Popular Science Monthly/Volume 50/February 1897/Principles of Taxation: In Relation to the Federal Government XIV
|PRINCIPLES OF TAXATION.|
THE United States presents the curious anomaly of a great nation existing under two systems, or dual forms of government; each having a sphere of action peculiar to itself, and both exercising the general functions of government, namely: the executive, the legislative, and the judicial. These two are the Federal or national Government, existing in virtue of an agreement of union entered into originally by thirteen separate and independent States, and known as the Federal Constitution; and next, a system of State or divisional governments, existing in virtue of certain original powers retained by the independent and sovereign parties to the above agreement, and not delegated by them, in entering the Federal Union, to any other or higher sovereignty. At the same time a concession of power to tax or compel contributions from persons, property, and business by each of these two forms of government, in order to defray their necessary expenditures, was obviously essential to their existence and continuance, and was so recognized from the first inception of any compact of union. But how to divide this power — the badge and symbol of sovereignty — between two distinct sovereignties of the same nation, namely, the Federal Congress and the Legislatures of the several States, and impose limitations in both cases on the exercise of a function so vast in its sweep and so imperative in its action, was one of the most difficult problems that confronted the framers of the Federal Constitution, and one without precedent in the world's history. The problem occasioned much discussion, and was really left unsettled — a general power being given to the national legislature, or Congress, "to lay and collect taxes, duties, imposts, and excises," with the limitation that "all duties, imposts, and excises shall be uniform throughout the United States"; that "no capitation or other direct tax shall be laid unless in proportion to the census"; that "no State shall, without the consent of Congress, lay any imposts or duties on imports or exports," and that no tax or duty shall under any circumstances be laid on articles exported from any State. Under such a loose and indefinite condition of things, a conflict of laws and of jurisdictions was inevitable, giving rise to controversies whose determination was really vital to the integrity and efficiency of the Federal Constitution. But happily, owing to the firmness and wisdom of the national tribunal (United States Supreme Court) before which these questions have been brought for adjudication, most of the difficulties which once seemed so formidable have been overcome, and are now mainly interesting as matters of history.
One of the earliest and most celebrated of these controversies culminated, as it were, in a case or suit known as McCulloch vs. Maryland, which came before the Supreme Court of the United States and was decided in 1819, under the following circumstances: Congress in 1815 chartered a national (United States) bank, which as a legitimate and authorized feature of its organization established branches in the States, with power to issue circulating notes. This measure proved unpopular in many of the States, and attempts were made by them to resist the various operations of this banking institution within their territory. Foremost among these was the State of Maryland, which, through an enactment of its Legislature, required every bank doing business in the State, and not chartered by the State, either to pay a stamp duty on every note issued, or pay a tax of $1,500 in gross per annum, and in addition imposed certain penalties on all the officers of a bank violating the law, and upon every person who had any agency in circulating such notes. Contemporaneously, also, the State of Ohio imposed an annual tax of $50,000 upon the branch bank of the United States established in that State.
The validity of the Maryland statute having been affirmed by the Court of Appeals, the highest court of law in that State, and an action having been brought for the enforcement of a penalty against an official of the Maryland branch (United States) bank for a violation of the State law, the defendant — one McCulloch, the cashier of the said branch bank — thereupon brought the case (as involving an interpretation of the Federal Constitution) by writ of error before the United States Supreme Court.
A little reflection will abundantly satisfy the reader that the question involved in this procedure was of the greatest importance, inasmuch as it necessitated certain rational and fundamental conclusions that had not previously been authoritatively reached and popularly accepted, respecting the nature and power of the Federal Government; and a definite interpretation of the letter and spirit of certain features of the Federal Constitution which, as the action of the States before noticed demonstrated, had, to say the least, been heretofore regarded as ambiguous. So that, whatever might be the decision of the court, the consequences were certain to be most momentous. Thus, if the right of a State to tax — which practically involved the right to destroy the instrumentalities of the Federal Government, was denied, then such Government rested on sure foundations. If, on the other hand, to quote the language of the court, "the right of the State to tax the means employed by the General Government be conceded, the declaration that the Constitution and laws made in pursuance thereof shall be the supreme law of the land is an empty and unmeaning declaration," and the United States, in the sense of a nation, would practically cease to exist. Taking also into account the increase in the number of States that would have to harmonize if anything was accomplished in a new constitutional convention, and the number of new antagonizing elements on the part of the several States that had arisen — the vexing question of the future tolerance and extension of slavery, which finally eventuated in civil war, the power of Congress to create banking corporations, and the right of the Legislatures of the States to subject them to taxation, and the like — and it is very doubtful whether any new Federal Constitution could have been established. As a matter of fact, the Federal Government and the union of the States came nearer disruption and dissolution in 1819 than when, forty two years subsequently, Fort Sumter was fired upon and the flag of the Union forcibly hauled down — which latter events are generally regarded as constituting the leading features of the constitutional history of the United States. And this situation was so well recognized by Chief-Justice Marshall (to whom the nation is indebted for its preservation to a greater degree than has been generally recognized) as to draw from him the remark, preliminary to announcing the decision of the court, that "no tribunal could approach such a question as was involved without a deep sense of its importance and of the awful responsibility involved in the decision."
