CHAPTER III:
TAXATION
14. Taxation defined and limited.
15. Taxation by the United States.
16. Restrictions upon federal taxation.
17. Taxation of exports.
18. Direct taxation.
19. Requirement of uniformity.
20. Taxation in the territories.
21. Exemption of state, agencies from taxation by the United
States.
22. Charges which are not taxes exempt from constitutional
restraints.
23. Taxation by the states.
24. Expressed restraints upon state taxation.
25. Implied restraint upon state taxation resulting from the
federal supremacy.
26. Taxation of national banks.
27. State taxation as affected by the prohibition of the
impairment of obligation of contracts.
28. State taxation as affected by the grant to Congress of the
power of regulating commerce.
Taxation Defined and Limited.
14. Taxation is the compulsory exaction by a government, in the
exercise of its sovereignty of a payment of money or surrender of
property by any person, natural or corporate, who, or whose
property so taxed, is subject to the sovereign power of that
government. (1) Taxation operates upon real property and upon
tangible personal property by reason of its situs or presence
within the territory of the taxing power. (2) It operates upon
choices in action by reason of the subjection of the owner
thereof the jurisdiction of the government imposing the tax (3);
Every possible exaction of money or property by a government from
those who are subject to its jurisdiction is not a tax; thus, a
duty of so much per passenger, imposed by the United States in
the exercise of the power to regulate commerce on owners of
vessels bringing passengers from foreign ports into ports of the
United States, in order to raise a fund to mitigate the evils
incident to immigration, is "not a tax or duty within the meaning
of the Constitution; (4) for, as Miller, J., said in the judgment
in that cause, (5) "the money thus raised, though paid into the
treasury, is appropriated in advance to the uses of the statute,
and does not go to the general support of the government. It
constitutes a fund raised from those who are engaged in the
transportation of those passengers, and who make profit out of
it, for the temporary care of the passengers whom they bring
among us and for the protection of the citizens among whom they
landed." Nor is a tax levied, in the strict sense of the word,
when the cost of executing the banking laws is met by a charge on
bank notes, and a bill for that purpose need not originate in the
House of Representatives. (6) On the same principle, a charge
made by a state for facilities furnished by it, directly or
indirectly, for the movement of commerce, in the form of improved
waterways, (7) or wharves, (8) or railways, (9) or a charge on
telegraph companies for the use of the streets for their poles,
or for the governmental supervision of their poles and wires,
(10) or charge on adjoining property for local improvements, (11)
or a charge for quarantine or other examination, (12) cannot be
said to be a tax. The power of taxation is vested in the
legislative department of the government, (13) but it may be
delegated by states to political subdivisions, such as counties
and municipalities, (14) and a state may determine the bounds of
a municipality and prescribe its rate of taxation. (15) By
whomsoever exercised, or to whomsoever delegated, the power can
only be exercised for public purposes. Taxes, therefore, cannot
be imposed in aid of enterprises strictly private, such as the
establishment of manufactories (16) or of private grist mills;
(17) but when the purpose is public, though not directly
connected with the administration of government, taxes may
rightfully be laid to aid in its accomplishment, as in the cases
of state reform schools; (18) grist mills required by statute to
grind for all customers on payment of certain tolls; (19) the
improvements of water powers of rivers for general purposes; (20)
the payment of bounties to volunteer soldiers in time of war;
(21) or for the construction of railways. (22) When bonds, though
issued in aid of private purposes, on their face appear to have
been issued for public purposes, they are valid and enforceable
in the hands of bona fide holders for value and without notice.
(23)
Taxation by the United States.
15. Section 8 of Article I of the Constitution declares that
"the Congress shall have power to lay and collect taxes, duties,
imposts, and excises, to pay the debts and provide for the common
defense and general welfare of the United States; but all duties,
imposts, and excises shall be uniform throughout the United
States." At one period in the history of the country political
parties were at issue as to the construction to be given to this
section of the Constitution, the Federalists contending that the
section granted in express terms three substantive and
independent powers, namely, (1) to lay and collect taxes, duties,
imposts, and excises, (2) to pay the debts, and (3) to provide
for the common defense and general welfare of the United States;
and the Democrats asserting that the section granted but one
substantive power, that to lay and collect taxes, duties,
imposts, and excises, and limited the exercise of that power to
the purpose of paying the debts and providing for the common
defense and general welfare of the United States. The Federalist
view was open to the objection that a power to legislate for the
common defense and general welfare of the United States would
authorize Congress to do anything and everything, and would
render superfluous the delegation of other express powers of
legislation in the same section; but the Democratic view, however
sound in theory, could never be judicially affirmed, for, as
Congress has admittedly some power of taxation, a court, looking,
as it is bound to look, not at the question of expediency but
solely at the question of power, could never determine an act of
Congress imposing a tax to be unconstitutional because it was
intended for some purpose other than that of paying the debts and
providing for the common defense and general welfare of the
United States. That restraint, therefore, upon the congressional
power of taxation, if it be a restraint, is of moral, and not of
legal, sanction.
Restrictions upon Federal Taxation.
16. "The power of Congress to tax is given in the Constitution
with only one exception and only two qualifications. Congress
cannot tax exports, and it must impose direct taxes by the rule
of apportionment, and indirect taxes by the rule of uniformity.
Thus limited, and thus only, it reaches every subject and may be
exercised at discretion." (24) The constitutional power of
taxation vested in the United States is coextensive with the
territory "subject to their jurisdiction." It does not operate in
a port of one of the United States during a temporary occupation
of that port by the armed forces of a public enemy, (25) nor in
foreign territory temporarily occupied by the armed forces of the
United States, (26) but during such temporary occupation the
armed forces in possession of such territory may, under the rules
of international law, levy and collect such duties and taxes as
the military authorities impose. (27) On the other hand, the
constitutional power of taxation does operate upon foreign
territory acquired by treaty, but only from and after the
ratification of the treaty. Thus, importations into California
after the ratification of the treaty which ended the war with
Mexico and ceded California to the United States were subject to
duties under the then tariff laws of the United States, which
took effect immediately upon the ratification of the treaty. (28)
Conversely, from and after the ratification of the treaty which
ended the war with Spain and ceded Puerto Rico and the
Philippines to the United States, those islands ceased to be
foreign territory, and thereafter, but only until Congress
otherwise provided, (29) importations from those islands into
other ports of the United States were not subject to duty under
the then tariff laws of the United States (30) and, so far as
regards the Philippines, that conclusion was not affected by the
continuance in insurrection against the United States of those
who had previously been in insurrection against Spain. The
constitutional power of taxation is, therefore, operative within
the states, in the District of Columbia, (31) and also in the
territories, but only to the extent of the constitutional grant
and subject to the limitations imposed by the Constitution, with
the important exceptions that in Puerto Rico and the Philippines
its operation is not subject to the constitutional requirement of
uniformity, (32) and that articles exported from the states to
Puerto Rico may be taxed by duties levied upon those articles
when "imported from the United States" into Puerto Rico. (33)
Taxation of exports.
17. "No tax or duty shall be laid on articles exported from any
state." (34) The constitutional language is "no tax or duty," and
"the requirement is that exports shall be free from any
governmental burden.". (35) The word "export," as used in the
constitutional prohibition of state imposition of duties, (36)
has been held to apply only to foreign, and not to interstate,
commerce, (37) and the same construction has been given by a
divided court (38) to the prohibition of the imposition by the
United States of duties of duties on exports, as affecting goods,
to quote the words of the statute, "imported from the United
States" in Puerto Rico under the Act of 12th April, 1900. (39)
Yet the place at which the duty is levied and collected ought
not to be held to change the character of the duty. As Marshall,
C. J., suggested, (40) a duty upon exports would not cease to be
such when collected by a revenue cutter cruising off the coast.
If so, why does the duty cease to be a duty upon exports when
collected for the United States by officers of the United States
under an act of Congress at an island in the West Indies ceded
to, owned by, and governed by the United States, and when the act
in terms imposes the duties upon goods "imported from the United
States?" It is obviously the fact that "no article can be
imported from one state into another which is not at the same
time exported from the former." (41) It would seem to be equally
clear that goods "imported from the United States" into Puerto
Rico are as certainly goods exported from the United States to
Puerto Rico. It may also be suggested that the constitutional
prohibition applies in terms to articles exported from any state
without regard to their destination, and that there is nothing in
the terms of the provision, or in its context, or in the history
of the Constitution, to support a judicial qualification of the
provision by adding thereto the words "to foreign countries." In
the view of the court, Puerto Rico is at one and the same time
'foreign' in order to justify the collection at ports of the
United States of duties upon Rico and "domestic" in order to
justify the collection at Puerto Rico of duties upon exports from
the United States. Internal revenue stamps required to be placed
by the manufacturer upon articles made for exportation were held
not to fall within the prohibition, when "intended for no other
purpose than to separate and identify" that "which the
manufacturer desires to export, and thereby instead of taxing it
to relieve it from the taxation" to which articles intended for
domestic use are subjected; (42) and the Constitution does not
prohibit the imposition of the same amount of internal revenue
taxation upon goods exported as upon similar goods intended for
domestic consumption; (43) but, on the other hand, a specific
stamp duty imposed "for and in respect of the ... paper ... upon
which ... shall be written or printed ... a bill of lading," and
not graduated in amount according to the quantity or value of the
articles covered thereby, has been held, in a recent case (44) by
a divided court, four justices dissenting, to be in effect a tax
upon the articles covered by the bill of lading, and, therefore,
as applied to foreign and outgoing bills of lading, a tax upon
exports.
