ON THE POWER OF TAXATION STATE AND FEDERAL IN THE UNITED STATES By FREDERICK N. JUDSON St. Louis The F. H. Thomas Law Book Company PREFACE It was said, in prefacing the First Edition of this book in 1902, that questions of taxation were then engaging more than ever before the attention of the legislatures and courts, as well as economists. It can be said without fear of contradiction that this is true of the present time to a far greater degree. The necessity of meeting new demands for human betterment in the development of our civilization has caused throughout the states of the Union a pressing demand for new methods in taxation to secure needed revenue; and the pressure of national emergencies in war as well as in peace, has called for the exercise of all the Federal powers of taxation. The distinction between the taxing power of the State under our complex form of government, and the construction of the statutes in the exercise of that power, is obvious. Our states are sovereign in taxation, subject to the restriction of the Federal Constitution and the limitations growing out of our dual form of government. Under the Fourteenth Amendment the power of the Federal government secures to the citizen due process of law and the equal protection of the laws in the exercise by the State of its sovereign power; so that there is a Federal question whereon Federal jurisdiction may be invoked in every tax case in which these fundamental rights are claimed to be denied by State authority. So great is the diversity in the details of State taxing systems, and so many are the cases involved in their construction and application, that the inclusion of this great volume of accumulated case law on taxation in an intelligent form, with different State constitutions and statutes expounded and applied, as was said in the preface of the First Edition, would now require a publication of encyclopedic proportions. The limitation of the taxing power of the States under our form of government and under the Constitution of the United States, has been expounded and developed by the Supreme Court of the United States for more than a century; and the rules formulated by the Court are essentially judge-made law, evolved for the complicated conditions of modern business from the gradually developed conception of the relation of the State to the Federal government. The historical method, therefore, has been followed, presenting the judicial development of these conceptions of the relation of the State to the general government, and liberal use has been made of quotations from opinions of the Supreme Court in formulating and announcing these fundamental rules. It is the aim of this book to show the limitation of the taxing power of the State and Federal government, so far as these limitations have been declared and expounded by the Supreme Court of the United States; and decisions of the State Court and inferior Federal courts have been cited as implying or illustrating the fundamental limitations thus declared. These decisions declare what the State cannot tax, and thereby show what it can tax. What the State has taxed must be learned from its own statutes and the decisions of its own courts. What the several states are now taxing (the State tax systems now in force), it has been the aim to show in the collocation of State taxing systems in the Appendix. What the State ought to tax is a question for economists and reformers. The vast increase in the Federal taxing power, illustrated in the recent enactments set forth in the Appendix, called forth by the existing national emergencies, is the most interesting and impressive fact in the development of taxation in our national history. This Federal power is based, not only upon the adoption of the Sixteenth Amendment in 1913, but also on the judicial construction of the original grant of the Constitution. There are indications that the States may in the future avail themselves of the effectiveness of the Federal taxing system by adopting one or more of its features, in remedying the recognized ineffectiveness of the general property tax, which has been the main dependence of the States. To save unnecessary repetition, the Supreme Court of the United States is mentioned as the Supreme Court only, and is dis tinguished from the Supreme Courts of the States, as the titles of the cases cited from the latter include the names of the States. I take pleasure in acknowledging the efficient assistance of Mr. Eustace C. Wheeler, of the St. Louis Bar, in general revision and in the preparation of the Index. St. Louis, Oct., 1917. FREDERICK N. JUDSON. |