The decision of the court was unanimous that "the States have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control the operation of the constitutional laws enacted by Congress to carry into execution the powers vested in the General Government; and that the law passed by the Legislature of Maryland imposing a tax on the Bank of the United States is unconstitutional and void."
"If we apply," said the Chief Justice, "the principle for which the State of Maryland contends to the Constitution generally, we shall find it capable of changing totally the character of that instrument. We shall find it capable of arresting all the measures of the Government, and of prostrating it at the foot of the States. The American people have declared their Constitution and the laws made in pursuance thereof to be supreme; but this principle would transfer the supremacy, in fact, to the States. If the States may tax one instrument employed by the Government in the execution of its powers, they may tax any and every other instrument. They may tax the mail; they may tax patent rights; they may tax the papers of the custom house; they may tax judicial process; they may tax all the means employed by the Government, to an excess which would defeat all the ends of government. This was not intended by the American people. They did not design to make their Government dependent on the States."
The court, however, held that its decision did not deprive "the States of any resources which they originally possessed. It does not extend to a tax paid by the real property of the bank, in common with the other real property within the State, nor to a tax imposed on the interest which the citizens of Maryland may hold in this institution, in common with other property of the same description throughout the State. But this is a tax on the operation of the bank, and is consequently a tax on the operation of an instrument employed by the Government of the Union to carry its powers into execution. Such a tax must be unconstitutional."
The successful counsel in this case were Daniel Webster and William Pinkney, and in the course of his decision the Chief Justice complimented the counsel on both sides as maintaining the affirmative and negative with a splendor of eloquence and a strength of argument seldom, if ever, surpassed.
It may also be added that no decision of the United States Supreme Court, or of any other court in the United States, has since impugned the correctness of the principle upon which the case of McCulloch vs. Maryland was decided. A brief notice, however, of subsequent judicial proceedings is interesting and necessary to complete the history of this celebrated case.
Thus, the Legislature of Ohio having, as before stated, imposed an annual tax of $50,000 upon the branch of the Bank of the United States established in that State before the decision in the McCulloch case, the State officers, even after the decision, proceeded to levy and collect the tax. Thereupon the case was again brought before the United States Supreme Court on an application for injunction, and was reargued, with reliance upon the point that the bank was a mere private corporation, whose chief object was individual trade or profit. The court, however, at once reaffirmed its former judgment, and held that the bank was a public corporation, created for national purposes, and an instrument for carrying into effect the national powers. At the same time the opinion of the court in the McCulloch case, that its decision "did not deprive a State of any resources it originally possessed," remained unaffected.
Subsequently a case came before the United States Supreme Court (Weston vs. the City of Charleston, S. C.) in which the question involved was the right of a State to tax stock issued for loans made to the United States, whether on the stock, eo nomine or included in the aggregate of the tax-payers' property to be valued at what it was worth. The court, by Chief-Justice
Marshall, held "that a tax on stock of the United States, held by an individual citizen of a State, is a tax on the power to borrow money on the credit of the United States, and can not be levied on the authority of a State consistently with the Constitution," and, further, "that if the right to impose a tax exists, it is a right which, in its nature, acknowledges no limits. It may be carried to any extent within the jurisdiction of the State or corporation which imposes it, which the will of such State or corporation may prescribe. Can anything," continued the Chief Justice, "be more dangerous or more injurious than the admission of a principle which authorizes every State and every corporation in the Union which possesses the right of taxation to burden the exercise of this (borrowing) power at their discretion?" A tax on the stock or bonds of a State is therefore a tax on the borrowing power of such State.