Direct Taxation.
18. "No capitation or other direct tax shall be laid, unless in
proportion to the census or enumeration herein before directed to
be taken." (45) "Ordinarily all taxes paid primarily by persons
who can shift the burden upon some one else, or who are under no
legal compulsion to pay them, are considered indirect taxes,"
(46) and taxes imposed upon individuals in their personal
capacity, or upon individuals in respect of their ownership of
their property, are direct taxes. (47) In 1796 the court decided
(48) that a tax on carriages for the conveyance of persons under
the act of 1794 (49) was an excise, and, therefore, an indirect
tax. In the argument Alexander Hamilton said, "the following are
presumed to be the only direct taxes: capitation or poll taxes;
taxes on lands and buildings; general assessments, whether on
the whole property of individuals or on their whole real or
personal property. All else must of necessity be considered as
indirect taxes." Chase, J., said that he was inclined to think,
but did 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,
possession, or any other circumstances; and a tax on land." (50)
Paterson, J., said "Whether direct taxes, in the sense of the
Constitution, comprehend any other tax than a capitation tax, and
tax on land, is a questionable point. (51) Iredell, J., said,
"Perhaps a direct tax ... can mean nothing but a tax on something
inseparably annexed to the soil; something capable of
apportionment under all such circumstances." (52) Wilson, J.,
contented himself with affirming the constitutionality of the tax
in question. (53) It was held in later cases that neither taxes
on the personal incomes (54) under the Act of 5th August, 1861,
(55) and its supplements; nor taxes on distilled spirits; (56)
nor taxes on manufactured tobacco; (57) nor taxes on the
business of refining sugar, measured by the gross annual receipts
of the refiners; (58) nor succession duties on the devolution of
title to real or personal estate; (59) nor stamp duties on a
memorandum of sale of a certificate of stock, (60) or on an
"agreement of sale or agreement to sell any products or
merchandise at any exchange, or board of trade, or other similar
place, either for present or future delivery;" (61) nor taxes on
the notes of state banks paid out by national banks; (62) nor
taxes on the receipts of insurance companies from premiums and
assessments, (63) are direct taxes, but that all such taxes are
imposts or excises. It has been suggested that the tax under
consideration in the Hylton case was in reality a tax upon
transportation and as such capable of transference to the person
carried, and, therefore, when imposed upon the carrier clearly an
indirect, and not a direct, tax; that the tax under
consideration in Singer's case was clearly an excise; that the
tax under consideration in the Veazie Bank case was in its own
nature not a tax at all, but an exercise by Congress of the power
to prohibit the issue of circulation by state banks in order to
stimulate the formation of national banks; and that the tax
under consideration in the Insurance Company's case was an
indirect tax because capable of transference to the policy-
holders paying premiums and assessments. Springer's case was
decided long after the income tax of 1861 had been repealed, and
when the popular and professional interest in the subject had
ended, for no one then believed that this country would ever
again be called upon to pay an income tax under the laws of the
United States. It is the consensus of economic authorities that
income tax laws, even when wisely framed, should be reserved only
for great public emergencies, for the reason that they are
necessarily unequal in operation in that they fall most heavily
on those who conscientiously make full returns; and that when
resorted to they should tax impartially the surplus income of
every citizen, over and above that minimum which suffices for the
necessities of the life of an individual, and that incomes
received from salaries, or from professional compensation, if
taxed at all, should, by reason of their terminable character, be
less heavily taxed than incomes derived from invested funds.
Under the income tax legislation of 1861 and its supplements,
when the amount exempted was $600, the tax was paid by only four
hundred sixty thousand persons, and when the amount exempted was
$1,000 the tax was paid by less than two hundred and fifty
thousand persons. The state of New York paid nearly one-third of
that tax, and the states of New York and Pennsylvania paid nearly
one-half thereof. The population and the wealth of the country
had largely increased in the years preceding 1894, but it is
certain that by reason of the larger amount exempted from
taxation under the act of that year, the burden of the tax
imposed by that law would have been borne by a relatively small
number of persons, certainly not more than two per cent of the
population of the country. That law was a very objectionable
specimen of class legislation. Not content with exempting the
minimum amount which suffices for the necessities of the life of
an individual, and which in 1894 certainly did not exceed $600,
it enlarged the exemption to $4,000. It made no distinction
between income received from salaries, or as professional
compensation, and income derived from invested securities. While
purporting to exempt from all taxation the income of charities,
it yet taxed so much of their incomes as were derived from
investments in corporate shares. It taxed as income the receipt
by a widow or an orphan of that amount of insurance upon the life
of the husband or father, which might possibly constitute the
whole principal fund for the support of the beneficiaries. It
taxed the interest received from investments in state, county,
and municipal securities. It made no distinction between the
rental received from productive land and moneys received from the
sale of minerals, the taking away of which diminishes the
principal. In taxing the rental of land, it necessarily taxed
the land itself. It taxed profits realized on sales of real
estate within two years, and it forbade a deduction for losses on
like sales. It allowed a deduction of $4,000 from the income of
an unmarried person and it permitted only one exemption to that
amount from the aggregate incomes of a family composed of
parents, minor children, or husband and wife. It taxed without
exemption income derived from corporate securities and it
permitted the exemption in the case of incomes otherwise derived.
It vested oppressive, arbitrary, and uncontrollable power in the
tax collectors. It was an example of all that a tax law ought
not to be. The constitutionality of that act came before the
Supreme Court of the United States in 1895. (64) It was argued
that the judgment in Springer v. United States (65) did not
establish any rule of property, and was, therefore, open to
reconsideration; that that judgment was based solely on the
dicta in Hylton v. United States; (66) and that, even if those
dicta were binding authorities, capitation taxes were in reality
nothing else than taxes imposed upon persons, either per capita,
or graded in amount according to the possessions or income of the
person; that taxes on the income of real estate were in
substance taxes on the real estate from which the income was
derived; and that taxes on the income from securities issued by
a state, or by any political subdivision thereof, were taxes upon
agencies of state government. It was argued in reply that the
dicta in Hylton's case had not only been recognized by jurists
and commentators as fixing the construction of the Constitution,
but had also received the approval of the court in Springer's
case; that the term "capitation" taxes as understood by the
framers of the Constitution, meant nothing more than poll taxes;
and that the income of any person, from whatever source derived,
was a legal entity, entirely distinct from its sources, and,
therefore, independently taxable; and that with the policy of
the legislation the court had nothing to do, and could only
concern itself with the grounds of legal objection. At the first
hearing it was decided, two justices dissenting, that so much of
the act as provided for levying taxes upon incomes derived from
real estate was invalid, because such taxes are in legal effect
taxes upon real estate, and are, as such, direct taxes, and can
only be imposed according to the rule of apportionment, and that
so much of that act as taxed income derived from investment in
state, county, and municipal securities was invalid because taxes
on the states and on their instrumentalities of government. The
justices who heard the argument were, however, equally divided,
and, therefore, expressed no opinion, as to the other questions
raised. Upon the re-hearing, the court decided, four justices
dissenting, that, in addition to the points decided at the first
hearing, a tax on an individual in respect of his income derived
from real, or personal, property is a direct tax, and, therefore,
can be laid only under the rule of apportionment. The opinion of
the profession and the sober second thought of the country have
approved the judgement of the court. The requirement that direct
taxes must be "laid in proportion to the census or enumeration"
is not violated by a statutory imposition of a penalty for non-
payment of the tax; (67) and the amount of penalty to be
enforced is a matter within legislative discretion. (68)
Requirement of uniformity.
19. "All duties, imposts, and excises shall be uniform
throughout the United States. " (69) The requirement of
uniformity means that there must be geographical uniformity, or,
in other words, that "wherever a subject is taxed anywhere, the
same must be taxed everywhere! throughout the United States, and
at the same rate," (70) and taxation is uniform, when it operates
with the same effect in all places where the subject of taxation
is found, though that subject be not equally distributed in all
parts of the United States. (71) Subjects of taxation may, in the
discretion of Congress, be classified without impairment of
uniformity, and, while the theory is that such classification
should not be arbitrary, but must be based upon grounds of real
distinction, yet, in view of the progressive inheritance tax
case, (72) it would be difficult to make a classification
sufficiently arbitrary to justify a judicial determination that
the classification violates the rule of uniformity. Sales of
property at "any exchange, or board of trade, or other similar
place " may be taxed, when sales otherwise made are not taxed.
