Privilege tax

“ It suffices to say that the tax immunity extended to property qua property does not embrace a special privilege, the corporate franchise, otherwise taxable, merely because the value of the corporate property or net income is included in an equable measure of the enjoyment of the privilege. The owner may enjoy his exempt property free of tax, but if he asks and receives from the state the benefit of a taxable privilege as the implement of that enjoyment, he must bear the burden of the tax which the state exacts as its price. ”

“ Here it seems clear that a circumstance which affects only taxable values has been made the basis of a classification under which one is compelled to pay a tax for the enjoyment of a necessary privilege which, aside from the amount of the recording fee which is paid by each, is furnished to another as a pure gratuity. ”

“ It is therefore well settled by the decisions of this court that when the sovereign authority has exercised the right to tax a legitimate subject of taxation as an exercise of a franchise or privilege, it is no objection that the measure of taxation is found in the income produced in part from property which of itself considered is nontaxable. ”

“ Nor is it necessary to tax the use of the privilege, under all circumstances, in order to render the tax valid upon its use in particular cases. We see no reason why it should be necessary to tax a privilege whenever it is used for any purpose, or else not to tax it at all. It is not in its nature indivisible. A tax upon the privilege when used for one purpose does not require for its validity that the same privilege should also be taxed when used for another and a totally distinct purpose. ”

“ But, wholly apart from extrinsic circumstances, the statute itself in terms seems clearly to impose an income tax. The tax is not one upon the privilege of doing business, but it is an annual tax for the privilege of doing business, to be computed upon the basis of the net income for the year next preceding. ”

“ Occupation taxes normally are flat taxes, and the Court surely does not mean to hold that a tax is bad merely because all taxpayers pursuing the very same activities and thereby demanding the same governmental services are treated alike. Nor, as I have indicated, can a tax be invalidated because the exercise of a constitutional privilege is conditioned upon its payment. ”

“ As to residents it may, and does, exert its taxing power over their income from all sources, whether within or without the state, and it accords to them a corresponding privilege of deducting their losses, wherever these accrue. As to nonresidents, the jurisdiction extends only to their property owned within the state and their business, trade, or profession carried on therein, and the tax is only on such income as is derived from those sources. ”

“ The tax imposed by the City of Jeannette is a flat license tax, the payment of which is a condition of the exercise of these constitutional privileges. The power to tax the exercise of a privilege is the power to control or suppress its enjoyment. ”

“ It is urged that when the public grants a privilege on condition of the payment of an annual sum the contract implies that the public shall exact no larger amount for that privilege, that to impose a tax is simply increasing the price which the grantee is called upon to pay for the privilege, and Gordon v. ”

“ The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.'
But notwithstanding the rule of uniformity lying at the basis of every just system of taxation, there are doubtless many individual cases where the weight of a tax falls unequally upon the owners of the property taxed. ”

“ So you must, but you must not draw it in a way to do gross and palpable injustice,—to exempt the comparatively affluent, and oppress the industrious poor. There is a vital distinction, which it would be well if the income tax recognised, between income, of any amount, derived from realised property and from professional exertions. By all means give the humble professional classes the benefit of this distinction. But to draw the line, not according to the quality of the income as derived from capital or labour, but from its absolute amount, is arbitrary, invidious, and unjust. ”

“ Any exemption whatever, under an income tax, be it small or great, except to the absolutely indigent, is purely arbitrary; and the principle once allowed may be carried to any extent. Any exemption of any portion of the same class of property or incomes is an act of charity which every patriotic American citizen ought to reject upon principle and with scorn, except under circumstances of great want and destitution. Equality and manhood, therefore, demand and require uniformity of burden in whatever is the subject of taxation. ”

“ That tax is to be returned by, and collected from, the corporation as his agent and instrument.
A tax is understood to be a charge, a pecuniary burden, for the support of government. Of all burdens imposed upon mankind that of grinding taxation is the most cruel. It is not taxation that government should take from one the profits and gains of another. That is taxation which compels one to pay for the support of the government from his own gains and of his own property. ”

“ The principle, therefore, of equality of taxation, interpreted in its only just sense, equality of sacrifice, requires that a person who has no means of providing for old age, or for those in whom he is interested, except by saving from income, should have the tax remitted on all that part of his income which is really and bonâ fide applied to that purpose. ”

“ Taxation is but the means by which government distributes the burdens of its cost among those who enjoy its benefits. And the distribution of a tax burden by placing it in part on a special class which by reason of the taxing policy of the State has escaped all tax during the taxable period is not a denial of equal protection. ”

“ There is a limit beyond which it is exceedingly difficult to find ways of spending money on one's own enjoyment—though I have never been able to fix it precisely. On this ground, such plans as a graduated income-tax are, it would seem, compatible with the plea of justice; and, within certain limits, we do, in fact, approve of various taxes, on the ground, real or supposed, that they tend to shift burdens from the poor to the rich, and, so far, to equalise wealth. In fact, this appeal to justice is a tacit concession of the principle. ”

