Admitting that this act taxes the income of property irrespective of its source, still we cannot doubt that such a tax is necessarily a direct tax in the meaning of the Constitution. At the time the Constitution was framed and adopted, under the systems of direct taxation of many of the states, taxes were laid on incomes from professions, business, or employments, as well as from "offices and places of profit"; but if it were the fact that there had been then no income tax law, such as this, it would not be of controlling importance. A direct tax cannot be taken out of the constitutional rule because the particular tax did not exist at the time the rule was prescribed. As Chief Justice Marshall said in the Dartmouth College case: "It is not enough to say that this particular case was not in the mind 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 operation likewise, unless there be something in the literal construction 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." 4 Wheat, 518, 644. Being direct, and therefore to be laid by apportionment, is there any real difficulty in doing so? Cannot Congress, if the necessity exist of raising thirty, forty, or any other number of million dollars for the support of the government, in addition to the revenue from duties, imposts, and excises, apportion the quota of each state upon the basis of the census, and thus advise it of the payment which must be made, and proceed to assess that amount on all the real and personal property and the income of all persons in the state, and collect the same if the state does not in the meantime assume and pay its quota and collect the amount according to its own system and in its own way? Cannot Congress do this, as respects either or all these subjects of taxation, and deal with each in such manner as might be deemed expedient, as indeed was done in the act of July 14, 1798, c. 75, I Stat. 597? Inconveniences might possibly attend the levy of an income tax, notwithstanding the listing of receipts, when adjusted, furnishes its own valuation; but that it is apportionable is hardly denied, although it is asserted that it would operate so unequally as to be undesirable. We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such. Being of opinion that so much of the sections of this law as lays a tax on income from real and personal property is invalid, we are brought to the question of the effect of that conclusion upon these sections as a whole. It is elementary that the same statute may be in part constitutional and in part unconstitutional, and if the parts are wholly independent of each other, that which is constitutional may stand while that which is unconstitutional will be rejected. And in the case before us there is no question as to the validity of this act, except sections twenty-seven to thirty-seven, inclusive, which relate to the subject which has been under discussion; and as to them, we think the rule laid down by Chief Justice Shaw in Warren v. Charlestown, 2 Gray, 84, is applicable, that if the different parts "are so mutually connected with and dependent on each other, as conditions, considerations, or compensations for each other, as to warrant a belief that the legisla ture intended them as a whole, and that, if all could not be carried into effect, the legislature would not pass the residue independently, and some parts are unconstitutional, all the provisions which are thus dependent, conditional, or connected, must fall with them." According to the census, the true valuation of real and personal property in the United States in 1890 was $65,037,091,197, of which real estate, with improvements thereon, made up $39,544,544,333. Of course, from the latter must be deducted, in applying these sections, all unproductive property and all property whose net yield does not exceed $4000; but, even with such deductions, it is evident that the income from realty formed a vital part of the scheme for taxation embodied therein. If that be stricken out, and also the income from all invested personal property, bonds, stocks, investments of all kinds, it is obvious that by far the largest part of the anticipated revenue would be eliminated, and this would leave the burden of the tax to be borne by professions, trades, employments, or vocations; and in that way, what was intended as a tax on capital would remain in substance a tax on occupations and labor. We cannot believe that such was the intention of Congress. We do not mean to say that an act laying by apportionment a direct tax on all real estate and personal property, or the income thereof, might not also lay excise taxes on business, privileges, employments, and vocations. But this is not such an act; and the scheme must be considered as a whole. Being invalid as to the greater part, and falling, as the tax would if any part were held valid, in a direction which could not have been contemplated except in connection with the taxation considered as an entirety, we are constrained to conclude that sections twenty-seven to thirty-seven, inclusive, of the act, which became a law without the signature of the President, on August 28, 1894, are wholly inoperative