provision of the Constitution render the entire act imposing an income tax unconstitutional and void?
The precise or original question involved, it was admitted, was one on which the Federal Government had really never been heard,[1] and was first brought before the United States Supreme Court for a hearing and adjudication in April, 1895. On that occasion the court held that the provisions of the act of August 15, 1895, were unconstitutional, so far "as they purport to impose a tax on the rent or income of real estate." It was, however, equally divided on the following questions, and expressed no opinion in regard to them:
(1) Whether the void provisions invalidated the whole act; (2) whether, as to the income from personal property as such, the act is unconstitutional as levying direct taxes; (3) whether any part of the tax, if not considered as a direct tax, is invalid for want of uniformity.
The court, early in its history, adopted the practice of requiring, if practicable, constitutional questions to be heard by a full court, in order that the judgment in such cases might, if possible, be the decision of the majority of the whole court. And as the court was not full, at the first hearing in April, and as four judges did not concur in the opinion then rendered, a rehearing was granted by the court in the month following (May 6th, 7th, 8th); in the announcement of which the Chief Justice remarked that "the importance to the Government of the new views of its taxing power can hardly be exaggerated."
In advocating the constitutionality and rightfulness of the provisions of the income tax of 1894, the then United States Attorney General, Hon. Richard Olney, on behalf of the Government, made in part the following argument:
"What is this" (contested) "tax in its true value and essence? It is an assessment upon the taxpayer on account of his money-spending power as shown by his revenue for the year preceding the assessment. It is not a property tax in any sense or of any sort. Yet this is the sort of tax which is called a tax on real estate for no other reason than that last year's rents form a part of the yardstick by which this year's money-spending capacity is measured! A greater error, I submit, could not easily be justified. My Lord Coke is quoted to the effect that a grant in fee of the profits of land passes the land itself. Other citations are always interesting, and state a rule of law which is indisputable
- ↑ None of the previous decisions of the court "discussed the question whether a tax on the income of personalty is equivalent to a tax on that personalty; but all held real estate liable to direct taxation only so as to sustain a tax on the income of realty on the ground of being an excise or duty."—Chief-Justice Fuller.