“ But uniformity in this connection is only another name for equality, for the provision is for 'levying a tax by valuation, so that every person and corporation shall pay a tax in proportion to the value of his or her property.' The value of the property being ascertained, the same rate of taxation must be laid upon all. ”

“ The kind of tax, therefore, which comes under the general denomination of a discriminating duty, transgresses the rule that taxes should take as little as possible from the taxpayer beyond what they bring into the treasury of the state. A discriminating duty makes the consumer pay two distinct taxes, only one of which is paid to the Government, and that frequently the less onerous of the two. ”

“ If there were any doubt as to the intention of the states to make the grant of the right to impose indirect taxes subject to the condition that such taxes shall be in all respects uniform and impartial, that doubt, as said by counsel, should be resolved in the interest of justice, in favor of the taxpayer.'
Exemptions from the operation of a tax always create inequalities. Those not exempted must, in the end, bear an additional burden or pay more than their share. ”

“ Excise and sales taxes are based on the same principle—though the tax is levied on a transaction rather than on property. The principle is equally valid with regard to incomes, inheritances and gifts. The idea that a man who makes $100,000 a year should be forced to contribute ninety per cent of his income to the cost of government, while the man who makes $10,000 is made to pay twenty per cent is repugnant to my notions of justice. I do not believe in punishing success. ”

“ Luxury, my lords, or the excess of that which is pernicious only by its excess, may very properly be taxed, that such excess, though not strictly unlawful, may be made more difficult. But the use of those things which are simply hurtful, hurtful in their own nature, and in every degree, is to be prohibited. None, my lords, ever heard in any nation of a tax upon theft or adultery, because a tax implies a license granted for the use of that which is taxed, to all who shall be willing to pay it. ”

“ If others pay the tax which is demanded of me, from a sympathy with the State, they do but what they have already done in their own case, or rather they abet injustice to a greater extent than the State requires. If they pay the tax from a mistaken interest in the individual taxed, to save his property, or prevent his going to jail, it is because they have not considered wisely how far they let their private feelings interfere with the public good. ”

“ It is clear then, I think, that the admission of the power of taxation in regard to invested personal property, coupled with the restriction that the tax must be distributed by population and not by wealth, involves a substantial denial of the power itself, because the condition renders its exercise practically impossible. ”

“ As to the objections that certain organizations,-labor, agricultural, and horticultural,-fraternal and benevolent societies, loan and building associations, and those for religious, charitable, or educational purposes, are excepted from the operation of the law, we find nothing in them to invalidate the tax. ”

“ 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. ”

“ Can a general Neglect of the Poor be justly charged on a Nation in which the Poor are provided for by a Tax frequently equal to what is called the Land-Tax, and where there are such numerous Instances of private Donations, such Numbers of Hospitals, Alms-houses, and charitable Provisions of all Kinds? ”

“ Elaborate argument is made as to the efficacy and merits of an income tax in general, as on the one hand equal and just, and on the other elastic and certain; not that it is not open to abuse by such deductions and exemptions as might make taxation under it so wanting in uniformity and equality as in substance to amount to deprivation of property without due process of law ”

“ These very small incomes are mostly derived from manual labour; and, as we now see, any tax imposed on these, either permanently degrades the habits of the labouring class, or falls on profits, and burthens capitalists with an indirect tax, in addition to their share of the direct taxes; which is doubly objectionable, both as a violation of the fundamental rule of equality, and for the reasons which, as already shown, render a peculiar tax on profits detrimental to the public wealth, and consequently to the means which society possesses of paying any taxes whatever. ”

“ The income-tax was originally proposed to supply the loss of revenue sustained in consequence of an over-reduction of the indirect taxes; and as a matter of equity it follows, that the supplies should be drawn, though in a different form, from the same portion of the community.
Is this the case? Can any man venture to say that the income-tax, as we have known it for the last five years, has been borne with equal [388] fairness by all classes of the community? Is it not, on the contrary, the most unequal, the most unjust, and the most oppressive tax that ever yet was levied? ”

“ As a matter of personal conviction, and without pretending to discuss the details or formulate the system, I feel that we shall ultimately have to consider the adoption of some such scheme as that of a progressive tax on all fortunes, beyond a certain amount, either given in life or devised or bequeathed upon death to any individual—a tax so framed as to put it out of the power of the owner of one of these enormous fortunes to hand on more than a certain amount to any one individual ”

“ Rents, salaries, annuities, and all fixed incomes, [pg 556] can be exactly ascertained. But the variable gains of professions, and still more the profits of business, which the person interested can not always himself exactly ascertain, can still less be estimated with any approach to fairness by a tax-collector. The main reliance must be placed, and always has been placed, on the returns made by the person himself. The tax, therefore, on whatever principles of equality it may be imposed, is in practice unequal in one of the worst ways, falling heaviest on the most conscientious. ”

“ Whereas, in true justice, the only honest and wholly right tax is one not merely on income, but property; increasing in percentage as the property is greater. And the main virtue of such a tax is that it makes publicly known what every man has, and how he gets it. ”

“ If, as this court has repeatedly said, an income tax is an equitable method of distributing the necessary burdens of government, certainly no such discrimination as is evidenced by the challenged act can properly fall within the description. ”