(73) Inheritances may be taxed, even though the rate of taxation
progressively increase according to the value and amount of the
devise, bequest, or distributive share, and though there be
discrimination in the rate as between lineals, collaterals, and
strangers; and, under the statute, (74) the subject of taxation
is not the corpus of the estate, but the amount of each
particular devise, bequest, or distributive share. (75) Though
free from objection on constitutional grounds, the progressive
inheritance tax law is a very objectionable exercise of
legislative discretion, for it violates the fundamental American
doctrine that all men are equal before the law, and that equality
of rights implies equality of obligations, and it is of dangerous
import in that it teaches the many to expect that the necessary
expenditures of government will be met by taxation to be levied
on the few.
Taxation in the territories.
20. Long ago the court said in an unambiguous judgement, (76)
pronounced by Marshall, C. J., "Does this term `the United
States,' designate the whole, or any particular portion, of the
American Empire? Certainly this question can admit of but one
answer. lt is the name given to our great republic, which is
composed of states and territories. The District of Columbia, or
the territory west of the Missouri, is not less within the United
States than Maryland or Pennsylvania; and it is not less
necessary, on the principles of our Constitution, that uniformity
in the imposition of imposts, duties, and excises, should be
observed in the one than in the other." This expression of
opinion by the greatest of the judicial commentators on the
Constitution was not a dictum, obiter or otherwise, but was a
statement of the rule of law which was applied to, and which
decided, the case before the court. Nevertheless; that case has
been, in effect though not in form, overruled, for it has been
decided by a divided court, four justices dissenting and the five
justices constituting the majority agreeing only in the judgment,
and differing widely in the reasoning upon which it rests, that
the Act of 12th April, 1900, (77) imposing for a limited period
certain duties upon importations into ports of the United States
from Puerto Rico, and into ports of Puerto Rico from the United
States, differing from the duties imposed upon importations into
the United States from foreign countries, is constitutional, and
that, from and after the taking effect of that act, the duties
thereby imposed were rightfully collected. (78) The judgment in
that case is, therefore, authority for the proposition that after
a territory has been acquired by treaty and has so far become a
part of the United States that goods brought from it to ports of
the United States are not subject to the duties imposed by the
laws of the United States upon importations from foreign
countries, (79) Congress may, by subsequent legislation, organize
it as a territory of the United States, and by the same act
impose upon it taxation by tariff which if imposed upon any state
or upon any territory on the continent of North America would be
confessedly unconstitutional, because a violation of the rule of
uniformity. That the justices who concurred in the judgment did
not agree in the reasoning upon which that judgment is based does
not detract from the authority of the case as a binding
precedent', for, as Marshall, C. J., said, (80) "The authority of
a decision is coextensive with the facts upon which it is
founded." Mr. Justice Brown bases the judgment upon the
proposition that in the uniformity clause the words "throughout
the United States" do not include territories acquired by treaty
or conquest, except in so far as Congress shall direct. Mr.
Justice White, Mr. Justice Shiras, and Mr. Justice McKenna base
it on the theory that while territory may be acquired by treat,
and thereby become the property of the United States, it does not
become territory of the United States subject to constitutional
restraints upon congressional action until it shall have been "
incorporated" with the United States by an act of Congress. Mr.
Justice Gray, concurring in the judgment of affirmance, and in
substance concurring in the opinion of Mr. Justice White. also
held that territory acquired by conquest or cession does not
become domestic territory in the sense of the revenue laws, and
that Congress may establish a temporary government therefor,
"which is not subject to all the restrictions of the
Constitution." Mr. Chief Justice Fuller, Justice Brewer, and Mr.
Justice Peckham dissented, and held that the powers granted by
the Constitution and the restrictions upon the exercise of those
powers extend to every part of the territory of the United
States. Mr. Justice Harlan concurred in the dissenting opinion of
the chief justice, and held that "Congress has no existence and
can exercise no authority outside of the Constitution," and he
agreed with the chief justice in his opposition to the view that
Puerto Rico has not been " incorporated" into the United States.
Exemption of State Agencies from Taxation by the United States.
21. The United States cannot tax the agencies of a state, as,
for instance, the salary of a judicial officer of a state," (81)
nor the revenue of a municipal corporation derived from its loan
of capital to a railway; (82) nor may it tax, in the hands of an
individual, the income from municipal bonds. (83) But the federal
government may tax a bequest to a municipality for public
purposes, although the tax incidentally reduces the amount of the
bequest to that municipality. (84)
Charges which are not Taxes exempt from Constitutional Restraints.
22. The duty on the transportation of passengers by sea from
foreign countries imposed by the United States in the exercise of
the power of regulating commerce, not being in its nature a tax,
is not subject to the constitutional restrictions on the exercise
of the power of taxation; (85) and the same view has been taken
of the tax imposed by the United States on the circulating notes
of state banks for the purpose of preventing the circulation of
any other than national bank notes. (86)
Taxation by the states.
23. A state may, so far as it is not restrained by the
Constitution, tax all persons, natural or corporate, and all
property, real or personal, within its territory and subject to
its sovereignty, and may regulate, in the exercise of legislative
discretion, the manner of levying and collecting its taxes, (87)
and the United States cannot, either by legislative or judicial
action, afford any relief against " state taxation, however
unjust, oppressive, or onerous," so long as that taxation "does
not entrench upon the legitimate authority of the Union, or
violate any right recognized or secured by the Constitution of
the United States." (88)
Under the general rule which permits a government to tax all
persons and property within its jurisdiction, the states may
impose a succession duty on the devolution of title to real
estate from their citizens to alien non-residents; (89) they may
tax descents and inheritances, and they may classify and vary the
rate of taxation with reference to Lineal and collateral
relationship, strangers, and the amount of the legacy; (90) they
may tax goods and chattels which are actually within the state
when assessed for taxation, though owned by a non-resident; (91)
they may tax mortgages of lands within their limits, and note
secured by such mortgages, although held by residents of other
states; (92) they may tax the transfer by will of money deposited
within the state by a non-resident; (93) and, for purposes of
taxation, the situs of a debt being the residence of the
creditor, the state may include in the taxable property of a
resident so much of the registered public debt of another state
as such resident may hold, although the debtor state may either
exempt it from taxation or actually, tax it. (94) On the same
principle, a state may tax her resident citizens, for debts due
to them by a non-resident and secured by his bond and also by his
deed of resident trust or mortgage of real estate situated in
another state. (95) As, until the period of distribution arrives,
the law of a decedent's domicile attaches to his personal
property, that property is subject to a state collateral
inheritance tax, though bequeathed by his will to non-resident
legatees. (96) But the laws of a state can have no extra-
territorial effect, and, therefore, a state cannot tax a
franchise granted by, and exercised in, another State, (97) nor
can it, as a means of taxing corporate bonds held by non-
residents, authorize the corporation to retain from the interest
due on its bonds the amount of the tax. (98) Nor can a state tax,
in the hands of a non-resident holder, corporate bonds issued
under a mortgage of a railway formed by the consolidation of
corporations, incorporated by the state, and other corporations
incorporated by another state, and encumbering by a Consolidated
and non-severable lien property which is not within the
jurisdiction of the taxing state. (99) Nor can a state compel a
foreign corporation to collect its taxes by retaining a portion
of the interest due upon scrip or bonds held by citizens of the
taxing state, when the payment is made by the foreign corporation
in its home state. (100) A state may tax corporate bonds at their
face, instead of their market, value. (101)
Expressed Restraints upon State Taxation.
24. Section 10 of Article I of the Constitution declares, that
"no state shall, without the consent of the Congress, lay any
imposts or duties on imports or exports, except what may be
absolutely necessary for executing its inspection laws; and the
net produce of all duties and imposts, laid by any state on
imports or exports, shall be for the use of the treasury of the
United States; and all such laws shall be subject to the revision
and control of the Congress. No state shall, without the consent
of the Congress lay, any duty of tonnage." The nature and effect
of the restrictions, upon the taxing power of the states imposed
by these constitutional provisions are more fully discussed in
Chapter IV, and it is sufficient to say in this connection that a
state cannot require importers of foreign by the bale or package
and wholesale vendors of such goods to pay a license fee; (102)
nor can a state impose, an ad valorem tax on imported goods
remaining in their original cases in the hands of the importer;
(103) nor can a state tax an auctioneer's sales of imported goods
for account of the importers; (104) but a state may prohibit the
exportation of tobacco grown within its territory, save after
inspection and on payment of a tax. (105) A state cannot tax
ships upon their tonnage. (106)
Implied restraint upon state taxation resulting from the federal
supremacy.
