Direct taxation

“ It was clear that the Government must have a revenue, and that revenue could only be raised by direct or indirect taxation; and he preferred, under the circumstances of the country, indirect taxes, which the people did not feel, and were not compelled to pay unless they liked; for the poor were not compelled to buy foreign imports, but if they bought them they must pay a tax to government. ”

“ Had the intention been to exempt from taxation those who were not represented in Congress, that intention would have been expressed in direct terms. The power having been expressly granted, the exception would have been expressly made. But a limitation can scarcely be said to be insinuated. The words used do not mean, that direct taxes shall be imposed on States only which are represented, or shall be apportioned to representatives; but that direct taxation, in its application to States, shall be apportioned to numbers. Representation is not made the foundation of taxation. ”

“ They cannot know what taxes can be least oppressive to the people. The tax that may be convenient in one state may be oppressive in another. If they vary the objects of taxation in different states, the operation must be unequal and unjust. If Congress should fix the tax on some mischievous objects, what will be the tendency? It is to be presumed that all governments will, some time or other, exercise their powers, or else why should they possess them? Inquire into the badness of this government. What is the extent of the power of laying and collecting direct taxes? ”

“ Enough, it is thought, has now been said to prove the extreme inequality and injustice with which direct public burdens are levied in this country, and the necessity for a thorough and searching revision of our system of taxation, in this respect, especially since, from the way in which the tide sets, it has become so evident that direct will progressively be more extensively substituted for indirect taxation. ”

“ It will be no less so to attempt to raise a powerful fleet. With respect to requisitions, I beseech gentlemen to consider the importance of the subject. We, who are for amendments, propose (as has been frequently mentioned) that a requisition shall be made for two hundred thousand pounds, for instance, instead of direct taxation, and that, if it be not complied with, then it shall be raised by direct taxes. We do not wish to have strength, to refuse to pay them, but to possess the power of raising the taxes in the most easy mode for the people. ”

“ Some think they would solve the problem at a stroke by substituting direct for indirect taxation. They argue that people should know exactly what they are paying for the service of the State; and that direct taxation is not only a more logical but a more economic method of raising the revenue. They show that the consumer of duty-bearing articles pays not only the duty but a percentage upon it as interest to the middleman ”

“ But in addition to these two forms of direct taxation indirect taxation also was coming more and more to the front. The right of the king to grant licences to bring goods into or to trade within the realm, a right springing from the need for his protection felt by the strangers who came there for purposes of traffic, laid the foundation of our taxes on imports. Those on exports were only a part of the general system of taxing personal property which we have already noticed. ”

“ There is no safety in allowing the limitation to be adjusted except in strict compliance with the mandates of the constitution, which require its taxation, if imposed by direct taxes, to be apportioned among the states according to their representation, and, if imposed by indirect taxes, to be uniform in operation and, so far as practicable, in proportion to their property, equal upon all citizens. ”

“ In such a case it is immaterial to inquire whether the tax is, in its nature or by its operation, a direct or an indirect tax; for the instrumentalities of the states-among which, as is well settled, are municipal corporations, exercising powers and holding property for the benefit of the public-are not subjects of national taxation in any form or for any purpose, while the property of private corporations and of individuals is subject to taxation by the general government for national purposes. ”

“ We said (Id., at page 225 of 282 U.S., 51 S.Ct. 125, 127, 75 L.Ed. 304, 71 A.L.R. 1260) : 'The power to tax is no less essential than the power to borrow money, and, in preserving the latter, it is not necessary to cripple the former by extending the constitutional exemption of taxation to those subjects which fall within the general application of non-discriminatory laws, and where no direct burden is laid upon the governmental instrumentality, and there is only a remote, if any, influence upon the exercise of the functions of government.' Many illustrations were given. ”

“ By prohibiting any discrimination in favor of particular states, through revenue laws establishing a preference between their ports and those of others.
'These provisions should be read together, because they are at the foundation of our system of national taxation.
'The two rules prescribed for the government of congress in laying taxes are those of apportionment for direct taxes and uniformity for indirect. In the first class are to be found capitation or poll taxes and taxes on land; in the second, duties, imposts, and excises. ”

“ And it matters not in what form these taxes are imposed upon the people, whether in the shape of municipal subscriptions of stock, to be paid by assessments upon the people; by donations of land or money, to be repaid by imposing a larger price upon lands sold to the citizen; by indirect taxation, or by special local elections held in cities, towns, or counties,—the compulsory taxation of the property of individuals, under our system of government, can only be imposed for governmental or public purposes. Taxes are levied for the support of the government in all its departments ”

“ Abolition of industrial trusts, those that exist because of tariff protection and those that exist because of freight discriminations whether by rebates, special rates or otherwise.
7. Taxation that will tax every man according to his accumulated wealth—tax property, not man; collect state and municipal taxes by direct tax on the accumulated wealth of society assessed at actual cash value; collect national taxes by a direct tax on the earnings of accumulated wealth, whether large or small. Have only direct taxes, for indirect taxes cover injustice and extravagance. ”

