Capitation tax

“ It is well known that the government, anxious to conciliate the interests of the tributary classes with those of the revenue, frequently commutes the pecuniary capitation tax into an obligation to pay the amount in produce or manufactures. ”

“ Contributions levied on the people are two kinds; real, levied on commodities, and personal, paid by the head. Both are called taxes or subsidies: when the people fixes the sum to be paid, it is called subsidy; but when it grants the product of an imposition, it is called a tax. We are told in the Spirit of the Laws that a capitation tax is most suited to slavery, and a real tax most in accordance with liberty. ”

“ He said that, so far as he had been able to form an opinion, there had been a general concurrence in a belief that the ultimate sources of public contributions were labor, and the subjects and effects of labor; that taxes, being permanent, had a tendency to equalize, and to diffuse themselves through a community. According to these opinions, a capitation tax, and taxes on land, and on property and income generally, were a direct charge, as well in the immediate as ultimate sources of contribution. He had considered those, and those only, as direct taxes in their operation and effects. ”

“ The money which is needed to pay the expenses of administering the government, if the state has no permanent source of revenue, or income, must be raised by taxation. A tax is a rate or sum of money assessed upon the person or property of a citizen for the use of the state. When assessed upon the person, it is called a poll-tax, or capitation tax, being a certain sum on every poll, or head. But as persons ought generally to contribute to the public expenses according to their ability, taxes are more just and equal when laid upon the property of the citizens. ”

“ As persons, slaves were proper subjects of a capitation tax, which is described in the constitution as a direct tax; as property, they were, by the laws of some, if not most, of the states, classed as real property, descendible to heirs. Under the first view, they would be subject to the tax of 1798, as a capitation tax; under the latter, they would be subject to the taxation of the other years, as realty. ”

“ United States, to the effect that a capitation tax and a tax on land are the principal, if not the only, direct taxes within the meaning of the Constitution, that the general acquiescence in the unapportioned income tax is, in a great degree, attributable. ”

“ The only limitations imposed are that direct taxes, including the capitation tax, shall be apportioned; that duties, imposts, and excises shall be uniform; and that no duties shall be imposed upon articles exported from any state. With these exceptions, the exercise of the power is, in all respects, unfettered.
'If a tax upon carriages, kept for his own use by the owner, is not a direct tax, we can see no ground upon which a tax upon the business of an insurance company can be held to belong to that class of revenue charges. ”

“ In the course of this examination he 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. If Congress, for instance, should tax, in the aggregate or mass, things that generally pervade all the States in the Union, then, perhaps, the rule of apportionment would be the most proper, especially if an assessment was to intervene. ”

“ If paid at once it affects their capital; if paid annually it affects their income. But here neither the capital nor the income is affected. The capital is not affected because the payment is an annual one. The income is not affected because this annual payment does not belong to the company, but is received by it, accounted for by it, and paid into the State treasury. Affecting, then, neither the capital nor the income of the stockholders, it comes within no known definition of a bonus. It is a tax, and nothing but a tax; a capitation tax, in the recognized meaning of the term. ”

“ The capitation tax is a poll-tax on the male population of the province, from 18 to 60 years of age, with the exception of immigrants during the first five years of their residence, religious teachers, school masters, Government servants, and those unable to obtain their own livelihood. In 1871-72 it was levied on 556,035 persons, and yielded a revenue of £226,954. The expenditure on the civil administration of the province in 1871-72 was £497,002. For the protection of British Burmah 5016 fighting men, Europeans and natives, were maintained in 1871 at a total cost of £276,200. ”

“ By the power to lay and collect taxes, they may proceed to direct taxation on every individual, either by a capitation tax on their heads, or an assessment on their property. By this part of the section, therefore, the government has power to lay what duties they please on goods imported ”

“ The General Assembly shall levy a capitation tag on every male inhabitant of the State over twenty-one and under fifty years of age, which shall be equal on each to the tax on property valued at three hundred dollars in cash. The commissioners of the several counties may exempt from capitation tax in special cases, on account of poverty and infirmity, and the State and county capitation tax combined shall never exceed two dollars on the head. ”

“ From what has been said, it may be seen that a tax on salt is not so in general, but only in particular parts of the Union; the remote inhabitants, it is said, will be dissatisfied, because it increases the price of the commodity, and they use more of it than others. It is mentioned as partaking of the nature of a capitation tax, but this kind of tax is odious, more from its manner of operation than its nature. We find in some States where it is in use, the people live easy under it ”

“ Taxation to be ad valorem; slaves under twelve years of age to be exempt; those over that age to be taxed for an amount not exceeding that levied upon 300 acres of land, white males over 21 years of age to pay a capitation tax equal to that upon 200 acres of land; incomes, salaries, and licenses may be taxed at the discretion of the Legislature. One half of the capitation tax upon white males is to be devoted to the purposes of primary education. The liability to the State of any incorporated company can not be released. ”

“ Either from design or from accident, the mode of assessment seemed to unite the substance of a land tax with the forms of a capitation. 178 The returns which were sent of every province or district, expressed the number of tributary subjects, and the amount of the public impositions. The latter of these sums was divided by the former; and the estimate, that such a province contained so many capita, or heads of tribute; and that each head was rated at such a price, was universally received, not only in the popular, but even in the legal computation. ”

