political economists than upon the practical nature of the tax itself.

"In deciding upon the validity of a tax with reference to these requirements, no microscopic examination as to the purely economic or theoretical nature of the tax should be indulged in for the purpose of placing it in a category which would invalidate the tax. As a mere abstract, scientific or economical problem, a particular tax might possibly be regarded as a direct tax, when as a practical matter pertaining to the actual operation of the tax it might quite plainly appear to be indirect. Under such circumstances, and while varying and disputable theories might be indulged as to the real nature of the tax, a court would not be justified, for the purpose of invalidating the tax, in placing it in a class different from that to which its practical results would consign it. Taxation is eminently practical, and is, in fact, brought to every man's door, and for the purpose of deciding upon its validity a tax should be regarded in its actual, practical results, rather than with reference to those theoretical or abstract ideas whose correctness is the subject of dispute and contradiction among those who are experts in the science of political economy."

Practical

results to be

considered.

or excise.

Does the progressive feature violate the clause? uniformity

Concluding, then, that the tax under consideration is not direct Inheritance tax a duty within the meaning of the Constitution, but, on the contrary, is a duty or excise, we are brought to consider the question of uniformity. The contention is that because the statute exempts legacies and distributive shares in personal property below ten thousand dollars, because it classifies the rate of tax according to the relationship or absence of the relationship of the taker to the deceased, and provides for a rate progressing by the amount of the legacy or share, therefore the tax is repugnant to that portion of the first clause of section 8 of article 1 of the Constitution, which provides that "the duties, imposts and excises shall be uniform throughout the United States."

I

Two views

of the

On the one side, the proposition is that the command that duties, imposts and excises shall be uniform throughout the United States relates to the inherent and intrinsic character of the tax; that it rule.

uniformity

contemplates the operation of the tax upon the property of the individual taxpayer, and exacts that when an impost, duty or excise is levied, it shall operate precisely in the same manner upon all individuals; that is to say, the proposition is that "uniform throughout the United States" commands that excises, duties and imposts when levied, shall be equal and uniform in their operation upon persons and property in the sense of the meaning of the words equal and uniform, as now found in the constitutions of most of the States in the Union. The contrary construction is this: That the words "uniform throughout the United States" do not relate to the inherent character of the tax as respects its operation on individuals, but simply requires that whatever plan or method Congress adopts for laying the tax in question, the same plan and the same method must be made operative throughout the United States; that is to say, that whenever a subject is taxed anywhere, the same must be taxed every where throughout the United States, and at the same rate. The two contentions then may be summarized by saying that the one asserts that the Constitution prohibits the levy of any duty, impost or excise which is not intrinsically equal and uniform in its operation upon individuals, and the other that the power of Congress in levying the taxes in question is by the terms of the Constitution restrained only by the requirements that such taxes be geographically uniform.

. . By the result of an analysis of the history of the adoption of the Constitution it becomes plain that the words "uniform throughout the United States" do not signify an intrinsic but simply a geographical uniformity. We add that those who opposed the ratification of the Constitution clearly understood that the uniformity clause as to taxation imported but a geographical uniformity and made the fact a distinct ground of complaint. Thus in a report made to the legislature of Maryland by Luther Martin: "Though there is a provision that all duties, imposts, and excises shall be uniform—that is, to be laid to the same amount on the same articles in each state yet this will not prevent Congress from having it in their power to cause them to fall very unequally and much heavier

on some states than on others, because these duties may be laid on articles but little or not at all used in some other states and of absolute necessity for the use and consumption in others."

135. The Apportionment of Direct Taxes

The obvious injustice of the rule requiring direct taxes to be apportioned among the states on the basis of population rather than wealth has prevented a frequent use of the power of Congress to lay such taxes. The manner in which it is done is illustrated by this extract from the law of 1861 raising war revenues: —

SEC. 8. And be it further enacted, That a direct tax of twenty millions of dollars be and is annually laid upon the United States and the same shall be and is hereby apportioned to the states respectively in the manner following:

To the State of Maine, four hundred and twenty thousand eight hundred and twenty-six dollars.

