the Constitution, but that forfeiture of lands was not known in England for that purpose, and it was not in general use in any of the States for that purpose at that time. In Virginia it has been used rather for the purpose of settling titles in the western counties than as a means of collecting revenue.2 Indirect Taxes.-Duties, imposts, and excises may be imposed under the Constitution. Duties and imposts are regarded as synonymous, both referring to the tax imposed on imported merchandise. The term excise signifies an inland tax imposed upon commodities either where they are manufactured, and before sale, or when they are sold, by a tax on the sale thereof, or on the privilege of selling, and includes all that class of taxes that fall upon the consumer, and not directly upon the tax-payer. The tax upon income is in this class. The principal source of revenue of the federal government is indirect taxes, which are divided into two classes, the customs, a tax on the importations of foreign merchandise, which may be well styled external revenue, and the excise tax, imposed on the citizens of the United States, for privileges exercised, or merchandise manufactured within the United States. Limitations.-The express limitations on the exercise of this mode of taxation are that it shall be uniform throughout the United States, that no preference shall be given to the ports of one State over those of another, and that no tax shall be laid on exports from any State. There are, however, many implied limitations upon the exercise of this power to tax, resulting from the complex character of the government. The States and the national government are each within their respective spheres supreme. The process of each is to be kept intact, and neither is to interfere with the powers of the other. The States have all the powers incident to a sovereign power, except so far as they have been delegated in the Constitution; yet we have seen that a State cannot impose a tax on the franchises of a bank chartered and used for the purpose of conducting the financial opera 1 Corbett v. Nutt, 10 Wall. 464; s. c. 18 Gratt. 624. 2 Martin v. Spowden, Trustee, &c., 18 Gratt. 100, 132–142. |