Page:Popular Science Monthly Volume 51.djvu/487

Rh excise duty was also imposed upon income derived from any profession, trade, employment, or avocation. The tax upon persons generally was not upon their entire income, but on the excess over and above the sum of $4,000. All persons having incomes of $4,000 or under were exempt. The whole burden of the tax, it was estimated, would fall on less than two per cent of the population of the country. That the Government practically conceded that such a feature of the act was pre-eminently class legislation is evident from the following extract from a statement made in a brief by the Attorney General of the United States: "Congress," he says, "has adopted as the minimum income for the purpose of taxation the limit of $4,000. This limit may be said to divide the upper from the lower middle class, financially speaking, in the larger cities, or to divide the middle class from the wealthy in the country districts." (Opening argument by William D. Guthrie, in support of the contention that the income-tax law of 1894 was unconstitutional.)

As might have been expected, the provisions of this enactment, which could not be fairly considered pertinent and relevant to a just and equitable system of income taxation, occasioned much of dissatisfaction among business men and the financial authorities of the country generally; and measures were at once initiated to test before the proper legal tribunals—i. e., the courts of the United States—the constitutionality of the statute. The most important and immediate representatives of this action were the Farmers' Loan and Trust Company and the Continental Trust Company, of New York—two of the largest trust companies in the United States. It is also worthy of note in this connection that the above-named companies, before taking any steps to test the validity of the act in question, complied with all its provisions; no collector of internal revenue or any public officer of the United States having been made a party, or any injunction sought from the courts, to restrain the collection of the tax.

The basis of action of the above-named parties, as represented by some of the most eminent members of the legal profession in the country, was substantially as follows: Each of them, and a large number of other like organizations—insurance companies, savings banks, and trusts—hold as investments of capital stock, earnings, and profits, and as trustees for minors, widows, individuals, copartnerships, and corporations too numerous to mention, resident in the United States and elsewhere, large amounts of real estate, situated in the various States of the