“ First, and most importantly, it is abundantly clear the Constitution does not guarantee that individuals may avoid taxation through inactivity. A capitation, after all, is a tax that everyone must pay simply for existing, and capitations are expressly contemplated by the Constitution. The Court today holds that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. ”

“ To provide that taxation shall fall entirely on income, and not at all on capital, is beyond the power of any system of fiscal arrangements. There is no tax which is not partly paid from what would otherwise have been saved; no tax, the amount of which, if remitted, would be wholly employed in increased expenditure, and no part whatever laid by as an addition to capital. All taxes, therefore, are in some sense partly paid out of capital; and in a poor country it is impossible to impose any tax which will not impede the increase of the national wealth. ”

“ But of this total gain received by the insured a part is attributable to and accrued during the period before the effective date of the Sixteenth Amendment (February 25, 1913) , and of the first law taxing the income of individuals (March 1, 1913) , and hence, for income tax purposes, must be deemed an accretion to capital not taxable by the income tax act enacted under the Sixteenth Amendment. ”

“ The statute of the State expressly forbids a higher rate of taxation.
This last proviso does not refer to corporations of any kind, but refers to private individuals-citizens of the State. The tax on bank shares is not to exceed the rate assessed upon other moneyed capital in the hands of such persons.
We submit that the words 'moneyed capital' refer only to such moneyed capital as is liable to assessment. They do not refer to bonds of the United States owned by individuals, for they are not moneyed capital liable to assessment. No assessment at all is to be made on such property. ”

“ And the amount of the taxation may be determined by the value of the property, or its use, or its capacity, or its productiveness. It may touch business in the almost infinite forms in which it is conducted, in professions, in commerce, in manufactures, and in transportation. Unless restrained by provisions of the Federal Constitution, the power of the State as to the mode, form, and extent of taxation is unlimited, where the subjects to which it applies are within her jurisdiction. ”

“ An includable element of the 'invested capital' is the 'accumulated earnings and profits as of the beginning of such taxable year.' § 718. It thus appears that by this method Congress intended, with minor exceptions not here relevant, to impose the excess profits tax on all annual net income in excess of 8% of a corporation's working capital, including its accumulated profits. ”

“ In indirect taxation, duties, and revenue taxes, a sum far greater is taken from the average household. One might very much wish that the individual householder might at least know how large a sum is thus taken from his earnings annually, for it is safe to say that in no civilized country, not even in the France before the Revolution, was individual taxation anything like so heavy. Therefore, we are beginning to find legislation, even constitutional provisions, carefully limiting the tax rate. ”

“ But taxation is not so much concerned with the refinements of title as it is with actual command over the property taxed-the actual benefit for which the tax is paid. If a man directed his bank to pay over income as received to a servant or friend, until further orders, no one would doubt that he could be taxed upon the amounts so paid. ”

“ The country therefore turned by common instinct to a system of internal duties,—to incomes, to excise, to stamps. In the extra session of the preceding year, Congress had, by the Act of August 5, 1861, laid the foundation for a system of internal revenue by providing for a direct tax of twenty millions of dollars on the real estate of the country, and for an income tax of three per cent. on all incomes in excess of eight hundred dollars per annum. ”

“ European nations generally, and some South American nations also, have been compelled to resort to various methods of taxation to supply the sums needed for ordinary governmental expenses, to meet the interest on the existing debt, to provide resources for new expenditures, buildings, armament, subsidies, and various public works. England has an income tax and many stamp taxes, a house tax, and collects some 20 per cent. of its revenue from direct taxation. ”

“ It is the foundation of its credit in the business community. The legislature well knew the peculiar system under which these institutions were incorporated, and the working of it; and, when providing for a tax on their capital at a valuation, they could not but have intended a tax upon the property in which the capital had been invested. We have seen that such is the practical effect of the tax, and we think it would be doing injustice to the intelligence of the legislature to hold that such was not their intent in the enactment of the law. ”

“ The adoption of the taxing act, as recommended by the commission, may therefore be taken, as appellant contends, to evidence a definite and specific legislative purpose to levy a new type of franchise tax, measured by corporate net income, including the tax exempt income from federal and state bonds. ”

“ It errs in paying too much regard to theoretical distinctions and too little to the practical effect and operation of the respective taxes as levied; in failing to observe that in effect citizens and residents of the state are subjected at least to the same burden as nonresidents, and perhaps to a greater, since the tax imposed upon the former includes all income derived from their property and business within the state and, in addition, any income they may derive from outside sources. ”

“ Congress evidently intended by that act, as appears by the one hundred and sixteenth, and the six following sections, to tax all the annual gains, profits, and income of every person residing here, and of every citizen residing abroad, whether derived from any kind of property, rents, interests, dividends, salaries, or from any profession, trade, employment, or vocation, or from any other source whatever, except as therein mentioned, if such annual gains, profits, or income exceed six hundred dollars. ”

“ It being beyond dispute, therefore, that the sum of taxation in this case was fixed almost exclusively by the gross earnings from interstate commerce, who, may I ask, can point out the distinction between taxing the gross earnings derived from interstate commerce and taxing a valuation based on such earnings? The elementary principle so often applied by the court, that a tax which may not be imposed directly cannot be levied indirectly, is decisive. ”