which the United States was pledged by the Constitution to maintain in every State; (2) that "the power to tax involved the power to destroy"; (3) that the tax invaded the field reserved to the States by the tenth amendment. Rendered as it was near the close of the reconstruction period, during which Congress had ridden roughshod over the most sacred pretensions of State sovereignty," the decision is easily explicable, especially when we bear in mind the constant solicitation to which the Supreme Court is always exposed to adopt the rôle of "savior of society "; but these are circumstances which can hardly justify the decision as a rule of law. Would it ever occur to "most people not lawyers" (the expression is Justice Holmes's; see 252 U. S. 220) that the republican form of government connotes the elevation of an official class above the common burdens of citizenship? Nor does the maxim that "the power to tax involves the power to destroy seem particularly applicable to a situation in which its realization would carry with it the destruction of everybody's income. But not only was the court's invocation of the guaranty of a republican form of government extravagantly irrelevant to the actual facts before it, it was also technically unallowable, for the court has said repeatedly that it is not for itself but for Congress to say what are the requisites of such a government, that this is "a political question." (Luther v. Borden, 7 How. 1; Pacific States T. & T. Co. v. Oregon, 223 U. S. 118.)

Justice Nelson's chief reliance, however, is upon "the reserved rights" of the States, recognized in the tenth amendment; but it does not seem on the whole to be better placed than on the other arguments just reviewed. He contends, in brief, that the right to establish and maintain a judicial department is an "original," "inherent," "reserved" power of a State, "never parted with, and as to which the supremacy" of the National Government "does not exist," that "in respect to the reserved powers, the State is as sovereign and independent as the General Government." Virginia had made the same argument half a century earlier and with much better reason in Cohens v. Virginia (6 Wheat. 264; see also Justice Story's opinion in Martin v. Hunter's Lessee, 1 Wheat. 304) and had been answered that as to the purposes of the Union the States, are not sovereign but subordinate. Moreover, if the supremacy of the National Government does not exist as to the reserved powers of the States, as to what powers does it exist? Modern constitutional law certainly lends Justice Nelson's logic small support. For if the reserved power of a State to establish courts can prevent the incidental operation of an otherwise constitutional tax of the National Government, what is to be said of a tax levied upon a privilege granted by the State in the exercise also of powers indubitably reserved to it (Flint v. Stone Tracy Co., 220 U. S. 107, sustaining a tax measured by net profits on the privilege of doing business as a corporation); or of a direct invasion of the reserved power of a State in the regulation of local transportation? (The Shreveport Case, 234 U. S. 342; Railroad Commission v. C., B. & Q. Co., 257 U. S. 563.)

Yet both these assertions of national power have been sustained within recent years, Furthermore, even though it be conceded that the power to maintain a judiciary is a reserved power of so peculiarly sacrosanct a character as to set limits to the operation of otherwise constitutional acts of the National Government, yet it would remain to be shown that this reserved power comprised the further power of rendering immune from national taxation the salaries paid the State's judges and already in their pockets. Recent decisions do not tend to support such far-fetched theories of the incidence of taxation (a tax on income two-thirds of which was derived from export trade is valid, notwithstanding the constitutional prohibition of a tax on "articles exported from any State" (Article I, sec. 9, par. 5), Peck & Co. v. Lowe, 247 U. S. 165; also, a tax by a State on the profits of a company though these were derived in large part from interstate commerce, United States Glue Co. v. Oak Creek, ibid. 321; also, State and municipal bonds held by a decedent may be validly included in the net value of an estate upon the transfer of which the estate tax imposed by the act of September 8, 1916, is assessed, Greiner v. Lewellyn. 258 U. S. 384. Finally, by New York v. Law, decided April 30 last, a tax on the income from a mortgage is not a tax on the mortgage itself within the sense of a law exempting the mortgage from taration)-far-fetched and, as Doctor Johnson would have added, worth the fetching." For all which reasons the doctrine of Collector v. Day must to-day be regarded as obsolete; and the same, of course, must also be said of the extension of that doctrine in Pollock v. The Farmers' Loan & Trust Co. (157 U. S. 429; 158 U. S. 601) to incomes from State and municipal bonds. A special tax on such incomes would fail for vicious classification (see the dicta in Brushaber v. Union Pacific R. R. Co., 240 U. S. 1; Bell's Gap R. R. Co. v. Penna. 134 U. S. 232; Connolly v. Union Sewer Pipe Co., 184 U. S. 540; and other cases) perhaps as not a tax at all (Bailey v. Drexel Furniture Co., 259 U. S. 20; Hill v. Wallace, ibid. 44); but an otherwise constitutional tax can not in logic or common sense be denied operation upon such incomes; and this would be so even if the sixteenth amendment had never become a part of the Constitution.

LXV-128

"not

III.

The sixteenth amendment reads as follows: "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 well understood that the purpose of this amendment was to overcome in whole or in part the effect of the Supreme Court's decision in Pollock v. The Farmers' Loan & Trust Co. (see note 20, supra, but whether in whole or in part only is disputed. In this case the Supreme Court ruled: First, that incomes derived from property were "direct taxes" and leviable only by the method of apportionment; and secondly, as we have just noted, that incomes derived from State and municipal bonds were not subject to national taxation at all. The question with which we are concerned, therefore, is this: Does the sixteenth amendment overthrow both branches of this decision or only the first? Or to put the issue a little more definitely: What is the force and effect of the phrase "from whatever source derived " in this context? Does it permit Congress to tax all kinds of income without resort to apportionment, or does it merely permit Congress to tax without resort to apportionment such incomes as were previously subject to national taxation?

