240 U.S. 1, 36 S.Ct. 236, 60 L.Ed. 493 FRANK R. BRUSHABER, Appt., v, UNION PACIFIC RAILROAD COMPANY.
No. 140.
Argued October 14 and 15, 1915.
Decided January 24, 1916.
APPEAL from the District Court of the United States for the Southern District of
New York to review a decree dismissing the bill in a suit by a stockholder to
restrain the corporation from voluntarily complying with the Federal income tax.
Affirmed.
Messrs. Julien T. Davies, Brainard Tolles, Garrard Glenn, and Martin A.
Schenck for appellant.
Mr. Henry W. Clark for appellee.
Solicitor General Davis, Assistant Attorney General Wallace, and Attorney
General Gregory for the United States.
Mr. Chief Justice White delivered the opinion of the court:
As a stockholder of the Union Pacific Railroad Company, the appellant filed his
bill to enjoin the corporation from complying with the income tax provisions of
the tariff act of October 3, 1913 (s II., chap. 16, 38 Stat. at L. 166).
Because of constitutional questions duly arising the case is here on direct
appeal from a decree sustaining a motion to dismiss because no ground for relief
was stated.
The right to prevent the corporation from returning and paying the tax was based
upon many averments as to the repugnancy of the statute to the Constitution of
the United States, of the peculiar relation of the corporation to the
stockholders, and their particular interests resulting from many of the
administrative provisions of the assailed act, of the confusion, wrong, and
multiplicity of suits and the absence of all means of redress which would result
if the corporation paid the tax and complied with the act in other respects
without protest, as it was alleged it was its intention to do. To put out of the
way a question of jurisdiction we at once say that in view of these averments
and the ruling in Pollock v. Farmers' Loan & T. Co. 157 U. S. 429,39 L.
ed. 759, 15 Sup. Ct. Rep. 673, sustaining the right of a stockholder to sue to
restrain a corporation under proper averments from voluntarily paying a
tax charged to be unconstitutional on the ground that to permit such a
suit did not violate the prohibitions of s 3224, Revised Statutes Comp. Stat.
1913, s 5947), against enjoining the enforcement of taxes, we are of
opinion that the contention here made that there was no jurisdiction of the
cause, since to entertain it would violate the provisions of the Revised
Statutes referred to, is without merit. Before coming to dispose of the case on
the merits, however, we observe that the defendant corporation having called the
attention of the government to the pendency of the cause and the nature of the
controversy and its unwillingness to voluntarily refuse to comply with the act
assailed, the United States, as amicus curiae, has at bar been heard both orally
and by brief for the purpose of sustaining the decree.
Aside from averments as to citizenship and residence, recitals as to the
provisions of the statute, and statements as to the business of the corporation,
contained in the first ten paragraphs of the bill, advanced to sustain
jurisdiction, the bill alleged twenty-one constitutional objections specified in
that number of paragraphs or subdivisions. As all the grounds assert a violation
of the Constitution, it follows that, in a wide sense, they all charge a
repugnancy of the statute to the 16th Amendment, under the more immediate
sanction of which the statute was adopted.
The various propositions are so intermingled as to cause it to be difficult to
classify them. We are of opinion, however, that the confusion is not inherent,
but rather arises from the conclusion that the 16th Amendment provides for a
hitherto unknown power of taxation; that is, a power to levy an income tax
which, although direct, should not be subject to the regulation of apportionment
applicable to all other direct taxes. And the far-reaching effect of this
erroneous assumption will be made clear by generalizing the many contentions
advanced in argument to support it, as follows:
(a) The Amendment authorizes only a particular character of direct tax without
apportionment, and therefore if a tax is levied under its assumed authority
which does not partake of the characteristics exacted by the Amendment, it is
outside of the Amendment and is void as a direct tax in the general
constitutional sense because not apportioned.
(b) As the Amendment authorizes a tax only upon incomes 'from whatever source
derived,' the exclusion from taxation of some income of designated persons and
classes is not authorized, and hence the constitutionality of the law must be
tested by the general provisions of the Constitution as to taxation, and thus
again the tax is void for want of apportionment.
