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ordinary bills of lading, and of ten cents on export bills of lading. To the contention that the tax was on the bills of lading and not one on the articles exported, the court say: "The fact that Congress has not graduated the stamp tax on bills of lading does not affect the question of power. . . The question of the power is not to be determined by the amount of the burden attempted to be cast. . Constitutional mandates are imperative. The question is never one of amount, but one of power. The applicable maxim is obsta principiis, not de minimis non curat lex." 67

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In Cornell v. Coynes was sustained the imposition of the same manufacturing tax on an article manufactured for export, and in fact exported, as upon other similar articles not intended for export, the court saying that such a tax is not on the articles exported "but is only a tax or duty on the manufacturing of articles in order to prepare them for export." "The true construction of the constitutional provision," the opinion continues, "is that no burden by way of tax or duty can be cast upon the exportation of articles, and does not mean that articles exported are relieved from the prior ordinary burdens of taxation which rest upon all property similarly situated."

$278. Direct Taxes.70

The Constitution provides that capitation and other direct taxes levied by Congress shall be apportioned among the States in pro

67 Four justices dissented. They say: "Here, the small duty imposed, without reference to the kind, quality, or value of the articles exported, renders it certain that when Congress imposed such duty specifically on the vellum, parchment, or paper upon which the bill of lading was written or printed, it meant what is so plainly said; and no ground exists to impute a purpose by indirection to tax the articles exported." The dissenting justices also urge that the practice of the government for more than a century should be held controlling.

68 192 U. S. 418; 24 Sup. Ct. Rep. 383; 48 L. ed. 504.

69 Two justices dissented, holding that inasmuch as there was no appreciable interval of time between the commencement of manufacture and the preparation for exportation, it could not be reasonably said that the articles had become a part of the general mass of property in the locality of manufacture, and as such subject to a tax that could be distinguished from a tax upon the articles as subject of export.

70 For a discussion of direct taxes with reference to the Territories and the District of Columbia, see Chapter XXVI.

portion to their respective populations. In a number of instances the constitutionality of federal taxes not thus apportioned has been questioned upon the ground that they were, within the constitutional meaning of the word, direct taxes. The decision of the Supreme Court in each of these cases in which this point has been raised has supplied an authoritative determination only as to the direct or indirect character of the particular taxes in ques tion. From these decisions, however, a judicial definition of direct taxes may be drawn which makes the term include all taxes levied upon property, real or personal, or upon the income derived from such property, and all capitation or poll taxes. A review of the cases will show that only within recent years has the court been willing to adopt this comprehensive definition, and, when it finally did so, the decision came as a surprise to very many of the lawyers and courts of the country.

In 1798 in Hylton v. United States" it was held that a tax on carriages was not a direct tax. Chase in his opinion said: "The Constitution evidently contemplated no taxes as direct taxes, but only such as Congress could lay in proportion to the census. The rule of apportionment is only to be adopted in such cases where it can reasonably apply; and the subject taxed must ever determine the application of the rule. If it is proposed to tax any specific article by the rule of apportionment, and it would evidently create great inequality and injustice, it is unreasonable to say that the Constitution intended such tax to be laid by that rule. . . . 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."

Paterson in his opinion said: "Whether direct taxes, in the sense of the Constitution, comprehend any other tax, than a capitation tax and a tax on land, is a questionable point. If Congress, for instance, should tax, in the aggregate or mass, things that generally pervade all the States in the Union, then, perhaps,

713 Dall. 171; 1 L. ed. 556.

the rule of apportionment would be the most proper, especially if an assessment was to intervene. This appears from the practice of some of the States to have been considered as a direct tax. Whether it be so, under the Constitution of the United States, is a matter of some difficulty; but as it is not before the court, it would be improper to give any decisive opinion upon it. I never entertained a doubt that the principal, I will not say the only objects, that the framers of the Constitution contemplated as falling within the rule of apportionment, were a capitation tax and a tax on land."

Iredell, in his opinion, said: "As all direct taxes must be apportioned, it is evident that the Constitution contemplated none as direct but such as could be apportioned. If this cannot be apportioned, it is, therefore, not a direct tax in the sense of the Constitution. That this tax cannot be apportioned is evident."

In Pacific Insurance Co. v. Soule 2 a tax on receipts of insurance companies was held to be not a direct tax, the dicta in Hylton v. United States being relied upon as authority.

In Veazie Bank v. Fenno a tax on the circulating notes of state banks was held to be an indirect tax.