Anterior to Evans v. Gore (253 U. S. 245), which was decided four years ago and which receives special consideration further along in this paper, the court, or justices speaking for it, had uttered a number of dicta which have been assumed to sustain the narrower view of the amendment. Thus in Brushaber v. Union Pacific R. R. Co. (see note 21, supra), which was decided shortly after the amendment was added to the Constitution, we find Chief Justice White declaring 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 "-a view of the matter which he asserts shortly afterwards to have been settled" by the previous utterance. (The Baltic Mining Co. v. Stanton, 240 U. S. 103.) And to the same effect is the language of Justice Pitney in the Stock Divldend case. (Eisner v. Macomber, 252 U. S. 189.) "As repeatedly held, this-the sixteenth amendment-did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the States of taxes laid on income.” This was a five-to-four decision, but meantime, in Peek & Co. v. Lowe (cited in note 19, supra), Justice Van Devanter, speaking for a unanimous court, had reiterated the same proposition.

But now just what is this proposition? The present writer submits that it is neither more nor less than the statement, evident on the face of it, that the sixteenth amendment does not authorize Congress to tax without apportionment anything except incomes. Let it be considered what were the precise questions before the court in the two more important of these cases. In the Brushaber case it was whether an income which had accrued since March 1, 1913, could be reached retroactively by a tax enacted the subsequent August, it being contended that the income had now become capital; while in the stock dividend case the question was whether such a dividend was to be regarded as income in the hands of stockholders or merely as evidence of capital holding. The former question was answered adversely to the taxpayer concerned, the latter favorably; but in both instances it was obviously proper for the court to clarify its position by stating the self-evident proposition offered above. (The Peck & Co. v. Lowe and Baltic Mining Co. v. Stanton, as in the Brushaber case, the exertion of the national taxing power questioned was sustained independently of the sixteenth amendment.)

On the other hand, interpret the statements above quoted as signifying that the amendment still leaves outstanding certain limitations on Congress's power of income taxation, and what results? This, at least: That the Supreme Court is chargeable with having "settled " by the mere process of heaping obiter dictum upon obiter dictum a most important question of constitutional power, which was not remotely involved in the cases before it, on which, so far as the published briefs of attorneys show, there was no argument worthy of mention, and in justification of its determination of which it condescended to utter not one word of proof, whether of law or of fact.

That the Supreme Court has no authority "to pass abstract opinions upon the constitutionality of acts of Congress has been repeatedly stated by the court itself (see Justice Sutherland's opinion in Massachusetts v. Mellon, decided June 4 last, and cases there cited); that it bas no right to anticipate action by Congress by affixing to the Constitution a reading thereof not required in the determination of any question before it would seem to be even clearer. Respect for the court, if nothing else, forbids our attributing to it the intention of prejudging the interpretation of the sixteenth amendment unnecessarily. Instead, we should recall the maxim stated by Chief Justice Marshall and reiterated many times since: "It is a maxim not to be disregarded that general expressions in every opinion are to be taken in connection with the case in which those expressions are used. If they

go beyond the case they may be respected, but ought not to control

the judgment in a subsequent suit when the very point is presented for decision." (Cohens v. Virginia, cited note 16, supra.)

But it is insisted that in Evans v. Gore (cited in note 24, supra), which followed the cases just reviewed, "the very point" here under consideration was presented and decided. Is this so? The principal holding of that case was that a United States judge could not, consistently with the provision in Article III of the Constitution; that judges of the United States shall at stated times receive for their services a compensation "which shall not be diminished during their continuance in office," be subjected to a national income tax in respect of his official salary. Confronted with the argument that the sixteenth amendment must be deemed to have authorized such taxation, notwithstanding the language of Article II, the majority, speaking through Justice Van Devanter, said:

"The purpose of the amendment was to eliminate all occasion for such an apportionment because of the source from which the income came a change in no wise affecting the power to tax, but only the mode of exercising it. The message of the President recommending the adoption by Congress of a joint resolution proposing the amendment, the debates on the resolution by which it was proposed, and the public appeals-corresponding to those in the Federalist-- made to secure its ratification, leave no doubt on this point.

*

*

"True, Governor Hughes, of New York, in a message laying the amendment before the legislature of that State for ratification or rejection, expressed some apprehension lest it might be construed as extending the taxing power to income not taxable before; but his message promptly brought forth from statesmen who participated in proposing the amendment such convincing expositions of its purpose, as here stated, that the apprehension was effectively dispelled and ratification followed. "Thus the genesis and words of the amendment unite in showing that it does not extend the taxing power to new or excepted subjects, but merely removes all occasion otherwise existing for an apportionment among the States of taxes laid on income, whether derived from one sources or another."