(c) As the right to tax 'incomes from whatever source derived' for which the
Amendment provides must be considered as exacting intrinsic uniformity,
therefore no tax comes under the authority of the Amendment not conforming to
such standard, and hence all the provisions of the assailed statute must once
more be tested solely under the general and pre-existing provisions of the
Constitution, causing the statute again to be void in the absence of
apportionment.
(d) As the power conferred by the Amendment is new and prospective, the attempt
in the statute to make its provisions retroactively apply is void because, so
far as the retroactive period is concerned, it is governed by the pre-existing
constitutional requirement as to apportionment.
But it clearly results that the proposition and the contentions under it, if
acceded to, would cause one provision of the Constitution to destroy another;
that is, they would result in bringing the provisions of the Amendment exempting
a direct tax from apportionment into irreconcilable conflict with the general
requirement that all direct taxes be apportioned. Moreover, the tax authorized
by the Amendment, being direct, would not come under the rule of uniformity
applicable under the Constitution to other than direct taxes, and thus it would
come to pass that the result of the Amendment would be to authorize a particular
direct tax not subject either to apportionment or to the rule of geographical
uniformity, thus giving power to impose a different tax in one state or states
than was levied in another state or states. This result, instead of simplifying
the situation and making clear the limitations on the taxing power, which
obviously the Amendment must have been intended to accomplish, would create
radical and destructive changes in our constitutional system and multiply
confusion.
But let us by a demonstration of the error of the fundamental proposition as to
the significance of the Amendment dispel the confusion necessarily arising from
the arguments deduced from it. Before coming, however, to the text of the
Amendment, to the end that its significance may be determined in the light of
the previous legislative and judicial history of the subject with which the
Amendment is concerned, and with a knowledge of the conditions which
presumptively led up to its adoption, and hence of the purpose it was intended
to accomplish, we make a brief statement on those subjects.
That the authority conferred upon Congress by s 8 of article 1 'to lay and
collect taxes, duties, imposts and excises' is exhaustive and embraces every
conceivable power of taxation has never been questioned, or, if it has, has been
so often authoritatively declared as to render it necessary only to state the
doctrine. And it has also never been questioned from the foundation, without
stopping presently to determine under which of the separate headings the power
was properly to be classed, that there was authority given, as the part was
included in the whole, to lay and collect income taxes. Again, it has never
moreover been questioned that the conceded complete and all- embracing taxing
power was subject, so far as they were respectively applicable, to limitations
resulting from the requirements of art. 1, s 8, cl. 1, that 'all duties, imposts
and excises shall be uniform throughout the United States,' and to the
limitations of art I., s 2, cl. 3, that 'direct taxes shall be apportioned among
the several states,' and of art 1, s 9, cl. 4 that 'no capitation, or other
direct, tax shall be laid, unless in proportion to the census or enumeration
hereinbefore directed to be taken.' In fact, the two great subdivisions
embracing the complete and perfect delegation of the power to tax and the two
correlated limitations as to such power were thus aptly stated by Mr. Chief
Justice Fuller in Pollock v. Farmers' Loan & T. Co. 157 U. S. supra, at
page 557:
'In the matter of taxation, the Constitution recognizes the two great classes of
direct and indirect taxes, and lays down two rules by which their imposition
must be governed, namely: The rule of apportionment as to direct taxes, and the
rule of uniformity as to duties, imposts, and excises.'
It is to be observed, however, as long ago pointed out in Veazie Bank v. Fenno,
8 Wall. 533, 541, 19 L. ed. 482, 485, that the requirements of apportionment as
to one of the great classes and of uniformity as to the other class were not so
much a limitation upon the complete and all-embracing authority to tax, but in
their essence were simply regulations concerning the mode in which the plenary
power was to be exerted.
In the whole history of the government down to the time of the adoption of the
16th Amendment, leaving aside some conjectures expressed of the possibility of a
tax lying intermediate between the two great classes and embraced by neither, no
question has been anywhere made as to the correctness of these propositions. At
the very beginning, however, there arose differences of opinion concerning the
criteria to be applied in determining in which of the two great subdivisions a
tax would fall.
Without pausing to state at length the basis of these differences and the
consequences which arose from them, as the whole subject was elaborately
reviewed in Pollock v. Farmers' Loan & T. Co. 157 U. S. 429, 39 L. ed.
