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Justice Field in Wisconsin Central Railroad Company v. Price County, 133 U. S. 496, 504:
“It is familiar law that a State has no power to tax the property of the United States within its limits. This exemption of their property from State taxation—and by State taxation we mean any taxation by authority of the State, whether it be strictly for State purposes or for mere local and special objects—is founded upon that principle which inheres in every independent government, that it must be free from any such interference of another government as may tend to destroy its powers or impair their efficiency. If the property of the United States could be subjected to taxation by the State, the object and extent of the taxation would be subject to the State's discretion. It might extend to buildings and other property essential to the discharge of the ordinary business of the National Government, and in the enforcement of the tax those buildings might be taken from the possession and use of the United States. The Constitution vests in Congress the power to 'dispose of and make all needful rules and
regulations respecting the territory or other property belonging to the United States. And this implies an exclusion of all other authority over the property which could interfere with this right or obstruct its exercise."
It is too clear to require elaboration that every word of this statement applies, a fortiori, to taxation of property or agencies of the United States Government by a derivative sovereignty like the government of the Philippine Islands. But the attorney general of the Philippines, as the quotation from his opinion given above shows, finds in this very derivative character of the Philippine Government the reason why the general rules governing this subject should not be applied. He starts with the premise that Congress itself can tax the property of the United States Government or not, as it pleases; which, of course, is true, though an intent on the part of Congress to tax such property ought never to be presumed, as it is evidently an idle thing for the Government to tax its own property. He then states that Congress has granted its taxing power, without exempting property of the United States, to the Philippine
Government, subject to the power of Congress to annul any legislation; that, in the exercise of this power, the Philippine Government has passed a taxing act which, by its terms, covers property of the United States, and this act Congress has not annulled, thereby making the act its own and making the situation no different from what it would be had Congress itself passed an act taxing property of the United States. This, in my judgment, is to take an imperfect view of the situation. Congress has not granted to the Philippines the same power of taxation possessed by itself. The organic act of July 1, 1902, after ratifying the establishment of the Philippine Commission with the powers conferred upon it by the President, and after confirming the creation and authority of the governor of the islands, merely provides that“ until otherwise provided by law the said islands shall continue to be governed as thereby and herein provided." That is, Congress granted powers of local government to the islands, but that government was subject to the inherent limitation of all governments, namely, that its taxing power could not extend to subjects beyond its jurisdiction. It was not granted power to tax property in the United States, though no such limitation is expressly mentioned, and, aequo ratione, it could not tax the property or agencies of the very government which was the source of its power. The power
of taxation is a sovereign power. If one government may tax another, the former necessarily is sovereign over the latter. The States and the Federal Government both have sovereign concurrent powers of taxation over the same subjects; yet neither can tax the property or agencies of the other, for that would imply that one was sovereign over the other within the latter's proper sphere, which is not the case. How unreasonable, then, to suppose that a mere grant of power of local government by a dominant sovereign to a derivative, local sovereignty could carry with it a power to tax the dominant sovereign itself, and thus make the creature greater than the creator. The fact that Congress has not annulled the legislation in question is unimportant, and would still be so if the act had in
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terms professed to tax property of the United States. The power to annul is only reserved for acts of whose policy Congress does not approve. But ultra vires acts do not need annullment, since they have no initial force or validity at all, not coming within the grant made by the organic act. And, in this particular case, the act of the Philippine Commission did not purport to tax United States property, so that there was nothing in the act for Congress to disapprove. It was the application of the act which carried it beyond the lawful powers of the Philippine Government.