The court further held that a tax of this description was a tax upon contracts, using the following language: "Congress has power to borrow money on the credit of the United States. The stock it issues is evidence of a debt created by the exercise of this power. The tax in question is a tax upon the contract subsisting between the Government and the individual. It bears directly upon the contract. While subsisting and in full force, the power operates upon the contract the instant it is framed, and must imply a right to affect that contract. If the States and corporations throughout the Union possess the power to tax a contract for the loan of money, what shall arrest the principle in its application to every other contract? What measure can Government adopt which will not be exposed to its influence? The right to tax the contract to any extent, when made, must operate upon the power to borrow before it is exercised, and have a sensible influence on the contract. The extent of this influence depends on the will of a distinct government. To any extent, however inconsiderable, it is a burden on the operations of government. It may be carried to an extent which shall arrest them entirely."
As a sequence to these decisions of the United States Supreme Court, not only has the general principle that no State of the Federal Union can impose any tax upon any agency of the Federal Government — as its mails, its buildings, its lands, its ships, its money, and the like — come to be universally recognized as in the nature of an unquestionable law of the land, but the question of the application of the principle in respect to many cases to which some latitude of opinion was legitimate, has been specially and definitely determined. Thus, for example, it has been established, that a State can not impose license taxes upon persons passing through or coming into it merely for a temporary purpose, especially if connected with interstate commerce; a State, furthermore, can not enact any law or establish any regulation affecting interstate commerce, inasmuch as the same would be an unauthorized interference with the power given to Congress on the subject. Interstate commerce also can not be taxed at all by a State statute, even though the same amount of tax should be laid on commerce which is carried on solely within the State; and the negotiation of sales of goods, which are in another State, for the purpose of introducing them into the State into which said negotiation is made, has been held to be interstate commerce. A tax levied by the State of Michigan of one cent and a half a ton on iron ores, if taken out of the State for smelting, while exempt if smelted within the State, was held by the United States Supreme Court to be a tax on commerce and therefore void.
A State statute which levies a tax upon the gross receipts of railroads for the carriage of freights and passengers into, out of, or through a State has been held to be a tax upon commerce between the States, and therefore void. Under the provision of the Federal Constitution that "no State shall, without the consent of Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws," some difficulty has been experienced in indicating with sufficient accuracy for practical purposes, the point of time at which articles brought into the country from abroad cease to be regarded as imports in the sense of constitutional protection, and become liable to State taxation. But it has been held by the United States Supreme Court that where the importer has so acted upon the thing imported that it has become incorporated and mixed up with the mass of property in the country, it has lost its distinctive character as an import, and become subject to the taxing power of the State; but while remaining the property of the importer, in his warehouse, in the original form or package in which it was imported, a tax upon it is too plainly a duty upon imports to escape the prohibition in the Constitution. The deductions from a contrary rule would be manifestly as follows: "No goods would be imported if none could be sold. The same power that imposes a light duty can impose one that amounts to prohibition. A duty on imports is a tax on the article, which is paid by the consumer. The great importing States would thus levy a tax on the nonimporting States," as was done under articles of the Confederation prior to the adoption of the Federal Constitution. "This would necessarily produce countervailing measures."
In the case of Brown vs. Maryland, where the latter State, for revenue purposes, required a merchant to take a license and pay fifty dollars before he should be allowed to sell a package of imported goods, the court (by Chief-Justice Marshall) held that this tax, though indirect inform (i. e., a license on the person of the importer), was in fact equivalent to a duty on imports, and therefore illegal; and that the right to import carried with it the right to sell.
This decision has been carefully recognized by the authorities of the several States in dealing with imported liquors under local license acts. " Under its police powers there is no constitutional restraint on a State prohibiting the retail and internal traffic in ardent spirits. But a State is at the same time bound to receive and permit the sale by the importer of any article of merchandise which Congress authorizes to be imported, but it is not bound to abstain from the passage of laws which it deems proper to guard the health or morals of its citizens, although the effect of such laws may be to discourage importation, and diminish the profits of the importer and the revenue of the General Government." — Burroughs, On Taxation.
Limitations of the Taxing Power of the Federal Government. — If the States can not tax the agencies or instrumentalities by which the Federal Government performs its functions, it would seem clearly to follow that for like reasons the Federal Government can not tax State instrumentalities or agencies.