That these words would have been regarded by the court when it uttered them as concluding the question under discussion in this paper may well be believed. Also, it must be said in fairness to the court that the conclusions stated by Justice Van Devanter rest to some extent on a consideration of the question of the scope of the amendment in the light both of fact and of argument. Nevertheless, I venture to challenge the conclusiveness of the facts brought forward by the court, and also of the assumption, which I am willing to attribute to it, that the question before it involved the broader question of the status, in relation to the amendment, of incomes from State and municipal bonds and of the salaries of State officials; and let us first take up the question of fact.

IV.

As its citations go to prove, the court's chief reliance is upon arguments which were made by Senators Root and BORAH after the amendment had been proposed by Congress but before its ratification. On the other side, the court admits the contrary opinion of Mr. Hughes, then Governor of New York, whose utterance, however, was but one of several of like tenor, as the following quotations show:

"It is to be borne in mind that this is not a mere statute to be construed in the light of constitutional restrictions, express or implied, but a proposed amendment to the Constitution itself, which, if ratified, will be in effect a grant to the Federal Government of the power which it defines. The comprehensive words from whatever source derived,' if taken in their natural sense, would include not only incomes from real and personal property, but also incomes derived from State and municipal securities." (Governor Hughes, of New York.) "Congress could, therefore, tax incomes from State and municipal bonds and could exempt incomes so derived. Senators and Congressmen, being necessarily residents of the States and generally of the municipalities, would not pass a law which would destroy through taxation the credit of their own State and their own municipality." (Governor Gilchrist. of Florida.)

"The objection urged by Governor Hughes does not impress me as being a very substantial or effective one. If it is advisable, upon broad grounds of public policy, for the National Government to subject incomes to taxation, it impresses me as a narrow or technical objection to oppose this amendment for the reason that it does not provide for an exemption of that portion of one's income derived from interest upon State and municipal bonds." (Governor Hadley, of Missouri.)

"The income-tax amendment to the Constitution is broad enough to include a tax on incomes derived from the ownership of State and municipal bonds." (Governor Burke, of North Dakota.)

"The language of the amendment is very broad, and injustice might easily occur unless Congress should be careful in the exercise of the authority conferred upon Congress by this amendment." (Governor Haskell, of Oklahoma.)

Indeed, it seems to me that if the words "from whatever source derived" would leave the amendment ambiguous as to its power to tax incomes from official salaries and from bonds of States and munielpalities, the amendment ought to be opposed by whoever adheres to the

democratic maxim of equality of laws, equality of privileges, and equality of burdens. It is impossible to conceive of any proposition more unfair and more antagonistic to the American idea of equal. ity and the democratic principle of opposition to privilege than an income tax so levied that it would divide the people of the United States into two classes." (Governor Dix, of New York, in his message to the speaker urging him to press the amendment.)

Here, in short, are six gubernatorial utterances made, some in protest against the amendment, some in its favor, but all to the same effect that the amendment would rest Congress with the power to tax incomes from State and municipal bonds-while I have encountered but a single utterance from a like source which is clearly to the contrary effect. Yet, despite these warnings, following these commendations, the amendment was ratified. And in this connection it should be noted that ratification by the pivotal State of New York followed upon the Dix message, not upon the attempted refutation of Governor Hughes. (Of the foregoing quotations, the first five are taken from the Nem York Times and New York World of January 7, 1910. The last is from the Dix Papers (1911), pp. 533-541. The single hostile utterance referred to was that of Governor Noel, of Mississippi (Times, January 6). Governor Harmon, of Ohio, was content to leave the question to Congress, whose members would never pass a law that would cripple

or destroy their States," ibid. Governor Weeks, of Connecticut, who was opposed to the amendment, congratulated Governor Hughes upon the tone of his message" (Times, January 8). Governor Vessey, of South Dakota, is put down as agreeing with Governor Hughes in the Literary Digest of January 15, p. 88. Senator Brown, author of the amendment, declared on the floor of the senate that "Alabama, Oblo, Virginia, New Jersey, and other States have governors who not only favor conferring the power but favor the proposed amendment, which, if adopted, confers the power." (Congressional Record, vol. 45, p. 2245.) For many of these data I am indebted to Mr. Robert A. Mackay, proctor fellow in politics, Princeton University.)

But let us consider the evidence which Justice Van Devanter adduces as to the intention of Congress itself in proposing the amendment. (The evi dence will be found in the following pages of the CONGRESSIONAL RECORD: Vol. 44, pp. 1568-1570. 3344-3345 (President Taft's message), 3376, 3900, 4067, 4105-4121, 4389-4441; vol. 45, pp. 1694-1699 (Mr. BORAH'S speech), 2245-2247 (Senator Brown's views), 2539-2540 (Senator Root's letter to Mr. Davenport, of the New York Senate). He first refers to President Taft's message of June 16, 1909, urging an amendment to the Constitution which should confer the power to levy an income tax without apportionment among the States in proportion to population." This clearly shows that the object which was foremost in the President's mind was to get rid of the rule of apportionment in income taxation; but clearly, too, it throws no light on the question of the proper construction of the very differently worded proposal which was finally adopted. In Congress the ball was started rolling by Senator Brown, of Nebraska, the day following the message. In its original form his proposal gave Congress "power to lay and collect direct taxes on incomes without apportionment"; but when it emerged from the Senate Finance Committee 11 days later it had assumed the shape of the present amendment. Why the change? It would perhaps be difficult to say; but the burden of explaining the change is certainly not on those who contend that it must have had some significance. Nor does the trend of the discussion leading up to the passage of the amendment in either the Senate or the House strengthen the case for tax exemption. For the most part this dealt with political and historical matter which has no bearing on the pres ent question; but it was interlarded with repeated references to the desirability of clothing the National Government with the power to tax incomes effectively, both from the point of view of providing for pos sible emergencies and also from that of equitable taxation.

