474 POPULAR SCIENCE MONTHLY. 



eral Union, and amounting in aggregate value to liundreds of 

 millions of dollars. The rents and income of tliis real estate, also 

 annually amoimting in the aggregate to large sums, are collected 

 and received by the above-mentioned organizations, and held by 

 them in their various fiduciary capacities. 



The first point of importance under such a state of affairs to 

 which attention is asked is, that taxes levied or laid b}^ the Fed- 

 eral Government are recognized and admitted (in virtue of re- 

 peated decisions and assumptions of the United States Supreme 

 Court) to be typical forms of direct taxation, and as such under a 

 clear and carefully worded provision of the Federal Constitution 

 must be apportioned among the several States according to their 

 respective population.* On this point, therefore, there could obvi- 

 ously be no legal contention. 



It is now well recognized that this provision of the Constitu- 

 tion, after full discussion and careful wording on the part of its 

 framers, was adopted in order to protect to the States, which in 

 entering into union were surrendering to the prospective Federal 

 Government so many sources of income, the power of direct taxa- 

 tion, and so preclude a combination of States from exacting trib- 

 ute from other States, f 



The next point of contention in order of importance in the case 

 as presented to the United States Supreme Court was ; did the 

 provisions of the income-tax act of 1894, imposing a tax of two 

 per cent upon the gains, profits, and income derived from all kinds 

 of property including rent and the gains and profits accruing 

 from the growth, profits, or sale of land involve and create a 

 tax which must necessarily be deemed a direct tax on real estate 

 (land), and which not being apportioned (levied) according to the 



* " Representatives and direct taxes shall be apportioned among tlie several States 

 which may be included within this Union according to their respective numbers." Condi- 

 tution of the United States, Article 7, S'ction 2. 



f " The foundera anticipated that the expenditures of the States, their counties, cities, 

 and towns, would chiefly be met by direct taxation on accumulated property, Mhile they ex- 

 pected that those of the Federal Government would be for the mosl part liy indirect taxes ; 

 and in order that the power of direct taxation of the General Government should not be 

 exercised except on necessity, and when the necessity arose should be so exercised as to 

 leave the States at liberty to discharge their respective obligations and should not be so ex- 

 ercised unfairly and discriminatingly as to particular States or otherwise by a mere majoi-ity 

 vote, possibly of those whose constituents were intentionally not subjected to any part of 

 the burden, this qualified grant was made. Those who made it knew that the power to tax 

 involved the power to destroy, and that 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 oppress- 

 ive taxation, and they retained this security Vjy providing that direct taxation and repre- 

 sentation in the lower House of Congress should be adjusted on the same measure." Chief- 

 Justice Fuller. 