25. The supremacy of the United States under the Constitution
impliedly limits to some extent the exercise by the states of the
power of taxation. Thus, a state cannot tax the official salary
of an officer of the United States, as, for instance, an officer
in the revenue marine service; (107) nor can a state tax a
telegraph company upon messages sent by officers of the United
States on public business; (108) nor can a state authorize
municipal taxation of the bonds issued by the government of the
United States for money loaned to it; (109) nor can a state tax
the notes of the United States; (110) nor can a state tax so much
of the capital of a state bank as is invested in the bonds of the
United States, that capital being assessed either at its actual
value, (111) or at a valuation equal to the amount paid in, or
secured to be paid in. (112) But no one will be allowed to evade
state taxation of his money on deposit by making a temporary
investment of that money in the notes of the United States. (113)
A corporation claiming an exemption from state taxation by reason
of the investment of its surplus funds in the legal tender notes
of the United States has, of course, the burden of proving the
fact on which it rests its claim for exemption. (114) A state tax
of a certain percentage of the total amount of the deposits on a
given day, (115) or of the average amount of the deposits for a
fixed period, (116) of a saving fund society chartered by the
state, a state tax of a certain percentage upon the excess of the
market value of the shares of the capital of a corporation
chartered by a state over and above the value of its real estate
and machinery, (117) and a state tax, measured by dividends, upon
a foreign corporation doing business within the state, (118) are,
in each case, a tax on the franchise and not on the property of
the corporation, and the corporation cannot claim exemption from
such taxation by reason of the investment, in the case of the
saving funds, of their deposits, and in the case of the other
corporations, of their capital and assets, in the bonds of the
United States. So also a state, in taxing the shares of stock of
a trust company, may include in the valuation of the shares the
amount of the capital stock of the company which is invested in
the bonds of the United States. (119) A state may tax a legacy
consisting of bonds of the United States issued under a statute
declaring them to be exempt from taxation in any form, (120) and
it may tax bequests to the United States. (121) it cannot tax
lands held in severalty by members of an Indian tribe and
protected by treaties between the United States and the tribe,
(122) and it cannot tax lands held by the United States in trust
for members of an Indian tribe, or improvements upon such lands,
or property given to the Indians by the United States, when such
taxation is prohibited by federal statute. (123) It may, by act
of Congress, tax surveyed but unpatented lands of the United
States included within a railroad land grant. (124). Lands
granted by act of Congress to a state to be held by it to aid in
the construction of a railway, though not taxable by the state
when held by it as trustee, are taxable by it after their
conveyance to the railway, (125) and, of course, in the case of
lands ceded by a state to the United States for the construction
of a railway, with an express reservation of the state's right of
taxation, the state may lawfully exercise that right, (126) but
land within a state, which, under laws of Congress for the
collection of taxes due to the United States, has been sold for
non-payment of such taxes, and at the sale thereof purchased by
the United States and afterwards sold by the United States to a
third party, or redeemed by the owner, is exempt from state
taxation during the period of federal ownership thereof. (127)
Although the title to land remain in the United States, ore dug
therefrom under a mineral claim is, as the personal property of
the claimant, subject to state taxation. (128), The exemption of
federal agencies from state taxation is dependent, not on the
fact of the agency, nor on the character, of the agents, nor on
the mode of their appointment, but on the effect of state
interference in depriving the agent of power to serve the
government of the United States, or in hindering the agent in the
efficient exercise of that power. (129) A state may, therefore,
tax the property, real and personal, of a railroad, which has
been chartered by act of Congress, is subject to a lien securing
its debt to the United States, and is used as a federal agency
for the transportation of mails, soldiers, government supplies,
and munitions of war; (130) and, it would seem, on the principle
of that case, that a state may tax the property of any federal
agency, wherever such taxation does not impair the efficiency of
the agency in the performance of its duty to the government of
the United States. The federal supremacy forbids a state so to
tax the transit of passengers through the state by the ordinary
modes of travel, as to impede their approach to the seat of
government of the United States, the ports of entry through which
commerce is conducted, and the various federal offices in the
states. (131) The supremacy of the United States does not involve
an exemption from state taxation of property which has been
acquired by the exercise of an exclusive privilege granted by the
United States, when there is no relation of agency between the
United States and the grantee; thus letters patent, granted by
the United States, do not exempt from state taxation the tangible
property in which the invention or discovery is embodied. (132)
Nor does a license granted, on payment of a license fee, by the
United States under its internal revenue statutes to a wholesale
liquor dealer in a state exempt the dealer, or his business, or
his goods from state control, regulation, or taxation. (133)
Taxation of National Banks.
26. A state cannot tax the operations of banks incorporated by
the government of the United States as fiscal agencies. (134) Nor
can a state tax the assets of an insolvent national bank in the
hands of a receiver appointed under the provisions of the
national banking laws. (135) Of course, when Congress licenses
state taxation of agencies of the government of the United
States, such taxation is permissible within the limits imposed by
the terms of the license; (136) thus in the case of national
banks, state taxation is by Section 41 of the Act of 3 June 1864,
(137) permitted as to the shares in any bank, when "included in
the valuation of the personal property of the owner or holder of
such shares, in assessing taxes imposed by authority of the state
within which the association is located, . . subject only to the
restrictions, that the taxation shall not be at a greater rate
than is assessed upon other moneyed capital in the hands of
individual citizens of such state, and that the shares of any
national banking association owned by non-residents of any state
shall be taxed in the city or town where the bank is located, and
not elsewhere." The states may, therefore, tax shareholders in
national banks within the limits of this license, (138) without
regard to the investment of all or any part of the capital of the
banks in United States securities. The National Bank Act of 3
June 1864, (139) had imposed a further restriction on state
taxation of national bank shares, declaring that such tax shall
not exceed the rate imposed upon the shares in any of the banks
organized under the authority of the state," but in the re-
enactment of this statute in 1868 (140) and in the Revised
Statutes, (141) this condition was omitted. Under the Act of 1864
it was held that a state could not tax shares in national banks,
when it taxed the capital of state banks, exempting so much
thereof as was invested in the bonds of the United States, and
failed to tax the shares of state banks. (142) It was also held
that the limitation upon disparity of state taxation imposed by
the Act of 1864 is not overstepped by a state which, having only
two banks of issue and circulation, and having by contract bound
itself not to tax these banks beyond a certain limit, but having
numerous banks of deposit, which do not issue circulation, taxes
generally and equally all shares of stock in banks and
incorporated companies doing business in the state. (143) The
terms of Section 5219 of the Revised Statutes show clearly that
Congress did not intend to curtail the taxing power of the states
over national bank shares as entities distinct from the capital
of the banks, and as the property of persons subject to state
jurisdiction, but that it was intended to guard the national
banks against unfriendly discrimination by the states in the
exercise of that taxing power. (144) The phrase "moneyed capital"
includes capital employed in national banks and capital employed
by individuals for the making of profit by its use, but it does
not include non-competitive capital (145) The exemption from
state taxation of some but not all of the moneyed capital in the
state is not a discrimination against national bank shares within
the terms of the license; as, for instance, in the case of
exemption of "all mortgages, judgments, recognizances, and moneys
owing upon articles of agreement f or the sale of real estate;"
(146) or of deposits in savings banks, shares in trust companies,
and shares in other moneyed or stock corporations chartered by
the state and deriving an income or profit from the use of their
capital or otherwise. (147) Nor is there any inequality of
taxation or unfriendly discrimination as against national bank
shares, in the exemption by a state of that which it cannot
lawfully tax, such as shares owned by its residents in the
capital stock of foreign corporations, (148) or in the exemption
of that which is not a subject of taxation by the United States,
such as the bonds of a municipal corporation created by the
state; (149) but where a very material part of the other moneyed
capital of a state in the hands of individual citizens within the
state is exempted from state taxation, the state cannot tax the
shares of national banks. (150) State statutes taxing personal
property, including national bank shares, and permitting the
party taxed to deduct his just debts from the valuation of his
personal property other than national bank shares, tax such
shares at a greater rate than other moneyed capital, and,
therefore, are not effective under the terms of the license given
by Congress; (151) but in the case of a national bank shareholder
who has no just debts to deduct, the taxing law is valid and
operative. (152) A state may, under the act of Congress, tax the
shares of a bank located within it." jurisdiction without regard
to the non-resident or resident ownership of such shares, (153)
and the shares may be assessed for purposes of state taxation at
their market value, though that exceed their par value. (154) But
state taxation of national bank shares must be uniform and equal,
and when a system of valuation for taxation purposes intended to
operate unequally is adopted by the state authorities whose duty
it is to make the assessment, equity may properly interfere, on
payment of the proper tax, to enjoin the collection of the
illegal excess. (155) Where a state has provided a mode for the
correction of error in the assessment of property for purposes of
taxation, a party aggrieved by an over-valuation of his property
cannot maintain an action at law to recover the alleged illegal
excess of taxes paid by him, for the official action of the
revising authority is judicial in character, and cannot be
collaterally impeached. (156) Only the shares of stock and the
real estate of a bank may be taxed. (157) A state may lawfully
require a national bank to act as the agent of the state in
collecting from the shareholders of the bank the tax imposed by
the state within the limits permitted by the act of Congress.
(158) A state may also, under a penalty for his non-performance
of the duty, require a cashier of a national bank to furnish to
the state authorities a list of the names and respective holdings
of the shareholders of his bank. (159)
State taxation as affected by the prohibition of the impairment
of the obligation of contracts.
