330 JOURNAL OF FORESTRY 



exports may not be taxed. The first qualification is that direct taxes 

 must be levied in accordance with the rule of apportionment ; that is, 

 levied on the States in proportion to their respective populations. The 

 second qualification insists that an indirect tax must be levied uniformly 

 over the industry or industries to which it applies. 



Federal revenue is derived from two general sources. There are 

 first the import or customs duties and secondly, internal revenue. 

 Broadly speaking, internal revenue includes all receipts of the Govern- 

 ment including miscellaneous receipts as well as internal taxes. The 

 Bureau of Internal Revenue is concerned", however, only with the 

 latter. 



Internal taxes are of two kinds. Direct taxes are those which attach 

 to property by reason of ownership. Indirect taxes do not attach by 

 reason of ownership but may attach by reason of some function. Ex- 

 amples of the latter are excise, stamp, and income taxes. 



An income tax act was passed by the Federal Government during 

 the Civil War. This act was in force for several years. The next 

 act was passed in 1894. This act was immediately attacked in the 

 courts as unconstitutional. It was a tax on the income from real 

 estate and property and said to be for that reason in effect a direct 

 tax on the property. Since it was not apportioned in accordance with 

 the population of the various States, it was held to be unconstitutional 

 and was so declared by the courts. 



In 1.909 Congress passed an act in the form of a privilege tax on 

 corporations. This act was held by the courts to be a true excise 

 tax, and stayed in efifect. The actual levy was a one per cent assess- 

 ment on the income of the corporation and as a result only a small 

 revenue was received. 



On February 25, 1913, the sixteenth amendment to the Federal Con- 

 stitution, providing for the direct taxation of incomes, became effective. 

 Later in that same year, an act taxing the incomes of both corporations 

 and individuals was passed. Purely as a matter of convenience. Con- 

 gress chose the first day of the month following the constitutional 

 amendment as the transition date between the excise tax then in effect 

 and the new income tax law. March 1, 1913, became by this means 

 one of the critical dates in Federal income taxation in the United 

 States. For a number of years after that this law prevailed but, with 

 the same low rate of taxation, and with a high specific exemption the 

 returns were not large. 