In Scholey v. Rew a tax on succession to real estate was held indirect, the tax being declared to be one not on the land, but upon the right of succession. The court say: "Whether direct taxes, in the sense of the Constitution, comprehend any other tax than a capitation tax and a tax on land is a question not absolutely decided, nor is it necessary to determine it in the present case, as it is expressly decided that the term does not include the tax on income, which cannot be distinguished in principle from a succession tax such as the one involved in the present controversy." 75

72 7 Wall. 433; 19 L. ed. 95.

73 8 Wall. 533; 19 L. ed. 482.

74 23 Wall. 331; 23 L. ed. 99.

75 Citing Ins. Co. v. Soule, 7 Wall. 433; 19 L. ed. 95; Veazie Bank v. Fenno, 8 Wall. 533; 19 L. ed. 482.

In Springer v. United States the income taxes provided for by the law of 1862 were held not to be direct taxes. After enumerating the various direct taxes previously levied, the court say: "It will thus be seen that wherever the government has imposed a tax which it recognized as a direct tax, it has never been applied to any objects but real estate and slaves. The latter application may be accounted for upon two grounds: 1. In some of the States slaves were regarded as real estate; and, 2, such an extension of the tax lessened the burden upon the real estate where slavery existed, while the result to the National Treasury was the same. This uniform practical construction of the Constitution touching so important a point, through so long a period, by the legislative and executive departments of the government, though not conclusive, is a consideration of great weight."

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After reviewing earlier cases and citing the opinions of leading commentators, the opinion concludes: "Our conclusions are, that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate."

$279. Income Tax Case-Pollock v. Farmers' L. & T. Co.

The foregoing line of cases, concluding with the emphatic assertion of a unanimous court in Springer v. United States, justly gave rise to the general opinion that the only taxes to be deemed direct taxes within the constitutional meaning of the term were capitation taxes and taxes on real estate. However, in the socalled Income Tax Case - Pollock v. Farmers' Loan and Trust Co."-decided in 1895, this doctrine was overthrown, the court upon the first hearing holding that taxes on the rents or income of real estate are direct taxes; and, upon a rehearing, holding that taxes on personal property or on the income derived from personal property are equally direct.

Upon the first hearing the crucial point was, of course, whether a tax upon the income derived from real estate was distinguish

76 102 U. S. 586; 26 L. ed. 253.

77 157 U. S. 429; 15 Sup. Ct. Rep. 673; 39 L. ed. 759, and 158 U. S. 601; 15 Sup. Ct. Rep. 912; 39 L. ed. 1108.

able from a tax on the real estate itself. This being decided in the negative, it necessarily followed that inasmuch as a tax on the real estate is admittedly a direct tax, a tax on the income derived therefrom would be direct. "The real question is," the majority justices declare, "is there any basis upon which to rest the contention that real estate belongs to one of the two great classes of taxes, and the rent or income which is the incident of its ownership belongs to the other? We are unable to perceive any ground for the alleged distinction. An annual tax upon the annual value or annual user of real estate appears to us the same in substance as an annual tax on the real estate, which would be paid out of the rent or income." 78

78 In a dissenting opinion, concurred in by Justice Harlan, Justice White, after a review of the earlier adjudications, says:

"The facts, then, are briefly these: At the very birth of the government a contention arose as to the meaning of the word 'direct.' That controversy was determined by the legislative and executive departments of the government. Their action came to this court for review, and it was approved. Every judge of this court who expressed an opinion, made use of language which clearly showed that he thought that the word 'direct' in the Constitution applied only to capitation taxes and taxes directly on land. Thereafter the construction thus given was accepted everywhere as definite. The matter came again and again to this court, and in every case the original ruling was adhered to. The suggestions made in the Hylton case were adopted here, and in the last case here decided, reviewing all the others, this court said that direct taxes within the meaning of the Constitution were only taxes on land and capitation taxes. And now, after a hundred years, after long continued action by other departments of the government, and after repeated adjudications of this court, this interpretation is overthrown, and the Congress is declared not to have a power of taxation which may at some time, as it has in the past, prove necessary to the very existence of the government. By what process of reasoning is this to be done? By resort to theories, in order to construe the word 'direct' in its economic sense, instead of in accordance with its meaning in the Constitution, when the very result of the history which I have thus briefly recounted is to show that the economic construction of the word was repudiated by the framers themselves, and has been time and time again rejected by this court; by a resort to the language of the framers and a review of their opinions, although the facts plainly show that they themselves settled the question which the court now virtually unsettles. In view of all that has taken place and of the many decisions of this court, the matter at issue here ought to be regarded as closed forever. . . . It is said that a tax on the rentals is a tax on the land, as if the Act here under consideration imposed an immediate tax on the rentals. This statement, I

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