759, 15 Sup. Ct. Rep. 673, 158 U. S. 601, 39 L. ed. 1108, 15 Sup. Ct. Rep. 912,
we make a condensed statement which is in substance taken from what was said in
that case.
Early the differences were manifested in pressing on the one hand and opposing
on the other, the passage of an act levying a tax without apportionment on
carriages 'for the conveyance of persons,' and when such a tax was enacted the
question of its repugnancy to the Constitution soon came to this court for
determination. Hylton v. United States, 3 Dall. 171, 1 L. ed. 556. It was held
that the tax came within the class of excises, duties, and imposts, and
therefore did not require apportionment, and while this conclusion was agreed to
by all the members of the court who took part in the decision of the case, there
was not an exact coincidence in the reasoning by which the conclusion was
sustained.
Without stating the minor differences, it may be said with substantial accuracy
that the divergent reasoning was this: On the one hand, that the tax was not in
the class of direct taxes requiring apportionment, because it was not levied
directly on property because of its ownership, but rather on its use, and was
therefore an excise, duty, or impost; and on the other, that in any event the
class of direct taxes included only taxes directly levied on real estate because
of its ownership. Putting out of view the difference of reasoning which led to
the concurrent conclusion in the Hylton Case, it is undoubted that it came to
pass in legislative practice that the line of demarcation between the two great
classes of direct taxes on the one hand and excises, duties, and imposts on the
other, which was exemplified by the ruling in that case, was accepted and acted
upon. In the first place this is shown by the fact that wherever (and there were
a number of cases of that kind) a tax was levied directly on real estate or
slaves because of ownership, it was treated as coming within the direct class
and apportionment was provided for, while no instance of apportionment as to any
other kind of tax is afforded. Again the situation is aptly illustrated by the
various acts taxing incomes derived from property of every kind and nature which
were enacted beginning in 1861, and lasting during what may be termed the Civil
War period. It is not disputable that these latter taxing laws were classed
under the head of excises, duties, and imposts because it was assumed that they
were of that character inasmuch as, although putting a tax burden on income of
every kind, including that derived from property real or personal, they were not
taxes directly on property because of its ownership. And this practical
construction came in theory to be the accepted one, since it was adopted without
dissent by the most eminent of the text writers. 1 Kent, Com. 254, 256; 1 Story,
Const. s 955; Cooley, Const. Lim. 5th ed. *480; Miller, Constitution, 237; Pom.
Const. Law, s 281; 1 Hare, Const. Law, 249, 250; Burroughs, Taxn. 502; Ordronaux,
Constitutional Legislation, 225.
Upon the lapsing of a considerable period after the repeal of the income tax
laws referred to, in 1894 [28 Stat. at L. 509, chap. 349], an act was passed
laying a tax on incomes from all classes of property and other sources of
revenue which was not apportioned, and which therefore was of course assumed to
come within the classification of excises, duties, and imposts which were
subject to the rule of uniformity, but not to the rule of apportionment. The
constitutional validity of this law was challenged on the ground that it did not
fall within the class of excises, duties, and imposts, but was direct in the
constitutional sense, and was therefore void for want of apportionment, and that
question came to this court and was passed upon in Pollock v. Farmers' Loan
& T. Co. 157 U.S. 429, 39 L. ed. 759, 15 Sup. Ct. Rep. 673, 158 U. S.
601, 39 L. ed. 1108, 15 Sup. Ct. Rep. 912.
The court, fully recognizing in the passage which we have previously quoted the
allembracing character of the two great classifications, including, on the one
hand, direct taxes subject to apportionment, and on the other, excises, duties,
and imposts subject to uniformity, held the law to be unconstitutional in
substance for these reasons: Concluding that the classification of direct was
adopted for the purpose of rendering it impossible to burden by taxation
accumulations of property, real or personal, except subject to the regulation of
apportionment, it was held that the duty existed to fix what was a direct tax in
the constitutional sense so as to accomplish this purpose contemplated by the
Constitution. (157 U. S. 581.)