The resolution of proposal having been passed by the Senate by a vote of 77 to 0, then went to the House, where it was voted by an overwhelming majority on July 28, and thereupon went to the States, with the result that Congress now lost all control over it. Notwithstanding this, when nearly six months later Governor Hughes sent his message to the New York Assembly criticizing the proposal, Senator BORAH introduced a resolution asking the Senate Committee on the Judiciary to report on the soundness of the governor's views and meantime proceeded to develop his own theory. In brief, his argument was this: It could not be the purpose of the clause "from whatever source derived" to vest Congress with additional powers of taxation, since that power was already plenary. The argument is self-contradictory; for if its power of taxation was really plenary, what additional power of the kind was there with which to vest Congress? But as an assertion of fact the statement is merely preposterous, being so far from the truth"-to borrow an expression of Mr. Chesterton's--"as to be exactly the opposite to it." How, then, is such an absurd statement in the mouth of a reputable public man to be explained? One explanation is to be found in Mr. BORAH'S quotation of a number of judicial dicta also asserting the plenitude of Congress's power in respect of taxation. It does not seem to have occurred to him to notice that these dicta take their rise from a period long antecedent

to Collector v. Day and Pollock v. The Farmers' Loan and Trust Company, the decisions in which they thus directly impugn. (The original source of the doctrine of the plenitude of Congress's power of taxation is Hylton v. U. S., 3 Dall. 171 (1796). See also Pao. Ins. Co. v. Soule, 7 Wall. 433. The reiteration of the same doctrine in the Pollock case, which is obviously to be taken in the Pickwicklan sense, is to be accounted for by the anxiety of the court to demonstrate that it was not depriving Congress of the power of income taxation by its holding that a tax on incomes from property was "direct." See Mr. Hubbard's telling criticism in his article on "The sixteenth amendment" in the Harvard Law Review, vol. 33, pp. 794-812.) Nor is his invocation of certain principles of "constitutional construction" pertinent unless he means to imply that these are beyond the reach of constitutional amendment; since, unlike the original grant of power to Congress" to lay and collect taxes," the sixteenth amendment does not employ general terms, but words which are most nicely adjusted to the legal problem to be met-a point which will become clear in a moment.

First and last of the more than 400 Members of Congress who voted to propose the sixteenth amendment I have had brought to my notice utterances of just 8 dealing with Governor Hughes's message. Senators Borah, Bailey, and Root dissented from the message, principally on the argument just examined. Senator Brown, of Nebraska, the reputed author of the amendment, "agreed" with Mr. BORAH but was willing to assume the contrary." Pointing out that no proposals had come to Congress from any State calling for a modified proposal in consequence of Governor Hughes's message, he said: "It does not follow that the amendment should be rejected; on the contrary, it follows that it should be ratified, because under that interpretation all the incomes would be treated alike." That "the man whose income arises from investments in State and municipal bonds should be exempt from the income tax," he continued, was, " on the face of it," a proposition which did not commend itself. "It does not square with the doctrine of equal rights. It is hateful to every sense of justice. It can not be defended in principle, nor can it be used successfully, in my judgment, to defeat the amendment." In short, Governor Hughes's view ought to be the correct one, whether it was or not, and was calculated furthermore to promote the ratification of the amendment. The House Members referred to are on record only in press inteviews. They are Mr. Payne, of New York, who as chairman of the Ways and Means Committee introduced the amendment into the House; Mr. Underwood, of Alabama, leading Democratic member of the same committee; Mr. Walter Smith, of Iowa; and Mr. Sherley, of Kentucky. All of them were inclined to think Mr. Hughes's interpretation the correct one, and that it was probably a good thing that such was the case. Does Justice Van Devanter really think that this evidence supports his conclusions as to the interpretation of the sixteenth amendment? (The N. Y. World, January 7, 1910.) V.

However, the question is not one of fact alone, but of mixed law and fact, so to say. Thus it is a maxim which has been frequently applied by the court, that the Constitution does not contain useless language. (See the Constitution of the. U S. Annotated, George Gordon Payne, editor: Government Printing Office, 1923; at pages 45-46 and in cases there cited. The rule is directly applied in Calder v. Bull, 3 Dall. 386; and in a number of cases in which the term "due process of law" of the fifth amendment is compared with the same clause of the fourteenth amendment. See Davidson v. N. O., 96 U. S. 97; Hurtado v. Calif., 110 U. S. 516; etc.) But unless the phrase "from whatever source derived" has the operation which Mr. Hughes claimed for it, what operation does it have?

Mr. Root sought to meet this difficulty by urging that the phrase in question was "introduced" in order to make it clear that incomes from property as well as those from personal service were meant to be covered by the amendment. The answer is obvious. The decision in the Pollock case admits Congress's right to tax the latter kind of incomes without apportionment; so Mr. Root's contention boils down to the proposition that notwithstanding its historical relation to the Pollock case the amendment might have had no effect at all-might have been a work of supererogation-had not the phrase "from whatever source derived" been written into it!