“ For several years past the revenues of the government have been unequal to its expenditures, and consequently loan after loan, sometimes direct and sometimes indirect in form, has been resorted to. By this means a new national debt has been created, and is still growing on us with a rapidity fearful to contemplate—a rapidity only reasonably to be expected in time of war. This state of things has been produced by a prevailing unwillingness either to increase the tariff or resort to direct taxation. But the one or the other must come. ”

“ And again, in the same case, 'it is admitted that the power of taxing the people and their property is essential to the very existence of government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the government may chose to carry it. The only security against the abuse of this power is found in the structure of the government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation.' 4 Wheat. ”

“ No one ever doubted that before the adoption of the Constitution of the United States each of the States possessed unlimited power to tax, either directly or indirectly, all persons and property within their jurisdiction, alike by taxes on polls, or duties on internal production, manufacture, or use, except so far as such taxation was inconsistent with certain treaties which had been made. ”

“ Only a comprehensive survey and investigation of the entire national economy-which Congress alone has power and facilities to make-can indicate the need for, as well as justify, restricting the taxing power of a State so as to provide against conjectured taxation by more than one State on identical income. ”

“ If what the law requires to be done can only be done through taxation, then taxation is authorized to the extent that may be needed, unless it is otherwise expressly declared. The power to tax in such cases is not an implied power, but a duty growing out of the power to contract. ”

“ 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. ”

“ How far do the implied limitations upon the taxing power of the United States over objects which would otherwise be legitimate subjects of federal taxation, withdraw them from the reach of the Federal Government in raising revenue, because they are pursued under franchises which are the creation of the states?... ”

“ The state's power to lay the tax, being independent of its jurisdiction over the ceded territory, subsists unless waived or prohibited by competent authority.
Whatever constitutional power the federal government may have to prohibit the state taxation of income derived from property located on the reservation, regarded as a federal instrumentality, it is plain that it has not assumed to exercise the power. ”

“ Each branch of government should pretty well confine its use of the taxing power to definite types of taxable wealth. The Federal government, for example, might secure most of its revenue from import duties, excises, an income tax, and stamp taxes of various kinds. Many taxation experts believe that the states ought to confine themselves mainly to license, corporation, inheritance, and, possibly, income taxes. Local governments might well secure most of their revenue from taxes on franchises, licenses, and real estate. ”

“ The exemption of interstate business from the type of State taxation here involved is now made complete.
A business engaging in activities in two or more States should bear its part of the tax burdens of each. If valid, non-discriminatory taxes imposed in these States create 'multiple' burdens, such 'burdens' result from the political subdivisions created by our form of government. They are the price paid for governmental protection and maintenance in all States where the taxpayer does business. ”

“ The ordinance in each case is sought to be sustained as a system of non-discriminatory taxation of various businesses, professions, and vocations, including the distribution of books for which contributions are asked, for the sole purpose of raising revenue. ”

“ There is little or no uniformity among the taxation schemes of the one hundred comparatively free and sovereign states as economic and other conditions vary greatly in different sections of the continent. Every state has ten basic constitutional provisions which cannot be modified except by consent of the federal supreme court, and one of these articles prevents levying a tax of more than one per cent on the value of any property in any one year, homesites, whether in city or country, being exempted. ”

“ In no other way can the principle of equality in taxation, so essential to good government, be secured. If the legislature intended to apply a different rule in this case, it were easy to have said that the property of this company shall be subject to taxation 'for State purposes.' Instead of this it is declared to be 'subject to taxation.' This obviously means general taxation-such taxation as other property of like value is subjected to. No words of limitation are used, and none can be implied against the interests of the State. ”

“ And yet the power to tax involves the power to destroy and the levy of duty touches all our people in all places under the jurisdiction of the Government. The logical result is that Congress may prohibit commerce altogether between the States and Territories, and may prescribe one rule of taxation in one Territory, and a different rule in another. ”

“ Experience has taught that the opposing demands that the commerce shall bear its share of local taxation, and that it shall not, on the other hand, be subjected to multiple tax burdens merely because it is interstate commerce, are not capable of reconciliation by resort to the syllogism. ”

“ All State taxation which does not impair the agent's efficiency in the discharge of his duties to the government has been sustained when challenged, and a tax upon his property generally has not been regarded as beyond the power of a State to impose. ”

“ For it must be borne in mind that the Government has the full Constitutional right to raise all its necessary revenue by the lawful exercise of the power of taxation. Not to return to the same community a sum taken unconstitutionally can in no sense be a necessity, when there continues the full power to take an equivalent amount justly and in accord with Constitutional right. ”

“ The decision of the case turns upon the answer to the question whether the taxation is for a public purpose. It is well settled that moneys for other than public purposes cannot be raised by taxation, and that exertion of the taxing power for merely private purposes is beyond the authority of the State. ”

“ We think that the system in regard to taxation, including what should be taxed, the rates, and the exemptions from taxation, was intended to be an independent one, to abolish existing impositions or exemptions, and to form a complete system of itself. ”