Coming to consider the validity of the tax from this point of view, while not
questioning at all that in common understanding it was direct merely on income
and only indirect on property, it was held that, considering the substance of
things, it was direct on property in a constitutional sense, since to burden an
income by a tax was, from the point of substance, to burden the property from
which the income was derived, and thus accomplish the very thing which the
provision as to apportionment of direct taxes was
adopted to prevent. As this conclusion but enforced a regulation as to the mode
of exercising power under particular circumstances, it did not in any way
dispute the all-embracing taxing authority possessed by Congress, including
necessarily therein the power to impose income taxes if only they conformed to
the constitutional regulations which were applicable to them. Moreover, in
addition, the conclusion reached in the Pollock Case did not in any degree
involve holding that income taxes generically and necessarily came within the
class of direct taxes on property, but, on the contrary, recognized the fact
that taxation on income was in its nature an excise entitled to be enforced as
such unless and until it was concluded that to enforce it would amount to
accomplishing the result which the requirement as to apportionment of direct
taxation was adopted to prevent, in which case the duty would arise to disregard
form and consider substance alone, and hence subject the tax to the regulation
as to apportionment which otherwise as an excise would not apply to it. Nothing
could serve to make this clearer than to recall that in the Pollock Case, in so
far as the law taxed incomes from other classes of property than real estate and
invested personal property, that is, income from 'professions, trades,
employments, or vocations' (158 U. S. 637), its validity was recognized; indeed,
it was expressly declared that no dispute was made upon that subject, and
attention was called to the fact that taxes on such income had been sustained as
excise taxes in the past. Id. p. 635.
The whole law was, however, declared unconstitutional on the ground that to
permit it to thus operate would relieve real estate and invested personal
property from taxation and 'would leave the burden of the tax to be borne by
professions, trades, employments, or vacations; and in that way what was
intended as a tax on capital would remain, in substance, a tax on occupations
and labor' (id. p. 637),--a result which, it was held, could not have been
contemplated by Congress.
This is the text of the Amendment:
'The Congress shall have power to lay and collect taxes on incomes, from
whatever source derived, without apportionment among the several states, and
without regard to any census or enumeration.'
It is clear on the face of this text that it does not purport to confer power to
levy income taxes in a generic sense,--an authority already possessed and never
questioned, --or to limit and distinguish between one kind of income taxes and
another, but that the whole purpose of the Amendment was to relieve all income
taxes when imposed from apportionment from a consideration of the source whence
the income was derived. Indeed, in the light of the history which we have given
and of the decision in the Pollock Case, and the ground upon which the ruling in
that case was based, there is no escape from the conclusion that the Amendment
was drawn for the purpose of doing away for the future with the principle upon
which the Pollock Case was decided; that is, of determining whether a tax on
income was direct not by a consideration of the burden placed on the taxed
income upon which it directly operated, but by taking into view the burden which
resulted on the property from which the income was derived, since in express
terms the Amendment provides that income taxes, from whatever source the income
may be derived, shall not be subject to the regulation of apportionment. From
this in substance it indisputably arises, first, that all the contentions which
we have previously noticed concerning the assumed limitations to be implied from
the language of the Amendment as to the nature and character of the income taxes
which it authorizes find no support in the text and are in irreconcilable
conflict with the very purpose which the Amendment was adopted to accomplish.
Second, that the contention that the Amendment treats a tax on income as a
direct tax although it is relieved from apportionment and is necessarily
therefore not subject to the rule of uniformity as such rule only applies to
taxes which are not direct, thus destroying the two great classifications which
have been recognized and enforced from the beginning, is also wholly without
foundation since the command of the Amendment that all income taxes shall not be
subject to apportionment by a consideration of the sources from which the taxed
income may be derived forbids the application to such taxes of the rule applied
in the Pollock Case by which alone such taxes were removed from the great class
of excises, duties, and imposts subject to the rule of uniformity, and were
placed under the other or direct class. This must be unless it can be said that
although the Constitution, as a result of the Amendment, in express terms
excludes the criterion of source of income, that criterion yet remains for the
purpose of destroying the classifications of the Constitution by taking an
excise out of the class to which it belongs and transferring it to a class in
which it cannot be placed consistently with the requirements of the
Constitution. Indeed, from another point of view, the Amendment demonstrates
that no such purpose was intended, and on the contrary shows that it was drawn
with the object of maintaining the limitations of the Constitution and
harmonizing their operation. We say this because it is to be observed that
although from the date of the Hylton Case, because of statements made in the
opinions in that case, it had come to be accepted that direct taxes in the
constitutional sense were confined to taxes levied directly on real estate
because of its ownership, the Amendment contains nothing repudiation or
challenging the ruling in the Pollock Case that the word 'direct' had a broader
significance, since it embraced also taxes levied directly on personal property
because of its ownership, and therefore the Amendment at least impliedly makes
such wider significance a part of the Constitution, --a condition which clearly
demonstrates that the purpose was not to change the existing
interpretation except to the extent necessary to accomplish the result intended;
that is, the prevention of the resort to the sources from which a taxed income
was derived in order to cause a direct tax on the income to be a direct tax on
the source itself, and thereby to take an income tax out of the class of
excises, duties, and imposts, and place it in the class of direct taxes.