and void. Our conclusions may, therefore, be summed up as follows: First. We adhere to the opinion already announced, that taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes. Second. We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes. Third. The tax imposed by sections twenty-seven to thirtyseven, inclusive, of the act of 1894, so far as it falls on the income of real estate and of personal property, being a direct tax within the meaning of the Constitution, and therefore unconstitutional and void because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid. 49. The History of Federal Direct Taxes. The income-tax decision of 1895 makes it important for the student of federal taxation to study the history of the so-called direct taxes which Congress has, upon a few occasions, apportioned among the several states according to the rule prescribed by the Constitution. The essential facts are as follows:1 Five years after the new government was established under the Constitution, the necessary expenditures of the United States had increased to such an extent that it was perceived by the best financiers that indirect taxation ought to be supplemented by other revenues. A direct tax was proposed in 1794 and in 1796, but Congress did not come to a decision until 1798. One of the reasons assigned for the reluctance to pass such a measure was the inequality and injustice of the constitutional requirement. The act of 1798 apportioned among the states a direct tax of $2,000,000. This was assessed upon dwellinghouses, lands, and slaves, and was collected by federal officers, without reference to state authorities. The tax was to be paid in 1800, but only $734,000 was raised in that year. In 1801 the collections amounted to $534,000 and in 1803 $207,000 was paid in. Thus, less than three quarters of the tax was raised in three years. Small payments dribbled into the treasury until 1813, when $238,000 still remained uncollected. The amount of the tax had been extremely small, when compared with the apparent needs of the government in 1798, but the difficulties of collection rendered it still more insignificant as a source of revenue. It will be seen that, if other imposts had been equally "efficacious to serve the needs of the general government," the United States would have been reduced to practical bankruptcy. Congress did not attempt to levy another direct tax until the country became involved in the second war with Great Britain. Then the blockade of our ports caused the revenue from customs duties to fall off so heavily that internal taxes became absolutely necessary. So in 1813, Congress imposed, among 1 The Origin and Effect of the Direct Tax Clause, by C. J. Bullock. Reprinted from the Political Science Quarterly, XV, 470 et seq. other taxes, a direct levy of $3,000,000 upon the states. This was assessed upon lands, houses, and slaves, but the states were allowed to assume their quotas and collect the money for the United States by means of their own taxes. Seven states availed themselves of this privilege, and in the other eleven the tax was collected by the federal government. This was a most favorable opportunity for proving the efficacy of direct taxes apportioned in the constitutional manner. The emergency was alarming, the necessities of the federal treasury were perfectly clear, and no one could deny the propriety of attempting to collect the small amount of money called for under the law. The result was a deficiency of nearly $800,000 out of the total levy of $3,000,000 for the year 1814. Congress felt obliged to establish, in 1815, an annual direct tax of $6,000,000. But this measure was repealed in 1816, when, however, a tax of $3,000,000 was required for that year. These later acts differed in no essential feature from the law of 1813. The amounts required had been as follows: $3,000,000 by the act of 1813, $6,000,000 by the act of 1815, and $3,000,000 by the act of 1816. By the close of the fiscal year. 1817, the payments had amounted to $10,470,000. Small collections continued until the year 1839, when the total receipts had risen to $10,984,000. The efficacy of this power of apportioned taxes can be judged from the fact that, during the years 1814, 1815, 1816, and 1817, when the returns were largest, direct taxes upon property had yielded only $10,470,000 out of a total of $100,486,000 which the government had drawn from the people by taxation. Worse even than the failure of these direct taxes for purposes of revenue were the hardships caused by their unequal assessment. Congress made no further attempts to use this efficacious power until the nation was convulsed in the throes of a life and death struggle with domestic insurrection. In the first war revenue act of 1861, there was a provision for an annual direct tax of $20,000,000. This followed closely the lines laid down by the laws of 1813 and 1815. It was assessed upon lands and dwelling-houses, and the states were allowed to assume their quotas, if they should prefer to do so. The seceding states were included in the apportionment, so that the loyal states were asked for only $15,000,000. This was a very small amount, |