27. The constitutional prohibition of the enactment by the
states of laws impairing the obligation of contracts affects to
some extent the exercise by the states of the power of taxation.
While, as a general rule, the states may, in the exercise of
legislative discretion, either tax property or exempt it from
taxation, yet contracts of exemption from state taxation, not in
terms contravening federal(160) or state (161) constitutional
prohibitions, and contained in corporate charters (162) or
stipulated by express agreement (163) if supported by an adequate
consideration, constitute contracts so binding upon the state,
that their obligation is not to be permitted to be impaired by a
subsequent legislative repeal of the charter, or by an imposition
of a rate of taxation inconsistent with the state's contract.
(164) But there cannot be implied from the grant of a charter an
exemption of the corporate franchise or property from state
taxation, (165) and the imposition in a charter of a specific
form or rate of taxation is not, in the absence of an express
contract of exemption from other taxation, to be construed as an
implied exemption from such other taxation, (166) and contracts
of exemption from state taxation, when expressly made, are to be
strictly construed. (167) Immunity from taxation is a personal
privilege which does not extend beyond the immediate grantee
unless it is otherwise so declared in express terms. (168) A
municipal corporation cannot, by the exercise of a statutory
power of taxation, diminish the interest payable to the holder of
a funded obligation of the municipality under the terms of the
bond. (169) The subject of exemption by contract from state
taxation is more fully discussed in Chapter V.
State taxation as affected by the grant to Congress of the power
of regulating commerce.
28. The constitutional grant to Congress of the power of
regulating "commerce with foreign nations, and among the several
states, and with the Indian tribes" also affects to some extent
the exercise by the states of the power of taxation, but the
states are not prohibited from taxing either the
instrumentalities, or the subjects, of foreign or interstate
commerce, provided that such taxation be imposed on those
instrumentalities and subjects as component parts of the mass of
property in the state, or by reason of the citizenship of their
owners as subjects of the sovereignty of the state, and provided
also, that that which is in form taxation, be not in substance a
regulation of, or a restraint upon, foreign or interstate
commerce. (170) In accordance with this distinction, a state may
tax ships and ferry boats as the personal property of their
owners, where either the owner, by reason of his residence, or
the property because of its situs is subject to the taxing power
of the state; (171) and a state may tax goods brought from
another state and mingled with the mass of property in the taxing
State, (172) and goods within the state intended for
transportation to another state but not actually stated on their
voyage; (173) provided, that the taxation is not so imposed as to
discriminate against either the natural products of, or goods
manufactured in, another state. (174) A state may require a
foreign corporation which is engaged in interstate commerce to
pay for the privilege of exercising the franchises of a
corporation, (175) though not for the right of transporting
interstate passengers, (176) within its borders. It may tax it
some citizens for the prosecution of any particular business or
profession within the state, unless that business be directly
concerned with interstate commerce; thus, while a state may not
tax drummers of goods made in other states, (177) it may tax
persons who sell goods shipped to them from outside points, (178)
and it may tax exchange brokers, despite the fact that bills of
exchange are instruments of foreign and interstate commerce.
(179) It may tax agents engaged in hiring laborers to be employed
beyond the limits of the state, even though transportation must
eventually take place as the result of such contracts; (180) but
an agent employed solely in promoting the use of his line in
interstate transportation cannot be taxed, for the business is
directly connected with commerce and consists wholly in carrying
it on. (181) It has the right to impose a license tax, (182) or a
tax on receipts, (183) upon a company engaged in local commerce,
although the company be also engaged in interstate business;
(184) but it cannot impose such charges upon strictly interstate
commerce. (185) It may, however, tax so much of the gross
receipts of an interstate railroad company as are earned within
the state. (186) If property within a state and otherwise liable
to taxation be in money at the date of assessment f or taxation,
a subsequent investment thereof in a subject of commerce does not
relieve that capital from liability to state taxation. (187)
While a state cannot tax the interstate transportation of
passengers or goods, it may by its charter of a railway charge a
toll payable to the state for the use of the improved facilities
of travel furnished by the railway, (188) and it may tax its
railway companies upon the cash value of their capital stock.
(189) It may tax an interstate railway car, express, or telegraph
company upon its property within the state, finding the value of
the whole property, both tangible and intangible, of the
corporation, which is used in its business, and then computing
the value of the line within the state by its relative length to
the whole. (190) On the other hand, a state may not tax sheep
which are driven at reasonable speed across its territory,
although they are allowed to graze on the way. (191) It may not
tax ships and ferryboats which come within the jurisdiction in
the prosecution of foreign or interstate commerce, unless the
owner is by residence subject to the taxing power of the state.
(192) Nor can a state tax the transportation of passengers coming
by water into its ports from a foreign Country or from another
state; (193) nor can a state tax the interstate transportation of
goods by water; (194) nor can a state impose port dues, that is,
charges payable by all vessels. entering, remaining in, or
leaving a port, without regard to services rendered to, or
received by, the Vessel; (195) nor can a state tax a telegraph
company upon messages transmitted by it to points outside of the
state; (196) nor can a state tax the interstate transportation of
Passengers or goods. It, therefore, cannot tax interstate freight
by the pound; (197) nor can it tax the total number of sleeping
cars brought into the state by a foreign corporation; (198) nor
can it tax the entire gross receipt's of corporations engaged in
the business of running cars not their own property over a
railway line within the state. (199)
Footnotes:
(1) The State Freight Tax, 15 Wall. 277; McCulloch v. Maryland,
4 Wheat. 420; Ashley v. Ryan, 153 U.S. 436; N. Y., L. E. &
W. R. v. Pennsylvania, ibid. 628; D. & H. C. Co. v.
Pennsylvania, 156 id. 200; W. U. T. Co. v. Taggart, 163 id.
1; Savings Society v. Multnonlah County, 169 id. 421; Dewey
v. Des Moines, 173 id. 193.
(2) Mager v. Grima, 8 How. 490; Coe v. Errol , 116 U.S. 517; P.
P. C. Co. v. Pennsylvania, 141 id. 18; C., C., C. & St. L.
Ry. v. Backus, 154 id. 439; Savings Society v. Multnomah
Count 169 id.
(3) Bonaparte v. Tax Court, 104 U. S. 592; Nevada Bank v.
Sedgwick, ibid. 111; Kirtland v. Hotchkiss, 100 id. 491; N.
Y,, L. E. & W. R. v. Pennsylvania, 153 id. 628; D. & H. C.
Co. v. Pennsylvania, 156 id. 200.
(4) The Head Money Cases, 112 U.S. 580.
(5) p. 595.
(6) Twin City Bank v. Nebekeer, 167 U.S. 196.
(7) Huse v. Glover, 119 U.S. 543; Sands v. M. R. I. Co., 123
id. 288; L. & P. Co. v. Mullen, 176 id. 126. But see Harman
v. Chicago, 147 id. 396.
(8) Packet Co. v. Keokuk, 95 U.S. 80; Packet Co. v. St. Louis,
100 id. 423; Vicksburg v. Tobin, ibid. 430; Packet Co. v.
Catlettsburg, 105 id. 559; Transportation Co. v.
Parkersburg, 107 id. 691; O. P. Co. v. Aiken, 121 id. 444.
(9) B. & O. R. v. Maryland, 21 Wall. 456.
(10) St. Louis v. W. U. T. Co., 148 U.S. 92; P. T. C. Co. v.
Baltimore, 156 id. 210; W. U. T. Co. v. New Hope, 187 id.
419. Charges for supervision in P. T. C. Co. v. New Hope,
192 id. 55; P. T. C. Co. v. Taylor, ibid. 64, were excessive
and therefore invalid. See also A. & P. T. Co. v.
Philadelphia, 190 id. 160.
(11) I. C. R. v. Decatur, 147 U.S. 190; Peake v. New Orleans,
139 id. 342; Fallbrook Irr. Dist. v. Bradley, 164 id. 112;
Ford v. D. & P. L. Co., ibid. 662; cf. Spencer v. Merchant,
125 id. 345. See also Norwood v. Baker, 172 id. 269; Dewey
v. Des Moines, 173 id. 193; French v. B. A. P. Co., 181 id.
324; Tonawanda v. Lyon, ibid. 389; Carson v. Brockton S.
Com., 182 id. 398; King v. Portland, 184 id. 61; Voigt v.
Detroit, ibid. 115; Goodrich v. Detroit, ibid. 432.
(12) Morgan v. Louisiana, 118 U.S. 455; N., C. & St. L. Ry. v.
Alabama, 128 id. 96. See also C., C. & A. R. v. Gibbes, 142
id. 386.
(13) Meriwether v. Garrett, 102 U.S. 472.
(14) Gilman v. Sheboygan, 2 Bl. 510; U.S. v. New Orleans, 98 U.
S. 381.
(15) Kelly v. Pittsburgh, 104 U.S. 78.
(16) Loan Assn. v. Topeka, 20 Wall. 655; Parkersburg v. Brown,
106 U.S. 487; Cole v. La Grange, 113 id. 1.
(17) Osborne v. County of Adams, 106 U.S. 181, 109 id. 1.
