Show INCOME TAX LAW INVALID washington may 20 Immediate ly IY ou on the convening ot u the supreme court chief justice fuller today read toe tho income tax opinion the fact abw a be read it wab accepted as aa a conclusion that this iho jaw would be knocked out la in toto was wall the ouse the conclusions of the court were as follows first we adhere to the opinion already announced that taxes on real estate being indisputably direct maxse taxes on rents or income from real estate are equally direct taxes second we are of the opinion that taxes on personal property or on income from personal property are likewise direct third the tax imposed by sections 27 to 37 inclusive of the bet act of 1894 so far as an it falls on income from real estate and on personal nl property being a d direct tax in the g of conkel WOOD and aad the therefore lefore unconstitutional and vold ald because not apportioned according to representation all those sections constituting the entire scheme of taxation are necessarily invalid the decrees hereinbefore entered in this bis court will be vacated deere decreed will be reversed and the oases cames remand edl ed with instructions to grant relief prayed for sections 27 to 87 37 of the tariff act of 1894 referred to in the conclusions of the court to in the he opinions are the be sec ions ol of the act relating to the income taeg tax so that tile the entire income tax case to 18 declared specifically void there was the usual throng about the united states but supreme reme cobit room in antl elation of tto he final decision of the income tax calep the justices were at the capitol early and the be con COB exultation eul tation began promptly at 10 continuing until a few minutes before 12 all the members of the court were present including justice jackson whose presence caused a great deal of speculation and was the basis for much gorsic as to the possibility of some sort ut a surprise for the public the lattices justices against the law were chief justice putter patter justices gray field brewer and chirse for the law were justices harlan white brown and jackson Ja oksoo at the outset of bis bin opinion chief justice fuller said mid whenever this court to Is required to pass upon the validity of an a n act of congress as an tested by the fundamental law enacted by the people the duty imposed Itie idamanda mends in its discharge the utmost deliberation end care s and nd invokes the deel deepest pent souse sense of responsibility and this thin to Is er ee specially pe ally so when the question involves the exercise of the be great governmental power and brings into consideration aa vitally affected by the decision ded aloo that complex system of government 10 sagaciously framed to secure and perpetuate me be indestructible union composed ff f indestructible states 10 awo we have bave therefore an anxious desire to omit nothing which might in any degree tend to elucidate the questions submitted and aided furtner further by the atle arguments menta embodying the fruits of elaborate research carefully examined reexamined re these cases with the re bult that abat while our former conclusions remain their scope boope must be enlarged by the acceptance of their logical con consequences sequencer our previous deol aion was waa confined to the be consideration of the valid ty of tax on income from real estate and on income from municipal bonds the question thus limited was waa whether such taxation was waa direct or not I 1 iu a the meaning of the and the court went no air further an ai to the tax on incomes irom from real estate than to hold that thai it fell within the earns clan ath auroe source whence the income was derived that in that the tax upon reality and the tax upon receipts receipt alike alke direct while as an to income from municipal bonds that could not be taxed because becaria of want of power to tax the source auroe and no reference was made to the nature of ibbe tax BB as being direct or indirect we are re now dow permitted to broaden the field of inquiry and determine to which of abe two great classes the tax upon a persons entire income whether derived from rente renta or products or other wise from real estate or from bonis stocks looks or other forms forma of commercial property belongs belonge and we are unable to conclude that the enforced subtraction is traction from the yield of all an ow own n ezop aj real or personal property in the be manner proscribed prescribed is so different from a tax upon the property itself that it Is ie not a direct but an indirect tax in the joas meaning aning of the constitution the words of the constitution are to go be taken in their obvious sense and nave a reasonable construction we know no reaton reason for holding otherwise than that the words direct taxes on one band and duties imports and excise son el on the other were used in the constitution in their natural and obvious senses nor in arriving at what those terms embrace do we perceive aloy ny ground for enlarging them beyond or er narrowing them within the natural and nd obvious import at the time the framed and ratified aou passing from the text we regard gibe abe conclusion reached as inevitable evitable Jn when the circumstances watch surrounded the convention and controlled ite ita action and the views view of those who framed and those who adopted the constitution are considered the chief justice discussed the be rea sons ons for foi the constitutional provisions regarding garling re direct taxation the states bad plenary powers of taxation tax he suld abil but gave up be abe great source of at revenue derived from commerce and retained the power of levying taxes od ad duties covering anything other aban excises but in respect to them the range of taxation was narrowed by the power granted the federal government over interstate commerce while they granted the of apportion I 1 lag ag direct taxation they secured to the fates the opportunity to pay the mount amount apportioned apportion eil and recoup from their own citizens to in the most feasible way the aninion continued it to is said the taic tax on the whole income of property properly is not a direct tax buta but a duty we 0 o not think so no direct taxation was oot not a restriction ia I 1 a a breath and re tri otton blown to winds in another ill the opinion dismisses the hylton two aae with this comment what was decided in the hylton case was that abe tax on carriages was excise an a therefore an indirect tax P the opinion next took up the argument that tax ax on property its not a direct tax within the meaning ot at the constitution and said we find bad it impossible to hold t bat she fundamental requisition deemed so important as to be enforced by two provisions one of affirmation and one negative can be defined away by forced between that mat which given value to property and the he property itself 11 1 1 the itress of the argument to is thrown however on an the assertion that the income tax is not a property tax at all t oat it is in an assessment upon the taxpayer on account of his money spending power as shown by his bia revenue for or the year preceding the assessment wat hat rents received crops harvested interest collected have dave lost 1089 oil all connection with their heir origin and although once not taxable had teen been transmuted in their now form into taxable subject matter to in other words that the income Is taxable irrespective spec tive of the source whence it is derived the chief justice said baid since anoe we the court had hold held unanimously that receipts municipal bonds should not be taxed because the bonds were instruments of states the same rule applied to revenue from other sources not sub ejected tu to tax and the lack of power to levy any out but an apportioned tax on real and personal perso oal property equally as to the revenue the court does not cot understand 1 I it says that the too ino me tax ever has been regarded in england as ae any other ither than a direct tax justices harlan and jackson read dissent and Ja justice tice brown will do the same washington D C may 20 in revenue commissioner miller has telegraphed graphed all collectors of internal re revenue to forward at once to his office all the income tax and everything else pertaining to the tax there has been collected about 80 under the income tax law while no action yet has been taken it Is almost certain ti t at commissioner miller as soon as he is officially informed of the courted court 19 decision will take steps to refund all collections |