A second suggested purpose of the clause may be disposed of just as summarily. This is to be found in Chief Justice White's opinion in the Brushaber case and consists in the theory that it was the purpose of the amendment to classify all taxes on incomes as "indirect" by forbidding consideration of the source from which the incomes are derived. Unquestionably the amendment does forbid the consideration of the source of incomes in connection with their taxation; indeed, as we shall note in a moment, this is a fact of first importance in determining the amendment's true operation. But the notion that the amendment classifies all income taxes as "indirect" in the constitutional sense must to-day, in the light of what was said in Eisner v. Macomber, be abandoned; for it is there clearly implied that taxes on incomes derived from property are still to be considered as "direct," although the necessity for their apportionment is now at an end. (Chief Justice White offers no proof of his singular theory of the pur

pose of the clause, and his argument for his position involves the admission that the decision in the Pollock case was usurpation of power by the court.)

The single application of the phrase that remains is, then, its literal application-the sixteenth amendment says that Congress may tax incomes from whatever source derived," and it means it! The phrase, moreover, was admirably chosen to strike at the very roots of the entire theory of tax exemption, which is that because of their source certain incomes ought to be considered not as private property but as instrumentalities of government. Henceforward such theories are to be discarded, and Congress's power of income taxation is to be defined without regard to the source from which incomes are drawn. In this sense, indeed, the amendment does not extend Congress's power of income taxation; it restores it to its original dimensions, and not by direct regrant but by leveling to its foundations the whole judicially fabricated structure of tax exemption.

But the case for this reading of the sixteenth amendment is still stronger when it is brought into touch with another acknowledged canon of constitutional interpretation. This is the one wherewith Chief Justice Marshall answered the argument in the Dartmouth College case (4 Wheat. 518) that the word contracts" as used in Article I, section 10, of the Constitution, was not intended to embrace the charters of private eleemosynary institutions: "It is not enough to say that this particular case was not in the minds of the convention when the article was framed, nor of the American people when it was adopted. It is necessary to go further and to say that had this particular case been suggested the language would have been so varied as to exclude it, or it would have been made a special exception. The case, being within the words of the rule, must be within its literal operation likewise, unless there be something so obviously absurd or mischievous or repugnant to the general spirit of the instrument as to justify those who expound the Constitution in making it an exception." This maxim has been repeatedly sanctioned by the court, twice in recent cases. (Ozawa v. United States, 260 U. S. 178; United States v. Bhagat Singh Thind, decided February 19, last.) Can it be said that there is any such absurdity or repugnancy to the literal rendering of the sixteenth amendment as to exclude it from the rule just stated? It has already been shown on how frail a foundation the doctrine of tax exemption rests, especially as applied to income taxation, and also how this doctrine operates to defeat what is universally acknowledged to have been a controlling purpose of the sixteenth amendment, to wit, a more equitable distribution of the burden of taxation.

Yet all this is on the assumption that the intention of those who framed and ratified the sixteenth amendment is a consideration which is material to its interpretation. There is, however, a third maximum of constitutional interpretation which renders this assumption extremely doubtful. The point is that the words "from whatever source derived" are so clear in themselves when not approached with preconceptions drawn from the outside that, in the words of Chief Justice Marshall in a similar case, they "neither require nor admit of elucidation." (Wayman v. Southard, 10 Wheat. 1.) The court has repeatedly said that "the construction and application of a provision are not restricted by and to the purpose of its adoption' (Constitution of the United States Annotated. (See note 37, supra), p. 42, and cases there cited); that "it can not be inferred from extrinsic circumstances that a case for which the words provide shall be exempted from its operation" (Op. cit., p. 45, and cases there cited); that-with specific reference to the " commerce clause-" the reasons which may

have caused the framers of the Constitution to repose this power in Congress do not affect or limit the extent of

**

the power itself." (Addystone Pipe & Steel Co. v. United States. 175 U. S. 211. See also Gibbons v. Ogden, 9 Wheat. 1, and Chisholm v. Georgia, 2 Dall. 419.)' In short, the rule would seem to be that when the literal meaning of a constitutional provision is clear, it is not the speculative intention of the authors of the provision but the text itself which governs; and it is submitted that his rule is applicable in the present instance. No more precise wording could have been chosen to convey the power contended for in this paper, while contrariwise it is in the interest of a restrictive application of the words of the amendment only that the problem of their interpretation has been created, as it were, out of the whole cloth. It is truly a case where the interpretative process is resorted to "not to remove an obscurity, but to import one." (Justice Sutherland, in Russell Motor Car Co. v. U. S., decided April 9 last. The opinion cites several cases forbidding resort by a court to legislative debates for extrinsic aid in interpreting a statute: Lapina v. Williams, 232 U. S. 78, 90; Omaha & C. B. Street R. Co. v. I. C. Com's'n, 230 U. S. 324, 333; Standard Oil Co. v. U. S., 221 U. S. 1, 50; United States v. Trans-Mo. Frt. Asso., 166 U. S. 290, 318. The objections to invoking a supposed "intention" of the legislator as interpretative of the law are admirably stated by Malberg, Contributions à la Theorie Générale de VEtat (1920), I, sec. 237. "In order that the will of the legislator become law, it must take form in an official text adopted in solemn form. cedure which consists in imputing intentions to the legislator by taking account of the state of mind, the customs, the circumstances which

That pro

VI.

