Our Changing Constitution

ality of such legislation.[1] A recent Revenue Bill contained provisions taxing the income of future issues of such obligations, and a motion for the elimination of those

ess., accompanying House Revenue Bill of 1918 as reported b

ch there is much to be said on both sides) but rather to deal with the strictly legal aspects of th

restriction or limitation save that exports shall not be taxed, that duties, imposts, and excises shall be uniform throughout the United States, and that direct taxes must be apportioned

overnment in all matters within its jurisdiction, nevertheless remained distinct bodies politic, each one supreme in i

ons looks to an indestructible Unio

as v. White, 7 W

nent justice (Samuel Nelson of

dently of each other, within their respective spheres. The former, in its appropriate sphere, is supreme; but the states within the limits of their powers not granted

ollector v. Day, 1

nterfere with the free and full exercise by the other of its powers. To do otherwise would be contrar

i.e., that a state could not tax an instrumentality of the nation, the Court has held in many subsequent decisions that the proposition enunciated by the great Chief Justice works both ways. For example, it has declared that a state cannot tax the obligations of the United States because such a tax operates upon the power of the Federal Government to borrow money[2] and conversely, that Congress cannot t

1: 4 Whe

n v. City of Charl

ile Bank v. New York

. Commissioner of Erie

llector v. Day,

rocklin v. Tenness

States v. Railroad

to destroy the state governments, or embarrass their lawful action."[1] One of the most distinguished writers on American Constitutional law (

istence of any state authority within its lawful bounds. And any such interference by the indirect means of taxati

oad Co. v. Penisto

Constitutional Limit

] involving the constitutionality of the Income Tax Law of 1804. While the Supreme Court was sharply divided as to the constitutionality

an & Trust Co., 157 U.S., 429; sam

nstrumentalities used by the state in carrying on an ordinary private business. This was decided in the South Carolina Dispensary case.[1] The State of South Carolina had taken over the business of selling liquor and the case involved a federal tax upon such business. The Court, while reaffirming the general doctrine, nevertheless upheld the tax on

a v. United States, 199 U.

er the effect of the

it was a direct tax and had not been apportioned among the states in proportion to population th

s, from whatever source derived, without apportionment among the

urce derived" might open the door to the taxation by the Government of income from state and municipal bonds. Charles E. Hugh

t merely remove the obstacle found by the Supreme Court to the Income Tax Law of 1894, i.e., the necessity of apportionment among the states in propo

but merely removes all occasion, which otherwise might exist, for an apportionment among

eck v. Lowe, 2

tle earlier[1] the Cour

White, h

ilway Co., 240 U.S., 1) it was settled that the provisions of

v. Baltic Mining Co.,

tion of state and municipal bonds from federal taxation is firmly emb

present-day conditions is a quest

than a tradition. To many it doubtless will seem that any rule of law which operates to prevent the nation, in th

wever, that it will have to be done by the orderly method of constitutional amendment, not by

ssues is coming to be regarded less as a safeguard of state rights than as a means whereby the rich escape federal income surtaxes. One is tempted to predict that the next

President Harding to Con