That such reciprocal limitations are natural and necessary, and exist by implication, not only in the Constitution of the United States, but also in the very structure of the Federal Union, must be evident, when one reflects that otherwise the Federal Government on the one hand, and the governments of the States on the other, might impose taxation to an extent that would cripple, if not wholly defeat, the operations of the two authorities, each within its respective and proper sphere of action. Or, in other words, if the Federal and the State governments had each unrestricted power to tax, or, what is equivalent, "the power to destroy," they might, and as experience proves they probably would, effectually destroy efficient government in both cases, and the necessity and validity of such reciprocal limitations have been recognized and enforced by the courts of the United States whenever this question has been brought before them for adjudication. Thus, in the case of Day vs. Buffington, United States Circuit Court, Massachusetts District, it was held that the salary of a State official, in this particular instance a judge of probate, could not be legally subjected to assessment for an income tax, under the laws of the United States authorizing the assessment and collection of internal revenue; and Congress, some years since, acting under the advice of the United States Supreme Court, repealed so much of an internal revenue act as previously required the affixing of stamps to State processes, warrants, commissions, etc. In the case of Warren vs. Paul, 22 Ind., 279, the court used the following language: "The Federal Government may tax the Governor of a State or the clerk of a State court and his transactions as an individual, but not as a State officer. This must be so, or the State may be annihilated at the pleasure of the Federal Government. The Federal Government may, perhaps, take by taxation most of the property in a State if exigencies require, but it has not a right by direct or indirect means to annihilate the functions of the State government."
In a recent debate in the United States Senate on a proposition to appropriate public money for the purpose of establishing and maintaining higher institutions of learning in the District of Columbia than were offered by its common schools, a leading Senator (John Sherman), others concurring, is reported as expressing himself as follows:
"I concur entirely in the opinion expressed by the Senator from Rhode Island (Mr. Aldrich) that we have no right to use the public money to establish business high schools. It is the duty of every community to give the children who are growing up a good common-school education, which covers a pretty wide range now, according to the general ideas of our people, and there the duty should stop. Money for this purpose should be contributed by private persons. We do our duty when we furnish a fair, common-school education to the children that are growing up among us" — i. e., in the District of Columbia — "and that is all we ought to contribute."
Can Congress authorize the States to tax National Instrumentalities? — In the popular discussions which have occurred in recent years in reference to the taxing of United States securities, the position has been not infrequently taken that it would have been just and expedient on the part of Congress, at the time of the creation of the present national debt, to have allowed the separate States to tax the evidences of such debt (i. e., the bonds) in the possession of their citizens, subject to a limitation that the same should not be taxed at any different rate than other "moneyed capital." A full consideration of the whole subject will, however, suggest a doubt whether Congress possesses the power to grant any such authorization, inasmuch as to have done so would have been equivalent to authorizing the States to do an act which in itself is unconstitutional — a thing which it is self-evident that Congress can not do. Thus "the power to tax," says Chief-Justice Marshall, in giving the opinion of the Supreme Court denying the right of Maryland to tax the Bank of the United States, "involves the power to destroy"; and in the case of Weston vs. The City of Charleston, the same court, by the same eminent authority, held further, as before shown, "that if the right to impose a tax exists, it is a right which in its nature acknowledges no limits." For Congress, therefore, to have authorized the States to tax "national agencies" would have been equivalent to authorizing the exercise of a right to destroy; which right, the Supreme Court has held, can not, from its nature, when once existing, be limited.
Alienation of the Taxing Power. — The application of the decision by the United States Supreme Court in the celebrated Dartmouth College case, has resulted in the general acceptance of the legal principle that a charter of incorporation by a State is a contract between the State and the incorporators; and if such charter contains a clause exempting the incorporators entirely from taxation, or for a definite period, a subsequent Legislature can not repeal the clause of exemption. Within a recent period the interest involved in this question has become so great, and the power of wealthy corporations who claim the benefit of this principle is so extensive, that it is desirable to briefly call attention to views of dissenting legal authorities and dissenting State courts.
"It is claimed that the power of taxation is one of the sovereign powers of the State necessary to its continued existence, and that it was never contemplated, when the people through their Constitutions delegated to their representatives in Legislature assembled the power to make laws for the good of the people of the State, that this grant of legislative power carried with it the right to barter away with private corporations one of the essential prerogatives of the Government, the very life-blood of the State."