We now return to the second point raised above with respect to the decision in Evans v. Gore (see note 24, supra), namely, whether it involves the broader question of the status, in relation to the sixteenth amendment, of incomes from State and municipal bonds and the salaries of State officials. The point of view, however, from which this query is put should be made clear. There is no anxiety to preserve the decision in Evans v. Gore, which fully as much as Collector v. Day (cited in note 13, supra) illustrates what curious results the judicial mind can sometimes achieve when it chooses to let itself go. The proposition for which Evans v. Gore stands is that a certain category of national judges should not be required to pay on their salaries the same taxes to the National Government as other people would on a like income, although they receive the same protection from the Government; that while as to ordinary incomes a payment of taxes is a use thereof, as to certain judicial salaries it is a forced surrender, a confiscation. But if to collect a general income tax on the salary of a judge in office when the tax was enacted is to diminish such salary in the sense forbidden by Article III, then to repeal or even to reduce an income tax reaching the salary of a President in office would be to increase such salary contrary to Article II, and, furthermore, to repeal or to reduce the tax as to any part of the income of the President in such a case would be another "emolument from the United States," also forbidden by Article II. In other words, as to everybody else in the country an income tax can be repealed or reduced at any time, but as to a President taking office under the act it must be collected to the end of his term and not only on his salary but on all his income and at the same rate. Furthermore, in failing to note any distinction between a discriminatory and nondiscriminatory taxation of judicial salaries the decision actually exposes the salaries of future judicial incumbents to special exactions. For while the "judicial independence" of judges in office at any particular time is bulwarked behind this decision, that of judges to be is still left to the mercy of Congress and their own fortitude.

But while this decision, for the reason stated, can hardly claim our applause, it is nevertheless, until it is set aside by the court, a fact to be reckoned with, and so the question of its scope becomes one of importance. The precise inquiry is, therefore, whether the question decided in Evans v. Gore can be distinguished logically from the question which would be raised by the application of a national income tax to incomes from State and municipal bonds and to State official salaries. I submit that it can be, for two reasons: In the first place, while the decision in Evans v. Gore is based on a clause of the written Constitution, no such clause can be invoked in behalf of the incomes just mentioned. Be it noted that the court does not claim that national judicial salaries are inherently exempt from national taxation; and, indeed, as we have seen, such salaries are subject to an income tax if the tax is in existence when the incumbent takes office. Thus, notwithstanding the importance of the principle of the separation of powers in our system, as well as of the principle of judicial independence, yet neither of these principles, nor both together, were regarded by the framers of the Constitution as sufficient to secure the exemption enforced in Evans v. Gore, but that exemption had, on the contrary, to be stipulated for in the written instrument itself. The exemption of incomes from State and municipal bonds and of State official salaries from national income taxation is, on the other hand, merely a deduction, and a far-fetched one at that, from theories external to the Constitution. The question is surely prompted, Why, if implication was insufficient in the one case, should it be supposed to suffice in the other?

The second difference between the case decided and the one suggested is even more cogent, though less obvious. It can be put in this way: That whereas the exemption which judicial salaries receive from the Constitution has no reference to the source of the salary but, on the contrary, is extended to the recipient thereof, the exemption which is claimed for incomes from State and municipal bonds-and I should say the same thing of State official salaries-is claimed solely on a consideration of the source of such incomes and totally without regard to the deserts or necessities of the recipients. Or to put it slightly dif ferently, whereas certain judicial salaries are protected as such by Article III of the Constitution, income derived from State and munici pal bonds is sought to be protected despite its being income by considering its source. But if the contention of the present writer be accepted, as it must be at this point at least for the purpose of argument, consideration of source is precisely what the sixteenth amendment

taxing

incomes. So, conceding the point decided in Evans v. Gore to have been correctly decided, namely, that the tax there involved was a diminution of judicial salaries in the sense of Article III, the sixteenth amendment had absolutely no bearing on the case; not, however, because the amendment does not purport to enlarge Congress's power of taxing income, but because the criterion which had previously restricted this power and which is now repealed by the amendment does not appear in Article III. It follows of necessity that what was said in Evans v. Gore about the sixteenth amendment was pure obiter dictum and without any legal weight whatsoever.