(18) County of Livingston v. Darlington, 101 U.S. 407.
(19) Burlington v. Beasley, 94 U.S. 310.
(20) Blair v. Cuming County, ill U.S. 363.
(21) Middleton v. Mullica Township, 112 U.S. 433.
(22) Rogers v. Burlington, 3 Wall. 654; Queensbury v. Culver, 19
id. 83; Taylor v. Ypsilanti, 105 U.S. 60; Olcott v. The
Supervisors, 16 Wall. 678; R. Co. v. County of Otoe, ibid.
667; Young v. Clarendon Township, 132 U.S. 340. See also
Wilkes County Comrs. v. Coler, 190 id. 107. (23 Hackett v.
Ottawa, 99 U.S. 86; Ottawa v. National Bank, 105 id. 343;
Ottawa v. Carey, 108 ida. 110, 118.
(24) License Tax Case, 5 Wall. 471. See Me(ray v. U.S. , 195 LT.
S. 27.
(25) U.S. v. Rice, 4 Wheat. 9146.
(26) Fleming v. Page, 9 How 603.
(27) Dooley v. U.S., 182 U.S. 222.
(28) Cross v. Harrison, 16 How. 164.
(29) Downes v. Bidvell, 1:82 U.S. 244.
(30) De Lima v. Bidwell, 182 U. S. 1; Fourteen Diamond Rings,
Pepke, Claimant, v. U.S., 183 id. 176.
(31) Loughborough v. Blalie, 5 Wheat. 317.
(32) Downes v. Bidwell, 182 U.S. 244.
(33) Dooley v. U.S. (second case), 183 U.S. 151
(34) Article I, Sec. 9 Par. 5.
(35) Per Brewer, J., Fairbank v. U.S., 181 U.S. 283.
(36) Article I, Sec. 10, Par. 2.
(37) Dooley v. U.S. (second case), 183 U.S. 151. Four justices
dissented.
(38) 31 Stat. 77,c. 191, secs. 2 and 3.
(40) Brown v. Maryland, 12 Wheat. 445.
(41) Per Miller, J.,in Woodruff v. Parham, 8 Wall. 123.
(42) Pace v. Burgess, 92 U.S. 372; Turpin v. Burgess, 117 id.
504.
(43) Cornell v. Coyne, 192 U.S. 418.
(44) Fairbank v. U.S., 181 U.S. 283.
(45) Constitution, Art. I, Sec. 9, Par. 4.
(46) Per Fuller, C. J., Pollock v. P. L. & T. Co., 157 U.S. 558.
(47) Hon. Geo. P. Edmunds' Argument, ibid. 491.
(48) Hylton v. U.S., 3 Dall. 171.
(49) 1 Stat. 373.
(50) 3 Dall. 175.
(51) ibid. 177.
(52) ibid. 183.
(53) ibid. 184.
(54) Springer v. U.S., 102 U.S. 586.
(55) 12 Stat. 309.
(56) U.S. v. Singer, l0 Wall. 111.
(57) Patton v. Brady, 184 U.S. 609.
(58) S. S. R. Co. v. McClain, 192 U.S. 397.
(59) Scholey v. Rew, 23 Wall. 331; Knowlton v. Aloore, 178 U.S.
41, 79, 83; Murdock v. Ward, ibid. 139.
(60) Thomas v. U.S., lt92 U.S. 363.
(61) Nicol v. Ames, 173 U.S. 509. The Union Stock Yards in
Chicago are a "similar place" within the meaning of the
taxing act.
(62) V. Bank v. Fenno, 8 Wall. 533; National Bank v. U.S. , 101
U.S. 1.
(63) P. 1. Co. v. Soule, 7 Wall. 433.
(64) Pollock v. F.L.& T.Co., 157 U.S. 429, and, on rehearing, 158
id. 60 1.
(65) 102 U.S. 586.
(66) 3 Dall. 175.
(67) De Treville v. smalls, 98 U.S. 517.
(68) W. LT. T. Co. v. Indiana, 165 U.S. 304.
(69) Article I See. 8 Par. 1.
(70) Knowltun v. Muore, 178 U.S. 41, 84, per White, J.
(71) The Head Money Casm, 112 U.S. 580.
(72) Knowlton v. Moore, 179 U.S. 41; Murdock w. Ward, ibid. 139.
(73) Nicol v. Ames, 173 U.S. 509.
(74) Act of 13th June, 1898, 30 Stat. 448, c. 448.
(75) Knowlton v. Moore, 178 U.S. 41.
(76) Loughborough v. Blake, 5 Wheat. 317.
(77) 31 Stat. 77, c. 191.
(78) Downes v. Bidwell, 182 U.S. 244.
(79) De Lima v. Bidwell, 182 U.S.1; Fourteen Diamond Rings,
Pepke, Claimant, v. U.S., 183 id. 176.
(80) Ogden v. Saunders, 12 Wheat. 333.
(81) The Collector v. Dav, 11 Wall. 113.
(82) U.S. v. B. & 0. R., 17 Wall. 322.
(83) Pollock v. F. L. & T. Co., 158 U.S. 60 1. On taxation of
state agencies in general, see Ambrosini i,. U.S. , 187 id.
1.
(84) Snyder v. Bettman, 1-90 tT. S. 249. Three justices
dissented.
(85) The Head Money Cases, 112 U.S. 580.
(86) Veazie Bank v. Fenno, 8 'Wall. 533. See also Twin City Bk.
v. Nebeker, 167 U.S. 196.
(87) Witherspoon v. Duncan, 4 Wall. 210; Spencer v. Merchant, 125
U.S. 345; P. P. C. Co. v. Pennsylvania, 141 id. 18; W. U.
T. Co. v. Indiana, 165 id. 304; A. Ex. Co. v. Ohio, 166 id.
185; Savings Society v. Multnomah County, 169 id. 421;
Magoun v. I. T. & S. Bank, 170 id. 283; King v. Mullins, 171
id. 404; New Orleans v. Stempel, 175 id. 309; Bristol v.
Washington County, 177 id. 133; Orr v. Gilman, 183 id. 278;
P. C. & P. R. v. Reynolds, ibid. 471; League v. Texas, 184
id. 156; Blackstone v. Miller, 188 id. 189; Board of Assrs.
v. C. N. DIE., 191 id. 388; Carstairs v. Cochran, 193 id.
10. See also opinion of Brown, J., in Eidman v. Martinez,
184 id. 578. A state may tax an interstate railway, car,
express, or telegraph company upon its property within the
state, finding the value of the whole property, both
tangible and intangible, of the corporation, which is used
in its business, and then computing the value of the line
within the state by its relative length to the whole: P.,
C., C. & St. L. Ry. v. Backus, 154 U.S. 421; C., C., C. &
St. L. Ry. v. Backus, ibid. 439; P. P. C. Co. v.
Pennsylvania, 141 id. 18; A. R. T. Co. v. Hall, 174 id. 70;
U. R. T. Co. v. Lynch, 177 id, 149; A. Ex. Co. v. Ohio, 165
id. 194, 166 id. 185; A. Ex. Co. v. Kentucky, 166 id. 171;
W. U. T. Co. v. Massachusetts, 425 id. 530; W. U. T. Co. v.
Taggart, 163 id. 1; and see W. U. T. Co. v. Missouri, 190
id. 412.
(88) Providence Bk. v. Billings, 4 Pet. 563; Carpenter v.
Pennasylvania, 17 How. 456; St. Louis v. W. F. Co., 11 Wall.
423; The State Tax on Foreign held Bonds, 15 id. 300;
Kirtland v. Hotchkiss, 100 U.S. 491, 498; M. G. Co. v.
Shelby County, 109 id. 398; Magoun v. I. T. & S. Bank, 170
id. 283; Orr v. Gilman, 183 id. 278; Blackstone v. Miller,
188 id. 189. The Fourteenth Amendment does not compel the
states to adopt an iron rule of equal taxation: B. G. R. v.
Pennsylvania, 134 U.S. 232; P. Ex. Co. v. Seibert, 142 id.
339; Jennings v. C. R. C. Co., 147 id. 147; Giozza v.
Tiernan, 148 id. 657; Merchants & Manufacturers' Bk. v.
Pennsylvania, 167 id. 461; Magoun v. 1. T. & S. Bank, 170
id. 283; Clark v. Titusville, 184 id. 329; Kidd v. Alabama,
188 id. 730. See also F. C. & P. R. v. Reynolds, 183 id.
471; Connally v. U. S. P. Co., 184 id. 540; Missouri v.
Dockery, 191 id. 165.
(89) Mager v. Grima, 8 How. 490.
(90) Magoun v. I. T. & S. Bank, 170 U.S. 283. Bee also Billings
v. Illinois, 188 id. 97.
(91) Coe v. Errol, 116 U.S. 517.
(92) Savings Society v. Multnomah County, 169 U.S. 421; New
Orleans v. Stempel, 175 id. 309; Bristol v. Washington
County, 177 id. 133. See also Board of Assessors v. C. N.
