The Collector v. Day

• Decision Date: 01 December 1870
• Citation: 78 U.S. 113,11 Wall. 113,20 L.Ed. 122
• Parties: THE COLLECTOR v. DAY
• Court: U.S. Supreme Court

78 U.S. 113

20 L.Ed. 122

11 Wall. 113

THE COLLECTOR v. DAY.

December Term, 1870

ERROR to the Circuit Court for the District of Massachusetts; the case being thus:

The Constitution of the United States ordains that

'Congress shall have power to lay and collect taxes, duties imposts, and excises, to pay the debts and provide for the common defence and general welfare of the United States; but all duties, imposts, and excises, shall be uniform throughout the United States.'

And an amendment to it, that

'The powers not delegated to the United States are reserved to the States respectively, or to the people.'

With these provisions in force as fundamental law, Congress by certain statutes passed in 1864, '5, '6, and '7,¹ enacted that

'There shall be levied, collected, and paid annually upon the gains, profits, and income of every person residing in the United States, . . . whether derived from any kind of property, rents, interest, dividends, or salaries, or from any profession, trade, employment or vocation, carried on in the United States or elsewhere, or from any other source whatever, a tax of 5 per centum on the amount so derived, over $1000.'

Under these statutes, one Buffington, collector of the internal revenue of the United States for the district, assessed the sum of $61.50 upon the salary, in the years 1866 and 1867, of J. M. Day, as judge of the Court of Probate and Insolvency for the County of Barnstable, State of Massachusetts. The salary was fixed by law, and payable out of the treasury of the State. Day paid the tax under protest, and brought the action below to recover it.

The case was submitted to the court below on an agreed statement of facts, upon which judgment was rendered for the plaintiff. The defendant brought the case here for review; the question being, of course, whether the United States can lawfully impose a tax upon the income of an individual derived from a salary paid him by a State as a judicial officer of that State.

Mr. Akerman, Attorney-General, and Mr. John C. Ropes (with a brief of Mr. Ropes), for the collector, plaintiff in error:

In the exercise of its granted powers, the Federal government is supreme. Under the general power of taxation, every man and every thing throughout the country (exports excepted) are subject to taxation in the discretion of Congress, provided that the power be exercised for the purposes declared in the Constitution, and not for unauthorized purposes, and that the conditions of its exercise, prescribed in the Constitution, uniformity, &c., be complied with.

1. What was granted to the Federal government was the power of taxation for certain purposes (the common debts, the common defence, the general welfare), for none of which were the particular States bound any longer to provide. These burdens were now thrown on the general government, and the resources on which each State had been able to draw to meet the requisitions of the Congress of the Confederation for money to defray these burdens, were naturally placed at the direct disposal of the United States. The idea was, not to exempt certain classes of persons or objects from their share of the public burdens; to exempt a judge of probate, for instance, from his share of the tax necessary to meet the interest on the public debt, or support the army and navy; but merely to lay these public duties on the general government instead of the States. With the duties went also the power to discharge them; the general government took by the Constitution an exclusive rights to tax imports, and shared with the States the rights of taxation retained by them. Nobody was to be exempted; nobody was to be taxed any more than he had been before. It was simply a change of the sovereign charged with the public duty, and who was therefore clothed with the power to discharge that duty. When the United States repays to a particular State money expended by that State for the public welfare, and originally raised by State taxation from the incomes of State officers among others, nobody imagines that the State officers can claim their share of this tax from the State. Why should they not therefore pay it in the first instance to the United States?

So a section of the statute now under consideration, taxing the issues of State banks so excessively as to drive their notes out of circulation, has been held constitutional.² And the court were unanimous in the opinion, that Congress can tax the property of the banks and of all other corporate bodies of a State, the same as that of individuals.

It will not be pretended, on the other side, that the income of an individual derived exclusively from State stock would be exempted from this income tax. Yet the courts have recognized a strong analogy between the taxation of the issues of a bank, of the office of an officer, and of stock as such: is there not a similar analogy between income derived from the business of the bank, from the dividends of the stock, and from the salary of the office? If one is taxable, are not they all?

Again: who are to be thus exempted from bearing all direct share in the maintenance of the National government? Is the exemption to be confined to judges of State courts? or are all officers of the State and municipal governments to be equally exempt? If not, why not?

Further: suppose the defendant in error had been drafted into the army under a general conscription law, would his office have saved him? If it would, how far is this exemption to extend? Are justices of the peace and aldermen exempt? And is it to be supposed that the number of persons exempt in a particular State from military duty depends on the laws of that State; that the fact of a man's holding a commission as a State judge exempts him from serving in the army of the United States in time of war?

It will doubtless be urged that within the sphere of their jurisdiction, the States are as independent of the Federal government, as the government, within its sphere, is independent of the States; and that a government whose officers are taxed cannot be considered independent.

But this independence of the States is confined to a certain sphere by the terms of one objection. That is to say, it is an independence consistent with the supreme authority of another government over its citizens, and its property, for certain of the most important purposes of government. Can that State be in any sense independent, all of whose citizens may, against their will, be drafted into the army; and all of whose citizens, except its officers (to adopt the defendant's theory), may be at any time deprived by another government of a percentage of their income to defray the expense of a war, to which, perhaps, they are all opposed? Is it any more an abridgment of the independence and sovereignty of a State to tax the agents of the people, than to tax the people themselves?

None of these abstract theories are pertinent to the case. The people, acting through the States, have given to the general government certain duties to perform, and a general power of taxation to enable it to perform those duties. Whoever and whatever would have been liable for such taxation had the States been independent, and retained these charges in their own hands, are made liable for the same taxation from the new government. The sphere of the latter was limited by express provisions; by restricting the objects for which taxes could be levied; by defining the mode of levying them so as to insure uniformity throughout the country; by excluding exports from all liability to taxation; and, in general, by conferring upon the general government a few only of the powers possessed by a nation. But when the general government acts within its prescribed limits and for its prescribed purposes, its power overrides everything in the country, and there is no limit to its reach. It is of no avail to plead that a man is a State officer, or that his income was paid him by the State; if the government need him or his money for legitimate purposes, they can take both in the way pointed out by the Constitution; exactly as the government of his own State could have done had it retained the powers which it has expressly granted to the United States.

Do we then assert for the general government that it can tax the State governments out of existence? By no means: no more than it can tax the people out of existence. The United States taxes must be uniform; they can be levied only for certain definite objects; they must be conformed to the general principles and practice of taxation. Whatever injury they do to the State governments is an incidental injury. The taxes would have to be levied by the States themselves if they had not granted the power to do so to the United States. No more money is exacted of the citizen in one case than in the other. The power of the general government is only to be exercised for certain purposes, and then only under certain conditions. These provisions were thought adequate to guard against encroachment on the part of the Federal government in the matter of taxation; and as long as the Federal government levies its taxes with the uniformity required by the Constitution, there is and can be no danger to the State governments, for the reason that the officer can be taxed no more than the citizen,—the burden falls on all alike. Whatever burden the people of the United States are willing to impose on themselves can be borne by the State officers in common with the rest of the people, without any injury to the State governments.

The difficulty about this subject has arisen from the mistake of applying the language used by this court, when the propriety of subjecting the powers and property of the United States to the varying taxation of the different States, was in question, to a case where the United States proposes to impose its uniform taxes on the persons and property in all the States, over which and over...