Federal tax

“ It is not the poor man who opposes the payment of those just debts to which we owe our independence and political existence, but the rich miser. Not the poor, but the rich, shudder at the idea of taxes. I have no dread that Congress will distress us; nor have I any fear that the tax will be embezzled by officers. Industry and economy will be promoted, and money will be easier got than ever it has been yet. ”

“ 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? ”

“ Under our plan of government those new instructions are the direct product of public opinion.
That is one side of taxation. The other side is even more amazing. There is practically no basic American principle applying to taxes, which of necessity affects every citizen and every corporation. We find, for instance, that there is no line of demarcation between Federal taxes and state taxes. In many cases there is a definite duplication of taxes by the Federal Government and by the state, as, for example, in the case of the income tax. ”

“ If requisitions were to be made on the several states, proportionate to their abilities, the several state legislatures, knowing the circumstances of their constituents, and that they would ultimately be compelled to pay, would lay the tax in a convenient manner, and would be able to pay their quotas at the end of the year. They are better acquainted with the mode in which taxes can be raised, than the general government can possibly be. ”

“ Shall we be bettered by the alternative proposed by gentlemen—by levying taxes in specific articles? How will you dispose of them? Where is the merchant to buy them? Your business will be put into the hands of a commissioner, who, having no business of his own, will grasp at it eagerly; and he, no doubt, will manage it. But if the payment of the tax be left to the people,—if individuals are told that they must pay such a certain proportion of their income to support the general government,—then each will consider it as a debt; he will exert his ingenuity and industry to raise it ”

“ Were the tax laid on one uniform article through the Union, its operation would be oppressive on a considerable part of the people. When any sum is necessary for the general government, every state will immediately know its exact proportion of it, from the number of their people and representatives; nor can it be doubted that the tax will be laid on each state, in the manner that will best accommodate the people of such state, as thereby it will be raised with more facility; for an oppressive mode can never be so productive as the most easy for the people. ”

“ If the business itself, by reason of its character, is not immune, although undertaken by the state, from a federal excise tax upon its operations, upon what ground can it be said that the compensation of those who conduct the enterprise for the state is exempt from a federal income tax? Their compensation, whether paid out of the returns from the business or otherwise, can have no quality, so far as the federal taxing power is concerned, superior to that of the enterprise in which the compensated service is rendered. ”

“ When a tax is in operation in a particular state, every citizen, if he knows the energy of the laws to enforce payment, and that every other citizen is performing his duty, will cheerfully discharge his duty; but were it known that the citizens of one district were not performing their duty, and that it was left to the policy of the government to make them come up with it, the other districts would be very supine and careless in making provisions for payment. Our own experience makes the illustration more natural. ”

“ The tax under consideration, however, goes further and fastens upon something new—something which in the case of individuals or partnerships has no existence at all—which comes into being only by the exercise of the sovereign power of a state. The opponents of the tax, far from attempting to narrow the existing field of federal taxation, were in fact resisting an encroachment by Congress on an entirely new field, created by, and theretofore reserved exclusively to, the separate states. ”

“ When a heavy federal tax is levied to support a federal program that offers large grants to the States, States may, as a practical matter, be unable to refuse to participate in the federal program and to substitute a state alternative. ”

“ The Federal tax system should be simple, fair, efficient, and pro-growth. The purposes of tax regulations should be to bring clarity to the already complex Internal Revenue Code (title 26, United States Code) and to provide useful guidance to taxpayers. ”

“ I am surprised that such strong objections should have been made to, and such fears and alarms excited by, this power of direct taxation, since experience shows daily that it is neither inconvenient nor oppressive. A collector goes to a man's house; the man pays him with freedom, or makes an apology for his inability to do it then: at a future day, if payment be not made, distress is made, and acquiesced in by the party. What difference is there between this and a tax imposed by Congress? ”

“ The gentlemen cannot escape the dilemma into which their own reasoning leads them. If the states comply, the people must be taxed; if they do not comply, the people must equally be taxed. The burden, in either case, will be the same—the difficulty of collecting the same. Sir, if these operations are merely harmless and indifferent, why play the ridiculous farce? If they are inconvenient, why subject us to their evils? It is infinitely more eligible to lay a tax originally, which will have uniform effects throughout the Union, which will operate equally and silently. ”

“ But, if it failed to adopt a plan acceptable to federal authority, the full burden of the federal tax would be exacted. And, as federal demands similarly conditioned may be increased from time to time as Congress shall determine, possible federal pressure in that field is without limit. ”

“ Reverting to income, as distinguished from accumulated wealth, it is illuminating to note that only one person out of every 50 in the United States has a net income of sufficient size to require him to pay a tax upon it to the Federal Government. About 2,500,000 persons, or 2 per cent of the population, pay all that is collected under the Federal income tax ”