Some point is made of the fact that the tariff act of the Philippine Commission of September 17, 1901 (which was ratified by the act of Congress of March 8, 1902, 32 Stat. 54), and the tariff act of Congress of March 3, 1905 (33 Stat. 928, 973), expressly included in their respective free lists supplies imported for the use of the United States Government, while the tariff act passed by Congress August 5, 1909 (36 Stat. 130), contained no such provision. But while the omission of this provision from the latter act might possibly be held to imply an intention on the part of Congress to levy duties upon goods imported into the Philippine Islands for the use of the Government of the United States (20 Op. 314) (although upon this point I express no opinion), it is far from implying a grant of authority to the Philippine Government to levy a tariff or other tax upon such articles. I
am, therefore, of the opinion that the stamp tax demanded by the Philippine authorities on goods imported into the islands for the use of the Army of the United States is illegal and void, as being beyond the competency of the Philippine Government. Whether an attempt should be made to induce the proper authorities of the Philippine Government to accede to this view, or whether a case should be made and an appeal to the courts taken as provided in chapter 156 of the Compiled Acts of the Philippine Commission, is a matter which may be more properly determined by yourself. Respectfully,
GEORGE W. WICKERSHAM. The SECRETARY OF WAR.
POSTAL SAVINGS SYSTEM-PUBLIC BUILDING FUND
BONDS OF OKLAHOMA.
Certain public building bonds issued by the State of Oklahoma
and payable out of a trust fund which the State is pledged merely to administer, are not acceptable as security for postal savings funds as they are not supported by the taxing power within the meaning of section 9 of the postal savings depositories act of June 25, 1910 (36 Stat. 816).
DEPARTMENT OF JUSTICE,
June 14, 1912. SIR: I have the honor to acknowledge the receipt of your letter of the 28th ultimo, in which you state that the Treasurer of the United States has held that public building fund bonds issued by the State of Oklahoma under the act of March 15, 1911, are not acceptable as security for deposits of postal savings funds, on the ground that they are not supported by the taxing power within the meaning of section 9 of the act of June 25, 1910 (36 Stat. 816), and you request my opinion as to the correctness of this ruling.
On August 19, 1893 (28 Stat. 1222, 1229), the President of the United States issued a proclamation opening to settlement certain lands acquired from the Indians, “except
that section 33 in each township which has not been otherwise reserved or disposed of, is hereby reserved for public buildings,” and this reservation was confirmed by Congress in the act of May 4, 1894, ch. 68 (28 Stat. 71).
By the Oklahoma enabling act of June 16, 1906, ch. 3335, section 8 (34 Stat. 267), it was provided : “
Section 8. * “ That section thirty-three, and all lands heretofore selected in lieu thereof, heretofore reserved under said proclamation, and acts for charitable and penal institutions and public buildings, shall be apportioned and disposed of as the legislature of said State may prescribe.”
Upon the same subject the constitution of Oklahoma has the following provisions:
“ARTICLE XI. “ SECTION 1. The State hereby accepts all grants of land and donations of money made by the United States under
the provisions of the enabling act, and any other acts of Congress, for the uses and purposes and upon the conditions, and under the limitations for which the same are granted or donated; and the faith of the State is hereby pledged to preserve such lands and moneys and all moneys derived from the sale of any of said lands as a sacred trust, and to keep the same for the uses and purposes for which they were granted or donated.
“SEC. 4. All public lands set apart to the State by Congress for charitable, penal, educational, and public building purposes, and all lands taken in lieu thereof, may be sold by the State, under such rules and regulations as the legislature may prescribe, in conformity with the regulations of the enabling act.”
In exercise of the power so granted the Legislature of Oklahoma on March 15, 1911 (Oklahoma Laws 1910–1911, p. 194), passed an act which provided (sec. 1) that all moneys received from the sale of the lands so granted should constitute and be known as the “public building fund;" that“ bonds shall be issued against the public building fund” (sec. 2), and, by section 9, that:
“All bonds and interest thereon, when issued as provided for in this act, shall become payable out of the public building fund arising from the sale or rental of section 33, and lands granted to the State in lieu thereof, until all of said bonds and interest thereon are fully paid. And the good faith of the State is solemnly pledged to administer the trust created by the terms of the enabling act and the constitution of Oklahoma, to apportion and dispose of all lands granted to the State for charitable and penal instituions and public buildings as the legislature may prescribe, and safely keep and preserve the proceeds of the rental and sale thereof, and apply same to the payment of the bonds authorized by this act, and the interest thereon, as the same falls due, and to use such funds, constituting the public building fund, for no other purpose or purposes. All bonds shall be paid in the order in which they are issued