We come, then, to ascertain the merits of the many contentions made in the light
of the Constitution as it now stands; that is to say, including within its terms
the provisions of the 16th Amendment as correctly interpreted. We first dispose
of two propositions assailing the validity of the statute on the one hand
because of its repugnancy to the Constitution in other respects, and especially
because its enactment was not authorized by the 16th Amendment.
The statute was enacted October 3, 1913, and provided for a general yearly
income tax from December to December of each year.
Exceptionally, however, it fixed a first period embracing only the time from
March 1, to December 31, 1913, and this limited retroactivity is assailed as
repugnant to the due process clause of the 5th Amendment, and as inconsistent
with the 16th Amendment itself. But the date of the retroactivity did not extend
beyond the time when the Amendment was operative, and there can be no dispute
that there was power by virtue of the Amendment during that period to levy the
tax, without apportionment, and so far as the limitations of the Constitution in
other respects are concerned, the contention is not open, since in Stockdale v.
Atlantic Ins. Co. 20 Wall. 323, 331, 22 L. ed. 348, 351, in sustaining a
provision in a prior income tax law which was assailed because of its
retroactive character, it was said:
'The right of Congress to have imposed this tax by a new statute, although the
measure of it was governed by the income of the past year, cannot be doubted;
much less can it be doubted that it could impose such a tax on the income of the
current year, though part of that year had elapsed when the statute was passed.
The joint resolution of July 4th, 1864 [13 Stat. at L. 417], imposed a tax of 5
per cent upon all income of the previous year, although one tax on it had
already been paid, and no one doubted the validity of the tax or attempted to
resist it.'
The statute provides that the tax should not apply to enumerated organizations
or corporations, such as labor, agricultural or horticultural organizations,
mutual savings banks, etc., and the argument is that as the Amendment authorized
a tax on incomes 'from whatever source derived,' by implication it excluded the
power to make these exemption . But this is only a form of expressing the
erroneous contention as to the meaning of the Amendment, which we have already
disposed of. And so far as this alleged illegality is based on other provisions
of the Constitution, the contention is also not open, since it was expressly
considered and disposed of in Flint v. Stone Tracy Co. 220 U. S. 108, 173, 55 L.
ed. 389, 422, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912B, 1312.
Without expressly stating all the other contentions, we summarize them to a
degree adequate to enable us to typify and dispose of all of them.
1. The statute levies one tax called a normal tax on all incomes of individuals
up to $20,000, and from that amount up, by gradations, a progressively
increasing tax, called an additional tax, is imposed. No tax, however, is levied
upon incomes of unmarried individuals amounting to $3,000 or less, nor upon
incomes of married persons amounting to $4,000 or less. The progressive tax and
the exempted amounts, it is said, are based on wealth alone, and the tax is
therefore repugnant to the due process clause of the 5th Amendment.
2. The act provides for collecting the tax at the source; that is, makes it the
duty of corporations, etc., to retain and pay the sum of the tax on interest due
on bonds and mortgages, unless the owner to whom the interest is payable gives a
notice that he claims an exemption. This duty cast upon corporations, because of
the cost to which they are subjected, is asserted to be repugnant to due process
of law as a taking of their property without compensation, and we recapitulate
various contentions as to discrimination against corporations and against
individuals, predicated on provisions of the act dealing with the subject.
(a) Corporations indebted upon coupon and registered bonds are discriminated
against, since corporations not so indebted are relieved of any labor or expense
involved in deducting and paying the taxes of individuals on the income derived
from bonds.