How one of the States of the Union — Connecticut — has recently thrown away valuable public franchises is thus graphically described by one of the leading and authoritative newspapers of New England — i. e., the Springfield Republican. We have here the astonishing fact that over seventy per cent of the stock capital of twenty-six monopoly electric or "trolley" companies operated in that State has been issued for something other than money, (cash) paid in, and hence may be said to represent nothing but what is popularly characterized as "water." The bonded debt of these roads amounts to $8,690,100, or over three times the amount of their cash stock — i. e., $2,671,240. This bonded debt, standing in comparison with a total stock issue, strikingly illustrates what has taken place:first, a gratuitous grant or franchise; second, an issue of bonds thereon to build the roads; third, a share capital, the product of the printing press, and representing no value whatever except as an instrumentality for obtaining extra profits and exceptional legislation through its distribution.
"This watered capitalization will in time, of course, pass into innocent hands, and the ‘rights’ of the monopolies in the matter of charges will all be gauged by the yearly revenue in its relation to this totality of nominal capital. The stock waterers will have sold their water at handsome figures and made off, and the purchasers of the water must henceforward, of course, be considered legitimate investors whose holdings are entitled to full consideration; and only until monopoly charges suffice to pay eight and ten per cent on all capital, watered or otherwise, will it be safe for any community to demand a reduction of charges without bringing upon itself the charge of being favorable to anarchy and confiscation.
"The people of Connecticut are preparing the way to pay handsomely for their electric transportation. The penalty of present neglect to guard and restrict closely the capitalization of these monopolies will fall in ugly force upon this and future generations; and when the time is ripe for municipal or State assumption of the monopolies, as may some time happen, the people will have the pleasure, no doubt, of paying more than face value for the water now so freely allowed to issue."
On this subject the late Chief-Justice Taney expressed his views as follows, in a case that came up before the United States Supreme Court in 1853: "The powers of sovereignty confided to the legislative body of a State are undoubtedly a trust committed to them to be executed to the best of their judgment for the public good; and no one Legislature can by its own act disarm its successors of any of its powers or rights of sovereignty confided by the people to the legislative body, unless they are authorized to do so by the Constitution under which they are elected. They can not, therefore, by contract, deprive a future Legislature of the power of imposing any tax it may deem necessary for the public service, or of exercising any other act of sovereignty confided to the legislative body, unless the power to make such contract is conferred upon them by the Constitution of the State. And in every controversy on this subject the question must depend on the Constitution of the State, and the extent of the power thereby conferred on the legislative body."
The subject again came up before the United States Supreme Court in 1869, 1871, and 1872, when the question at each time was treated as res adjudicata (definitely settled). In the first of these instances Justice Miller thus expressed his views: "We do not believe that any legislative body, sitting under a State Constitution of the usual character, has a right to sell, to give, or bargain away forever the taxing power of the State. This is a power which, in modern political societies, is absolutely necessary to the continued existence of every such society. While under such forms of government the ancient chiefs or heads of the Government might carry it on by revenues owned by them personally and by the exaction of personal service from their subjects, no civilized Government has ever existed that did not rely upon taxation in some form for the continuance of that existence. To hold, then, that any one of the annual Legislatures can, by contract, deprive the State forever of the power of taxation is to hold that they can destroy the Government they are appointed to serve, and that their action in that regard is strictly lawful. The result of such a principle, under the growing tendency to special and partial legislation, would be to exempt the rich from taxation and cast all the burden of the support of government on those who are too poor or too honest to purchase such immunity."
Like dissenting views have also found expression in various State courts. Chief-Justice Beasley, of New Jersey, for example, in commenting on the proposition that a charter of incorporation is a contract, says: "The entire contract on the part of a State, implied in such cases, is the supposed legislative agreement not to alter or recall the privilege granted. No other stipulation on the part of the State was ever suggested to exist, and it was the imagined existence of such stipulation alone which converted what else, in all its essential qualities as well as in its form, was an act of legislation, into a contract on the part of the community with the corporators. Without such stipulation, having an obligatory force, I am wholly unable to conceive the ground of difference between the charter of a corporation and any other act of legislation. If a statute lay no obligation on the State to do or refrain from doing a particular thing or one or more particular things, such an enactment seems to me to be a pure act of legislation, and in no sense a contract." "A law which seeks to deprive the Legislature of the power to tax must be so clear, explicit, and determinative that there can be neither doubt nor controversy about its terms, or the consideration which rendes it binding. Every presumption will be made against its surrender, as the power was committed by the people to the Government to be exercised, and not to be alienated." (47 Missouri, 158.)