To the State of New Hampshire, two hundred and eighteen thousand four hundred and six and two-thirds dollars.

To the State of Vermont, two hundred and eleven thousan and sixty-eight dollars. [Here follow all the other States and Territories in the Union with their respective apportionments.]

SEC. 13. And be it further enacted, That the said direct tax laid by this act shall be assessed and laid on the value of all lands and lots of ground, with their improvements and dwelling houses, which several articles subject to taxation shall be enumerated and valued by the respective assessors [appointed by the President and Senate for each tax district in the Union] at the rate each of them is worth in money on the first day of April, eighteen hundred and sixty

two. . . .

SEC. 53. And be it further enacted, That any State or Territory and the District of Columbia may lawfully assume, assess, collect, and pay into the Treasury of the United States the direct tax or its quota thereof, imposed by this act upon the State, Territory, or the District of Columbia, in its own way and manner, by and through its own officers, assessors, and collectors. .

...

The appor

tionment.

The tax

to be laid

on lands

and imby federal officers.

provements

Each state

or territory

may assume and collect its quota.

The question stated.

Arguments

on the

merits

of an

income tax.

Income

tax is a

direct tax.

136. The Income Tax

In 1895, the Supreme Court declared unconstitutional the federal income tax law passed by Congress the year before and in the conclusion of a lengthy opinion, Chief Justice Fuller laid down the following general principles.

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 enforced subtraction from the yield of all the owner's real or personal property, in the manner prescribed, is so different from a tax upon the property itself, that it is not a direct, but an indirect tax, in the meaning of the Constitution. . . .

Elaborate argument is made as to the efficacy and merits of an income tax in general, as on the one hand, equal and just, and on the other, elastic and certain; not that it is not open to abuse by such deductions and exemptions as might make taxation under it so wanting in uniformity and equality as in substance to amount to deprivation of property without due process of law; not that it is not open to fraud and evasion and is inquisitorial in its methods; but because it is preeminently a tax upon the rich, and enables the burden of taxes on consumption and of duties on imports to be sensibly diminished. And it is said that the United States as "the representative of an indivisible nationality, as a political sovereign equal in authority to any other on the face of the globe, adequate to all emergencies, foreign or domestic, and having at its command for offence and defence and for all governmental purposes all the resources of the nation," would be "but a maimed and crippled creation after all," unless it possesses the power to lay a tax on the income of real and personal property throughout the United States without apportionment.

The power to tax real and personal property and the income from both, there being an apportionment, is conceded; that such a

tax is a direct tax in the meaning of the Constitution has not been, and, in our judgment, cannot be successfully denied; and yet we are thus invited to hesitate in the enforcement of the mandate of the Constitution, which prohibits Congress from laying a direct tax on the revenue from property of the citizen without regard to State lines, and in such manner that the States cannot intervene by payment in regulation of their own resources, lest a government of delegated powers should be found to be, not less powerful, but less absolute, than the imagination of the advocate had supposed. We are not here concerned with the question whether an income tax be or be not desirable, nor whether such a tax would enable the government to diminish taxes on consumption and duties on imports, and to enter on what may be believed to be a reform of its fiscal and commercial system. Questions of that character belong to the controversies of political parties, and cannot be settled by judicial decision. In these cases our province is to determine whether this income tax on the revenue from property does or does not belong to the class of direct taxes. If it does, it is, being unapportioned, in violation of the Constitution, and we must so declare.

Our conclusions may, therefore, be summed up as follows: First. We adhere to the opinion already announced, that, taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes.

Second. We are of opinion that taxes on personal property or on the income of personal property, are likewise direct taxes.

Third. The tax imposed by sections twenty-seven to thirtyseven, inclusive, of the act of 1894, so far as it falls on the income of real estate and of personal property, being a direct tax within the meaning of the Constitution, and, therefore, unconstitutional and void because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid.

Court has

nothing to do with the

desirability

of the tax.

Conclusions.