(b) Of the class of corporations indebted as above stated, the law further
discriminates against those which have assumed the payment of taxes on their
bonds, since although some or all of their bondholders may be exempt from
taxation, the corporations have no means of ascertaining such fact, and it would
therefore result that taxes would often be paid by such corporations when no
taxes were owing by the individuals to the government.
(c) The law discriminates against owners of corporate bonds in favor of
individuals none of whose income is derived from such property, since
bondholders are, during the interval between the deducting and the paying of the
tax on their bonds, deprived of the use of the money so withheld.
(d) Again, corporate bondholders are discriminated against because the law does
not release them from payment of taxes on their bonds even after the taxes have
been deducted by the corporation, and therefore if, after deduction, the
corporation should fail, the bondholders would be compelled to pay the tax a
second time.
(e) Owners of bonds the taxes on which have been assumed by the corporation are
discriminated against because the payment of the taxes by the corporation does
not relieve the bondholders of their duty to include the income from such bonds
in making a return of all income, the result being a double payment of the
taxes, labor and expense in applying for a refund, and a deprivation of the use
of the sum of the taxes during the interval which elapses before they are
refunded.
3. The provision limiting the amount of interest paid which may be deducted from
gross income of corporations for the purpose of fixing the taxable income to
interest on indebtedness not exceeding one half the sum of bonded indebtedness
and paid up capital stock is also charged to be wanting in due process because
discriminating between different classes of corporations and individuals.
4. It is urged that want of due process results from the provision allowing
individuals to deduct from their gross income dividends paid them by
corporations whose incomes are taxed, and not giving such right of deduction to
corporations.
5. Want of due process is also asserted to result from the fact that the act
allows a deduction of $3,000 or $4,000 to those who pay the normal tax, that is,
whose incomes are $20,000 or less, and does not allow the deduction to those
whose incomes are greater than $20,000; that is, such persons are not allowed,
for the purpose of the additional or progressive tax, a second right to deduct
the $3,000 or $4,000 which they have already enjoyed. And a further violation of
due process is based on the fact that for the purpose of the additional tax no
second right to deduct dividends received from corporations is permitted.
6. In various forms of statement, want of due process, it is moreover insisted,
arises from the provisions of the act allowing a deduction for the purpose of
ascertaining the taxable income of stated amounts, on the ground that the
provisions discriminate between married and single people, and discriminate
between husbands and wives who are living together and those who are not.
7. Discrimination and want of due process result, it is said, from the fact that
the owners of houses in which they live are not compelled to estimate the rental
value in making up their incomes, while those who are living in rented houses
and pay rent are not allowed, in making up their taxable income, to deduct rent
which they have paid, and that want of due process also results from the fact
that although family expenses are not, as a rule, permitted to be deducted from
gross, to arrive at taxable, income, farmers are permitted to omit from their
income return certain products of the farm which are susceptible of use by them
for sustaining their families during the year.
So far as these numerous and minute, not to say in many respects hypercritical,
contentions are based upon an assumed violation of the uniformity clause, their
want of legal merit is at once apparent, since it is settled that that clause
exacts only a geographical uniformity, and there is not a semblance of ground in
any of the propositions for assuming that a violation of such uniformity is
complained of. Knowlton v. Moore, 178 U. S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep.
747; Patton v. Brady, 184 U. S. 608, 622, 46 L. ed. 713, 720, 22 Sup. Ct. Rep.
493; Flint v. Stone Tracy Co. 220 U. S. 107, 158, 55 L. ed. 389, 416, 31 Sup.
Ct. Rep. 342, Ann. Cas. 1912B, 1312; Billings v. United States, 232 U. S. 261,
282, 58 L. ed. 596, 605, 34 Sup. Ct. Rep. 421.
So far as the due process clause of the 5th Amendment is relied upon, it
suffices to say that there is no basis for such reliance, since it is equally
well settled that such clause is not a limitation upon the taxing power
conferred upon Congress by the Constitution; in other words, that the
Constitution does not conflict with itself by conferring, upon the one hand, a
taxing power, and taking the same power away, on the other, by the limitations
of the due process clause. Treat v. White, 181 U. S. 264, 45 L. ed. 853, 21 Sup.