DIE., 191 id. 388.
(93) Blackstone v. Miller, 188 U.S. 189.
(94) Bonaparte v. Tax Court, 104 U.S. 592.
(95) Kirtland v. Hotchkiss, 100 U.S. 491.
(96) Carpenter v. Pennsylvania, 17 How. 456; U.S. v. Perkins,
163 U.S. 625.
(97) L. & J. F. Co. v. Kentucky, 188 U.S. 385.
(98) State Tax on Foreign-held Bonds, 15 Wall. 301; cf. Savings
Society v. Multnomah County, 169 U. S . 421, 428.
(99) R. Co. v. Jackson 7 W
(100) N. Y., L. E. & W. R. v. Pennsylvania, 153 U.S. 628; D. &
H. C. Co. v. Pennsylvania, 156 id. 200.
(101) B. G. R. v. Pennsylvania, 134 U.S. 222; Jennings v. C. R.
C. Co., 147 id. 147.
(102) Brown v. Maryland, 12 Wheat. 419. Imports, in the
constitutional sense, embrace only goods brought from a
foreign country: A. S. & W. Co. v. Speed, 192 U.S. 500.
(103) Low v. Austin, 13 Wall. 29; cf. P. & S. C. Co. v. Bates,
156 id. 577.
(104) Cook v. Pennsylvania, 97 U.S. 566.
(105) Turner v. Maryland, 107 U.S. 38.
(106) State Tonnage Tax Cases, 12 Wall. 204; Steamship Co. v.
Portwardens, 6 id. 31; Peete v. Morgan, 19 id. 581; Cannon
v. New Orleans, 20 id. 577; 1. S. S. Co. v. Tinker, 94 U.S.
238.
(107) Dobbins v. Commissioners, 16 Pet. 435.
(108) W. U. T. Co. v. Texas, 105 U.S. 460.
(109) Weston v. Charleston, Pet. 449; Banks v. -Mayor, 7 Wall.
16; cf. Plummer v. Coler, 178 U. S 115.
(110) Bank v. Supervisors, 7 Wall. 26.
(111) People v. Commissioners of Taxes, 2 Black, 620.
(112) Bank Tax Case, 2 Wall. 200.
(113) Shotwell v. Moore, 129 U.S. 590.
(114) C. & B. Co. v. New Orleans, 99 U.S. 97.
(115) Society for savings v. Coite, 6 Wall. 594.
(116) Provident Inst. v. Massachusetts, 6 Wall. 611.
(117) Hamilton Co. v. Masschusetts, 6 Wall. 632.
(118) Home Ins. Co. v. New York, 134 U.S. 594.
(119) C. T. Co. v. Lander, 184 U.S. 111.
(120) Plummer v. Coler, 178 U.S. 115.
(121) U.S. v. Perkins, 163 U.S. 625.
(122) The Kansas Indians, 5Wall. 737; The New York Indians, ibid.
761.
(123) U.S. v. Rickert, 188 U.S. 432.
(124) Act of 10th July, 1886, 24 Stat. 143, c. 764; (. P. R. v.
Nevada, 162 U.S. 512; N. P. R. v. ixlyers, 172 id. 589.
(125) Tucker v. Ferguson, 222 Wall. 527.
(126) F. L. R. v. Lowe, 114 U.S. 525.
(127) Van Brocklin v. Tennessee, 117 U.S. 151.
(128) Forbes v. Gracey, 94 U.S. 762.
(129) U. P. R. v. Peniston, 18 Wall. 5; National Bank v.
Commonwealth, id. 353; Thomson v. P, R., ibid. 579; C. P. R.
i@. Califorina, 162 U.S. 91.
(130) U. P. R. v. Peniston, 18 Wall. 5.
(131) Crandall v. Nevada, (i Wall. 35.
(132) Webber v. Virginia, 103 U.S. 344.
(133) McGuire v. The Commonwealth, 3 Wall. 387; Pervear v. The
Cornmonwealth, 5 id. 475. See also Plumley v. Massachusetts,
155 U.S. 461.
(134) McCulloch v. The State of Maryland, 4 Wheat. 316; Osborn v.
The Bank of the U.S., 9 id. 738.
(135) Rosenblatt v. Johnston, 104 U.S. 462.
(136) Van Allen v. The Assessors. 3 Wan. 573; People ti. The
Commissioners, 4 id. 244. See also C. T. Co. v. -Lander, 184
U.S. 111.
(137) 15 Stat. 34, Rev. Stat., see. 5219.
(138) National Bank v. The Commonwealth, 9 Wall. 353; People v.
Commissioners, 4 id. 244; Van Allen v. The Assessors, 3 id.
573.
(139) 13 Stat. 111.
(140) 15 Stat. 34.
(141) Section 5219.
(142) Van Allen v. The Assessors, 3 Wall. 573; Bradley v. The
People, 4 id. 459.
(143) Lionberger v. Rouse, 9 Wan. 468.
(144) Adams v. Nashville, 95 U. S. 19; Mercantile Bank v. New
York, 121 id. 138. Bee the opinion of Miller, J., in
Davenport Bank v. Davenport, 123 id. 83.
(145) Mercantile Bank v. New York, 121 U. S. 138; Palmer v.
McMahon, 133 id. 660; National Bank v. Chapman, 173 id. 205.
(146) Hepburn v. The School Directors, 23 Wall. 480.
(147) Mercantile Bank v. New York, 121 U. S. 138; Bank of
Redemption v. Boston, 125 id. 60; Palmer v. McMahon, 133 id.
660; First National Bank v. Ayers, 160 id. 660; Aberdeen
Bank v. Chehalis County, 166 id. 440; National Bank v.
Chapman, 173 id. 205.
(148) Mercantile Bank v. New York, 121 U.S. 138, 162.
(149) Mercantile Bank v. New York, 121 U.S. 138, 162.
(150) Boyer v. Boyer, 113 U. S. 689; cf. Commerce Bank v.
Chambers, 182 id 556.
(151) People v. Weaver, 100 U.S. 539; Supervisors v. Stanley,,
105 id. 305; Hills v. Exchange Bank, ib id. 319; Evansville
Bank v. Britton, ibid. 322; Whitbeck v. Mercantile Bank,
127 id. 193; Palmer v. McMahon, 131 id. 660.
(152) Supervisors v. Stanley, 105 U.S. 305.
(153) Tappan v. Merchants' Nat. Bank, 19 Wall. 490.
(154) Hepburn v. The School Directors, 23 Wall. 480; People v.
Commissioners of Taxes, 94 U.S. 415.
(155) Cummings v. National Bank of Toledo, 101 U.S. 153; Pelton
v. National Bank, 101 id. 143; People v. Weaver, 100 id.
539; Whitbeek v. Mercantile Bank 127 id. 193.
(156) Stanley v. Supervisors, 121 U.S. 535.
(157) Owensboro Nat. Bank v. Owensboro, 173 U.S. 664; First Nat.
Bank: at Louisville v. Louisville 174 id. 438
(158) Aberdeen Bank v. Chehalis County, 166 U.S. 440; Merchants
& Manufacturers' Bank v. Pennsylvania, 167 id. 461.
(159) Waite v. Dowley, 94 U.S. 527.
(160) People v. Commissioners of Taxes, 94 U.S. 415.
(161) R. Cos. v. Gaines, 97 U.S. 697; Trask v. Maguire, 18 Wall.
391; Morgan v. Louisiana, 93 U.S. 217; Shields v. Ohio, 95
id. 319; P. I. Go. v. Tennessee, 161 id. 193; Stearns v.
Minnesota,, 179 id. 223, 241.
(162) Jefferson Branch Bank v. Skelly, 1 Bl. 436; M. & 0. R. v.
Tennessee 153 U.S. 486; Citizens' Bk. v. Parker, 192 id.
73. (163) New Jersey v. Wilson, 7 Cr. 164; New Jersey v.
Yard, 95 U.S. 104; Wells v. Savannah, 181 id. 531.
(164) Jefferson Branch Bank v. Skelly, 1 Bl. 436; W. & R. R. v.
Reid, 13 Wall. 264; R. & G. R. v. Reid, ibid. 269; Chicago
v. Sheldon, 9 id. 50; P. R. v. Maguire, 20 id. 36;
University v. People, 99 U.S. 309; Asylum v. New Orleans
105 id. 362 W. & W. R. v. Alsbrook 146 id. 279 ; M. & 0. R.
v. Tennessee, 153 id. 486; New Orleans v. Citizens' Bank,
167 id. 371; Stearns v. Minnesota, 179 id. 223.
(165) Providence Bank v. Billings, 4 Pet. 514; Tucker v.
Ferguson, 22 Wall. 527; M. G. Co. v. Shelby County, 109 U.
S. 398.
(166) The Delaware R. Tax, 18 Wall. 206; Erie Ry. v. Penna., 21
id. 492 The License Tax Cases, 5 id. 462; Home Ins. Co. v.