To summarize: (1) Congress has the power to permit State taxation of national securities by nondiscriminatory taxes. (2) On correct theory, it has always had the power to tax incomes from State and municipal securities by a general income tax. (3) The sixteenth amend ment restores that power by striking down the judicial theory whereby such incomes came to be exempted. Congress may tax incomes from whatever source derived. The words of the amendment are perfectly explicit, and the sense of them could not be made clearer by a dozen constitutional amendments. What is needed, therefore, is not further tinkering with the Constitution but an act of Congress assertive of its present powers. Nor is there any judicial decision interpretative of the sixteenth amendment which stands in the way of such an assertion of power. Yet even if it were otherwise, that should not deter Congress from taking the proper steps to secure a reconsideration of so important a question. In the words of the historian of the Constitution, "It is the Constitution which is the law, and not even the past decisions of the court upon it To the decision of an underlying question of constitutional law no * * finality attaches. To endure it must be right." (Bancroft, Works, IV, 549, as quoted by F. J. Stimson, the American Constitution, etc., p. 29. See also to the same effect Bancroft's History (author's last revision), VI, 350. See further to the same effect George Ticknor Curtis, Constitutional History of the United States (N. Y., 1897), II, 69-70; also Chief Justice Taney's words in The Genessee Chief, 12 Hon. 443, overruling The Thomas Jefferson, 10 Wheat. 448: "We are convinced that if we follow it we follow an erroneous decision, and the great importance of the question could not have been foreseen.")

It only remains to indicate briefly the form that Congress's action should take. This action would be based on the fundamental premise that public securities in the hands of private persons are private property and that the income from such securities is private income. On the one hand, therefore, Congress should subject all future issues of national securities, as well as the incomes therefrom, to the unimpeded operation of the general, nondiscriminatory tax laws of the States, and, on the other hand, claim a like operation for the national income tax upon the incomes from all future State and municipal issues. That is to say, the act should be reciprocal as between the National Government and the States, and it should respect existing vested rights and moral obligations. To be sure, it may be argued that expectations growing out of an attempt to evade taxation are not entitled to much respect, yet the answer is plain: the evasion was one which the law itself allowed and, indeed, promoted, wherefore it would be most imprudent to ask the court to disappoint such expectations. And, anyway, there is no need to cry over spilt milk if only we can make sure that no more milk will be spilt. (An additional difficulty in the way of maintaining Collector v. Day to day should have been noticed under sec. II supra. Green v. Frasier, 253 U. 8. 233, makes it clear that States may to-day borrow money to an almost unlimited extent for purposes which were nongovernmental in 1789. Yet by South Carolina v. United States, 199 U. S. 437, a State is not entitled to claim exemption from national taxation in the discharge of such functions. On this ground alone the right of holders of State aud municipal bonds to be exempt as to such holdings from the national income tax becomes most questionable in many cases. And, generally speaking, it seems clear that the court can not profess to uphold both Collector v. Day and South Carolina v. United States indefinitely.)

The letter from Mr. Frierson is personal, but it is of such importance in a public way that I do not hesitate to use it without his knowledge that it was ever to appear in print.

It is a brief, cautious, lawyerlike statement of his own views, and when made in connection with the brief of Professor Corwin, who contends that Evans v. Gore has no bearing on the present question, the statement of Mr. Frierson that he would have but little doubt but for that case that the securities could be included in taxable income, is important:

Hon. JAMES M. FREAR,

CHATTANOOGA, TENN., December 20, 1923.

House of Representatives, Washington, D. C. DEAR MR. FREAR: I am in receipt of your letter of December 17, evidently referring to a conversation which I had recently with Senator SHIELDS. I did not, however, state that the case of Evans v. Gore is authority for the statement that so-called tax-free securities can not be reached for income-tax purposes. I did say that while

I have not given the subject serious consideration, if my argument in Evans v. Gore had been successful and the dissenting opinion of Mr. Justice Holmes in that case had been the opinion of the court, I would have little doubt that the income from such securities could be included in taxable income. The majority opinion in that case, however, makes the question more doubtful.

So far as obligations of the Federal Government which may be issued in the future are concerned, there can be no doubt of the power of Congress to make income from them taxable. The question, I presume, in which you are interested is the power of Congress to treat State, county, and municipal bonds, or rather the income from them, as taxable income.

Of course, it is settled that bouds of this kind as such can not be taxed by the Federal Government, and I think it is equally true that the income from them as such can not be taxed.

There are, however, two recent decisions of the Supreme Court which I used in Evans v. Gore and which I think have established a principal which may make it possible for Congress in levying a general income tax to require income from such bonds to be included in gross income as the basis for arriving at the taxable net income. I refer to U. S. Glue Co. v. Oak Creek, 247 U. S., 321, and Peck & Co. v. Lowe, 247 U. S., 165. The first of these cases involved a State income tax, and the question was whether in computing net income profits derived from transactions in interstate commerce could be included. The second involved the question whether in computing taxable income under the Federal statutes profits derived from the business of exporting goods could be included.

Of course, it was clear that no State could levy a tax which would be a burden on or amount to a regulation of interstate commerce. And it was equally clear that Congress was expressly prohibited by the Constitution from taxing exports. The court, however, held in these cases that when the State taxed merely the net income of a person or corporation the net profit derived from interestate commerce constituted a part of the taxable income, and that ineluding net profits derived from the business of exporting as a part of the taxable income for Federal purposes was not a violation of the provision against taxing exports. In the latter case the court said, speaking of the tax: "It is not laid on income from exportation because of its source, or in a discriminative way, but just as it is laid on other income. The words of the act arenet income arising or accruing from all sources.' There is no discrimination. At most, exportation is affected only indirectly and remotely."