Ct. Rep. 611; Patton v. Brady, 184 U. S. 608, 46 L. ed. 713, 22 Sup. Ct. Rep.
493; McCray v. United States, 195 U. S. 27, 61, 49 L. ed. 78, 97, 24 Sup. Ct.
Rep. 769, 1 Ann. Cas. 561; Flint v. Stone Tracy Co. 220 U. S. 107, 158, 55 L.
ed. 389, 416, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912B, 1312; Billings v. United
States, 232 U. S. 261, 282, 58 L. ed. 596, 605, 34 Sup. Ct. Rep. 421.
And no change in the situation here would arise even if it be conceded, as we
think it must be, that this doctrine would have no application in a case where,
although there was a seeming exercise of the taxing power, the act complained of
was so arbitrary as to constrain to the conclusion that it was not the exertion
of taxation, but a confiscation of property; that is, a taking of the same
in violation of the 5th Amendment; or, what is equivalent thereto, was so
wanting in basis for classification as to produce such a gross and patent
inequality as to inevitably lead to the same conclusion. We say this because
none of the propositions relied upon in the remotest degree present such
questions. It is true that it is elaborately insisted that although there be no
express constitutional provision prohibiting it, the progressive feature of the
tax causes it to transcend the conception of all taxation and to be a mere
arbitrary abuse of power which must be treated as wanting in due process. But
the proposition disregards the fact that in the very early history of the
government a progressive tax was imposed by Congress, and that such authority
was exerted in some, if not all, of the various income taxes enacted prior to
1894 to which we have previously adverted. And over and above all this the
contention but disregards the further fact that its absolute want of foundation
in reason was plainly pointed out in Knowlton v. Moore, 178 U. S. 41, 44 L. ed.
969, 20 Sup. Ct. Rep. 747, and the right to urge it was necessarily foreclosed
by the ruling in that case made. In this situation it is, of course, superfluous
to say that arguments as to the expediency of levying such taxes, or of the
economic mistake or wrong involved in their imposition, are beyond judicial
cognizance. Besides this demonstration of the want of merit in the contention
based upon the progressive feature of the tax, the error in the others is
equally well established either by prior decisions or by the adequate bases for
classification which are apparent on the face of the assailed provisions; that
is, the distinction between individuals and corporations, the difference between
various kinds of corporations, etc., etc. Ibid.; Flint v. Stone Tracy Co. 220 U.
S. 107, 158, 55 L. ed. 389, 416, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912B, 1312;
Billings v. United States, 232 U. S. 261, 282, 58 L. ed. 596, 605, 34 Sup. Ct.
Rep. 421; First Nat. Bank v. Kentucky, 9 Wall. 353, 19 L. ed. 701; National Safe
Deposit Co. v. Stead, 232 U. S. 58, 70, 58 L. ed. 504, 510, 34 Sup. Ct.
Rep. 209.
In fact, comprehensively surveying all the contentions relied upon, aside from
the erroneous construction of the Amendment which we have previously disposed
of, we cannot escape the conclusion that they all rest upon the mistaken theory
that although there be differences between the subjects taxed, to differently
tax them transcends the limit of taxation and amounts to a want of due process,
and that where a tax levied is believed by one who resists its enforcement to be
wanting in wisdom and to operate injustice, from that fact in the nature of
things there arises a want of due process of law and a resulting authority in
the judiciary to exceed its powers and correct what is assumed to be mistaken or
unwise exertions by the legislative authority of its lawful powers, even
although there be no semblance of warrant in the Constitution for so doing.
We have not referred to a contention that because certain administrative powers
to enforce the act were conferred by the statute upon the Secretary of the
Treasury, therefore it was void as unwarrantedly delegating legislative
authority, because we think to state the proposition is to answer it. Marshall
Field & Co. v. Clark, 143 U. S. 649, 36 L. ed. 294, 12 Sup. Ct. Rep. 495;
Buttfield v. Stranahan, 192 U. S. 470, 496, 48 L. ed. 525, 535, 24 Sup. Ct. Rep.
349; Oceanic Steam Nav. Co. v. Stranahan, 214 U. S. 320, 53 L. ed. 1013, 29 Sup.
Ct. Rep. 671.
Affirmed.
Mr. Justice McReynolds took no part in the consideration and decision of this
case.