And Justice Cooley (one of the justices of the Supreme Court of Michigan), in reviewing the action of the United States Supreme Court, says: "It is not very clear that this court has ever at any time expressly declared the right of a State to grant away the sovereign power of taxation." A court in Pennsylvania has also said: "Revenue is as essential to government as food to individuals; to sell it is to commit suicide." (30 Pennsylvania Statutes, 9.)
Turning to English jurisprudence, we have an opinion of Edmund Burke that the charter of the East India Company, in virtue of which great authority was exercised, "was a charter to establish monopoly and create power," and not entitled to the protection of the various charters of English liberty.
So long, however, as the decision of the United States Supreme Court in the Dartmouth College case is not reversed by the same court, the above and many other like expressions of opinion on the part of judges and men learned in the law and in constitutional history have nothing of practical significance.
parts, is to be considered; the conflicting powers of the Government of the Union and of its members are to be discussed; and an opinion given which may essentially influence the great operations of the Government. No tribunal can approach such a question without a deep sense of its importance and of the awful responsibility involved in its decision. But it must be decided peacefully, or remain a source of hostile legislation; perhaps of hostility of a still more serious nature; and if it is to be so decided, by this tribunal alone can the decision be made. On the Supreme Court of the United States has the Constitution of our country devolved this important duty. The sovereignty of a State extends to everything which exists by its own authority, or is introduced by its permission; but it does not extend to those means which are employed by Congress to carry into execution powers conferred on that body by the people of the United States. We think it demonstrable that it does not. These powers are not given by the people of a single State. They are given by the people of the United States to a Government whose laws, made in pursuance of the Constitution, are declared to be supreme. Consequently, the people of a single State can not confer a sovereignty which will extend over them."
- "No more impressive words are to be found in any English or American adjudication than those uttered by Chief-Justice Marshall as a preamble to the judgment in this most interesting and important case." — Francis Hillard, The Law of Taxation.
- The following additional extracts from the decision of the court in this celebrated case will help to a further elucidation of its involved subject-matters:
"In the case now to be determined," said the Chief Justice, "the defendant, a sovereign State, denies the obligation of a law enacted by the Legislature of the Union; and the plaintiff, on his part, contests the validity of an act which has been passed by the Legislature of that State. The Constitution of our country, in its most interesting and vital
- What interpretation the Supreme Court puts upon the word "contract," as found in that clause of the Constitution of the United States which provides "that no State shall pass any law impairing the obligations of contracts," is made clear by the following language employed by Chief-Justice Marshall in giving the opinion of the court in the celebrated case of the Trustees of Dartmouth College vs. Woodward: "The term contract must be understood as intended to guard against a power of at least doubtful utility, the abuse of which had been extensively felt, and to restrain the Legislature in future from violating the right to property; that anterior to the formation of the Constitution a course of legislation had prevailed in many if not all of the States which weakened the confidence of man in man, and embarrassed all transactions between individuals, by dispensing with a faithful performance of engagements. To correct this mischief by restraining the power which produced it, the State Legislatures were forbidden ‘to pass any law impairing the obligations of contracts’ — that is, of contracts respecting property, under which some individual could claim a right to something beneficial to himself; and that, since the clause in the Constitution must in construction receive some limitation, it may be confined, and ought to be confined, to cases of this description — to cases within the mischief it was intended to remedy."
- As an extension of the history of this case the following futile criticism of a former chairman of the Board of Assessors of the City of Boston (report for 1871) is pertinent: "There is certainly a broad distinction between the prohibition of the right to sell an imported article and the right to tax the same as property. The decision of the United States Court was to the effect that the State could not enact a law that would prevent the sale of such property, and did not touch the question of the right to tax. In a recent decision of the Supreme Judicial Court of Massachusetts (Dunbar vs. Boston, 101 Mass., 317), where the question was raised that the Commonwealth could not tax a stock of liquors, the sale of which, by her laws, she had declared illegal, the court sustained the tax, upon the ground that the case did not show that the goods could not be legally sold. As the law stood at the time the decision was given, but one class of the plaintiff's stock of intoxicating liquors could legally be sold; and that was his importations in the original packages."
- Burroughs On Taxation, from which authority the writer is mainly indebted in his presentation of this important subject.