I

con

The principle thus established seems to be that a general tax upon net income is not a tax upon the sources from which particular parts of the income are derived. I thought that this principal controlled Evans v. Gore. If the court had agreed with me, I would have little doubt that it applied to income derived from so-called tax-free securities. I am, however, in some doubt as to whether this conclusion follows in view of the decision in that case. I am not convinced, however, that that decision settles the question against the Government. think it can be distinguished from the question you are now sidering. In Gore v. Evans the specific provision of the Constitution invoked was that which forbids the diminution of a judge's compensation during his term. The court reached the conclusion that to tax a judge's salary, even treating it as a part of his net income when the tax levied by the Government which paid his salary, was a substantial diminution of the salary. Having reached this conclusion, Mr. Justice Van Devanter distinguished Gore v. Evans from the cases I have referred to, upon the ground that the Constitution expressly forbids such a diminution.

The Constitution contains no express mention of State or municipal securities. As a matter of construction, it has long been settled that securities of this kind, as such, are not taxable by the Federal Government, because the Constitution does not permit the Federal Government to tax the governmental instrumentalities of the States, and neither does the Constitution contain any reference to the power of the States to tax interstate commerce. The conclusion that this can not be done was reached through a construction of the clause giving Congress the power to regulate interstate commerce. There is an express prohibition against the taxing of exports, but, as I have stated, the court has held that the taxing of all of a man's net income which includes some income derived from export business is not such a tax as violates this provision. I can not see any reason why the same principle does not apply to income derived from State and municipal bonds. The difficulty seems to be in reconciling this conclusion with the decision in Evans v. Gore. The doubt in my mind is whether the court would hold income from such securities falls in the class of cases controlled by the two cases I have referred to or by Gore v. Evans.

As stated above, I have given this question no serious consideration, but have merely given you the impressions made on my mind when I was preparing the argument in Evans v. Gore. I think, however, that the question is one well worthy of careful consideration. Yours truly,

WM. L. FRIERSON.

The foregoing opinions are offered on the constitutional question involved, and certainly coming from the sources they do create more than a doubt as to the constitutionality of a proposal for Congress to tax directly these incomes from whatever source derived. I concede that the Supreme Court has strongly leaned against what the dissenting opinion in the stock dividend case (Macomber, 252 U. S.) declared to be the clear intention of the people when adopting the sixteenth amendment. I also concede that some of the distinguished dissenters from that opinion unfortunately have left the scene of their labors and position they so highly honored, and that their successors may be of different mind. Judges are not essentially different in temperament or ability from those who stand before them on the opposite side of the bench, and with that belief in mind I have proposed a bill that will reach the same end as the proposed Green constitutional amendment, but it is of far wider scope, of more just application, and of immediate benefit by covering income from securities now outstanding, as follows:

A bill (H. R. 4524) to tax the net income on municipal and State securities.

Be it enacted, etc., That section 200 of the general provisions of the income tax law is hereby amended by providing

"Subdivision 6. The term 'taxable incomes, from whatever source derived,' shall include net incomes received from State and municipal securities and shall be laid and collected the same as all other taxes." SEC. 2. This act shall not be held unconstitutional or vold by the Supreme Court without the concurrence of at least all but one of the judges and shall remain in full force and effect notwithstanding any decision by any inferior court rendered prior to final determination by the Supreme Court.

It is proper to give additional reasons for asking that the same rule employed by the Ohio constitution, which is embodied in the bill, shall be the rule for the Supreme Court on this vastly important question, where the court has been so regularly divided.

I believe where Congress has passed an act after long and careful consideration and that act has been signed by the President under the advice of the Attorney General and that act is then embodied into a constitutional amendment approved by the legislatures of 36 States, and thereafter four judges say of their five brethren, as in the Macomber case, that the finding of the five in overturning and emasculating the constitutional amendment is not a "decent respect due the wisdom, the integrity, and the patriotism of the legislative body by which any law is passed, unless proved beyond a reasonable doubt," that such dissenting opinion from such high source ought to govern Congress in its effort to prevent another more disastrous expurgation of the same amendment. I do not go further than the dissenting judges, as shown by my remarks in the House January 27, 1923, when discussing "seeming laws" enacted by Congress. I briefly quote from such remarks in support of the proposed substitute numbered H. R. 4524.

I offer a few words for those who find fault first more especially with a court decision that by five judges to four first set aside the income tax law passed by Congress. Thereafter when Congress and the country after long delay and arduous effort secured the sixteenth amendment wherewith to overrule the court's previous decision rendered by one overbalancing judge, the court again by another five-to-four decision set at naught the constitutional amendment by emasculating its purpose, so far as stock dividends were concerned. To use the language in that case of a dissenting opinion by Justice Holmes, one of the ablest judges in the country, in which Justice Day concurred:

The known purpose of this amendment was to get rid of nice questions as to what might be direct taxes, and I can not doubt that most people not lawyers would suppose when they voted for it that they put the question like the present at rest. I am of the opinion that the amendment justifies the tax.

Again I submit further judicial criticism of this decision thus in effect setting aside a constitutional amendment when, in the language of Justice Brandeis and Justice Clark, in the same case we have their judicial opinions as follows:

If stock dividends representing profits are held exempt from taxation under the sixteenth amendment, the owners of the most successful businesses in America will be able to escape taxation on a large part of what is actually their income. So far as their profits are represented by stock received as dividends, they will pay these taxes not upon their income but only upon the income of their income. That such a result