“ It was conceived by the Committee to be highly unreasonable and unjust that a small State, which would contribute but one sixty-fifth part of any tax, should, nevertheless, have an equal right with a large State which would contribute eight or ten sixty-fifths of the same tax, to take money from the pockets of the latter, more especially as it was intended that the powers of the new legislature should extend to internal taxation. ”

“ The whole wisdom of the science of government, with respect to taxation, consists in selecting that mode of collection which will best accommodate the convenience of the people. When you come to tax a great country, you will find that ten men are too few to settle the manner of collection. One capital advantage, which will result from the proposed alternative, is this—that there will be necessary communications between your ten members in Congress and your hundred and seventy representatives here. ”

“ A Federal income-tax system necessarily involves multiple taxation on one and the same income, person, and property. For example, in the United States a citizen of any one State would be liable, in the first instance, to the Federal tax on his income ”

“ The tax law--even though we are generating a lot more revenue for the Federal Government, even though we are well over that mean number of 18.2 percent of gross national product, even though we have had jumps in revenue of 11 percent, 9 percent, 15 percent--we actually have a tax law today that is generating more revenue but is also more progressive. High-income individuals are paying more of the tax burden. Low-income people are getting more money back from the Federal Government. ”

“ A power to tax to this extent may be essential to the healthy existence of the State governments, and the Federal Constitution ought not to be so construed as to impair, much less destroy, anything that is necessary to their efficient existence. ”

“ In a few years, it is to be hoped that we shall be relieved from our embarrassments, and, unless new calamities come upon us, shall be flourishing and happy. Some difficulties will ever occur in the collection of taxes by any mode whatever. Some states will pay more, some less. If New York lays a tax, will not one county or district furnish more, another less, than its proportion? The same will happen to the United States as happens in New York, and in every other country. ”

“ How will gentlemen like to pay an additional tax on lands in the Northern Neck? This the operation of this system will compel them to do. They now are subject to the same tax that other citizens are; and if the quitrents be recovered in the federal court, they are doubly taxed. This may be called an assertion; but were I going to my grave, I would appeal to Heaven that I think it true. How will a poor man, who is injured or dispossessed unjustly, get a remedy? Is he to go to the federal court, seven or eight hundred miles? ”

“ Where a federal right is concerned we are not bound by the characterization given to a state tax by state courts or Legislatures, or relieved by it from the duty of considering the real nature of the tax and its effect upon the federal right asserted.' Carpenter v. ”

“ A tax on imports would be a tax on its own consumption; and the net proceeds going, according to the clause, not into its own treasury, but into the treasury of the United States, the state would tax itself separately for the equal gain of all the other states; and as far as the manufactures, so encouraged, might succeed in ultimately increasing the stock in market, and lowering the price by competition, this advantage, also, procured at the sole expense of the state, would be common to all the others. ”

“ Because the power to lay duties on imports is, and in its very nature can be, only a means of effecting objects specified by the Constitution; since no free government, and least of all a government of enumerated powers, can of right impose any tax, any more than a penalty, which is not at once justified by public necessity, and clearly within the scope and purview of the social compact ”

“ In seven years' time, the people would be able, by only being obliged to pay the interest annually, to save money, and pay the whole principal, perhaps, afterwards, without much difficulty. Congress will not lay a single tax when it is not to the advantage of the people at large. The western lands will also be a considerable fund. The sale of them will aid the revenue greatly, and we have reason to believe the impost will be productive. ”

“ 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 background and development of the particular provisions before us emphasize the congressional purpose to tax this type of income. They disclose the full familiarity of Congress with this general type of transaction. Throughout the history of our federal income taxes since the Sixteenth Amendment to our Constitution, the Revenue Acts have expressly subjected to taxation the income received by nonresident alien individuals from sources within the United States. ”

“ 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 levies a tax on 'every person residing within the state,' and defines the word 'person' as including 'natural persons, fiduciaries and corporations,' and 'corporations' as including 'corporations, joint stock companies, associations or common law trusts.' It lays graduated taxes on the incomes of natural persons and corporations at different rates. It is comprehensive in its provisions regarding gross income and allowable deductions and exemptions, and is in most respects the analogue of the federal income tax acts in force since 1916. ”

“ Power to lay and collect taxes for Federal purposes, being vested exclusively in Congress, it becomes necessary, whenever the validity of such a tax is drawn in question, to examine the act imposing the tax, as the question in every case must necessarily depend upon its true construction, unless it appears that the tax is not apportioned as required, or not uniform, or the object taxed is one not taxable for such a purpose. ”