Augusta, 93 U.S. 116; S. C. S. Ry. v. Sioux City, 138 id.
98; N. 0. C. & L. R. v. New Orleans, 143 id. 192; W. & W. R.
v. Alsbrook, 146 id. 279; Shelby County v. Union & Planters'
Bank, 161 id. 149; New Orleams v. Citizens' Bank, 167 id.
371.
(167) Tucker v. Ferguson, 22 Wall. 527; W. F. Co. v. East St.
Louis, 107 U . S. 365; Ry. Co. v. Philadelphia, 101 id. 528;
Tomlinson v. Branch, 15 Wall. 460; R. Cos. v. Gaines, 97 U.
S. 697; Picard v. E. T., V. & G. R.., 130 id. 637; Y. & M.
V. R. v. Thomas, 132 id. 174; N. 0. C. & L. R. v. New
Orleans, 143 id. 192; W. & W. R. v. Alsbrook, 146 id. 279;
W. & St. P. L. Co. v. Minnesota, 159 id. 526; P. F. & M. I.
Co. v. Tennessee, 161 id. 174; C. R. & B. Co. v. Wright, 164
id. 327; C. & L. T. R. Co. v. Sandford, ibid. 578; Ford v.
D. & P. L. Co., ibid. 662; Citizens' Savings Bank v.
Owensboro, 173 id. 636; Wells v. Savannah, 181 id. 531; Orr
v. Gilmam, 183 id. 278; Chicago Theological Seminary v.
Illinois, 188 id. 662.
(168) Picard v. E. T., V. & G. R., 130 U.S. 637; People v. Cook,
148 id. 397; K. & W. R. v. Missouri, 152 id. 301; St. L. &
S. F. Ry. v. Gill, 156 id. 649; N. & W. R. v. Pendleton,
ibid. 667; P. F. & M. I. Co. v. Tennessee, 161 id. 174;
Memphis Bank v. Tennessee, ibid. 186; P. I. Co. v.
Tennessee, ibid. 193; C. & L. T. Co. v. Sandford, 164 id.
578; G. & S. 1. R. v. Hewes, 183 id. 66; N. C. Ry. v.
Maryland, 187 id. 258.
(169) Murray v. Charleston, 96U.s.432.n 4 2.
(170) Gibbons v. Ogden, 9 Wheat. 201; The Passenger Cases, 7 How.
479; Transportation Co. v. Wheeling, 99 U.S. 280; W. F. Co.
v. East St. Louis, 107 id. 374; California v. C. P. R., 127
id. 1; Brimmer v. Rebman, 138 id. 78; Massachusetts v. W. u.
T. Co., 141 id. 40; P. T. C. Co. v. Adams,155 id. 688; P. &
S. C. Co. v. Louisiana, 156 id. 590; W. U. T. Co. v.
Taggart, l63 id. 1; A. Ex. Co. v. Ohio, 165 id. 194, 166 id.
185; New York v. Roberts, 171 id. 658; P., C., C. & St. L.
Ry. v. Board of Pub. Works, 172 id. 32; K. & H. Bridge Co.
v. Illinois, 175 id. 626; U. R T. Co. v. Lynch, 177 id. 149.
(171) W. F. Co. v. East St. Louis, 107 U. S. 365; T. Co. v.
Wheeling, 99 id. 273.
(172) Woodruff v. Parham, 8 Wall 123; Brown v. Houston, 114 U.S.
622; P. & S. C. Co. Bates, 156 id. 577; A. S. & W. Co. v.
Speed, 192 id. 500; cf. Kelley v. Rhoads, 188 id. 1.
(173) Coe v. Errol, 116 U. S. 517; D. M. Co. v. Ontonagon, 188
id. 82.
(174) Ward v. Maryland, 12 Wall. 418; Welton v. Missouri, 91 U.
S. 275; Guy v. Baltimore, 100 id. 434; Webber v. Virginia,
103 id. 344; Walling v. Michigan, 116 id. 446; Robbins v.
Shelby Co., 120 id. 489; Corson v. Maryland, ibid. 502;
Asher v. Texas, 128 id. 129; Brennan v. Titusville 153 id.
289; Stockard v. Morgan, 185 id. 27; Caldwell v. North
Carolina, 187 id. 622; N. & W. Ry. v. Sims, 191 id. 4-41.
But see Hinson v. Lott, 8 Wall. 148; Downham v. Alexandria
Council, 10 id. 173; Machine Co. v. Gage, 100 U.S. 676;
Tiernan v. Rinker, 102 id. 123; Ficklen v. Shelby County,
145 id. 1; Emert v. Missouri, 156 id. 296; Rash v. Farley,
159 id. 263; A. S. & W. Co. v. Speed, 192 id. 500.
(175) Maine v. G. T. Ry., 142, U.S. 217. Bradley, Harlan, Lamar,
and Brown, JJ., dissented. See also Crutcher v. Kentucky,
141 id. 47; Ashley v. Ryan, 153 id. 436; N. Y., L. E. & W.
R. v. Pennsylvania, 158 id. 431; New York v. Roberts, 171
id. 658.
(176) Allen v. P. P. C. Co., 191 U.S. 171.
(177) Robbins v. Shelby County, 120 U.S. 489; Asher v. Texas,
128 id. 129; Brennan v. Titusville, 153 id. 289; Stockard v.
Morgan, 185 id. 27; Caldwell v. North Carolina, 187 id. 622.
(178) Machine Co. v. Gage, 100 U.S. 676; Emert v. Missouri, 156
id. 296; Rash v. Farley, 159 263; A. S. & W. Co. v. Speed,
192 id. 500.
(179) Nathan v. Louisiana, 8 How.73.
(180) Williams v. Fears, 179 U.S. 270.
(181) McCall v. California, 136 U.S. 104. See also N. & W. R. v.
Pennsylvania, ibid. 114; Crutcher v. Kentucky, 141 id. 47.
(182)P. T. C. Co. v. Charleston, 153 U. S. 692; Osborne v.
Florida, 164 id. 650; P. Co. v. Adams, 189 id. 420; Allen v.
P. P. C. Co., 191 id. 171.
(183) Ratterman v. W. U. T. Co., 127 U.S. 411; W. U. T. Co. v.
Alabama, 132 id. 472; P. Ex. Co. v. Seibert, 142 id. 339.
(184) A company which carries to or from a ferry passengers
intending to go to another state, and which makes a separate
charge for such service, is not engaged in interstate
commerce, and a license tax upon such company is
constitutional: New York v. Knight, 192 U.S. 21.
(185) Leloup v. Port of Mobile, 127 U. S. 640; Crutcher v.
Kentucky, 141 id. 47.
(186) Maine v. G. T. Ry., 142 U.S. 217.
(187) People v. Commissioners, 104 U.S. 466.
(188) B. & 0. R. v. Maryland, 21 Wall. 456.
(189) The Delaware r. Tax,18 Wall. 206.
(190) P., C., C. & St. L. Ry. w. Backus, 154 U.S. 421; C., C.,
C. & St. L. Ry. v. Backus, ibid. 439; P. P. C. Co. v.
Pennsylvania, 141 id. 18; A. R. T. Co. v. Hall, 174 id. 70;
U. R. T. Co. v. Lynch, 177 id. 149; A. Ex. Co. v. Ohio, 165
id. 194, 166 id. 185; A. Ex. Co. v. Kentucky, 166 id. 171;
W. U. T. Co. v. Massachusetts, 125 id. 530; W. U. T. Co. v.
Taggart, 163 id. 1; W. U. T. Co. v. Missouri, l90 id. 412.
But in estimating the value of the whole property the state
may not include property in another state which is not used
by the company in its business: Fargo v. Hart, 193 id. 490.
(191) Kelley v. Rhoads, 188 U.S. 1.
(192) Hays v. P. M. S. S. Co., 17 How. 596; St. Louis v. W. F.
Co., 11 Wall. 423; Morgan v. Parham, 16 id. 471; Moran v.
New Orleans, 112 U. S. 69; G. F. Co. v. Pennsylvania, 114
id. 196; P. & S. S. S. Co. v. Pennsylvania, 122 id. 326.
(193) The Passenger Cases, 7 How. 283;Henderson v. The Mayor, 92
U.S. 259; Chy Lung v. Freeman, ibid. 275; People v. C. G.
T., 107 id. 59; P. & S. S. S. Co. v. Pennsylvania, 122 id.
326, overruling the case of the State Tax on Railway Gross
Receipts, 15 Wall. 284.
(194) Almy v. California, 24 How. 169.
(195) Steamship co. v. Portwardens, 6 Wall. 31.
(196) W. U. T. Co. v. Texas, 105 U.S. 460.
(197) The State Freight Tax, 15 Wall. 232; E. Ry. v.
Pennsylvania, ibid. 282, note.
(198) Packard v. P. S. C. Co., 117 U.S. 34; Tennessee v. P. S.
C. Co., ibid 51; Allen v. P. P. C. Co., 191 id. 171.
(199) Fargo v. Michigan, 121 U.S. 230.
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C. Stuart Patterson