Part 12

The right of the states to levy progressive and unequal taxes on inheritances and testamentary dispositions is frequently sought to be upheld upon the theory that the power of our legislatures over successions to the property of decedents is unlimited, that the right to succeed is a mere statutory privilege, and that our lawmakers may arbitrarily grant or withhold that privilege at their will and discretion. It is, however, far from established that any such arbitrary and unrestrained power is vested in our state legislatures as that of denying wholly the right of inheritance or of testamentary disposition, or of discriminating in the regulation or grant of the privilege. The power to regulate the exercise of any right does not necessarily imply the power to deny it altogether. All rights of property as well as of personal liberty are subject to reasonable regulation, but this does not involve the power absolutely or arbitrarily to destroy such rights. The right of inheritance by children was not originally the creation of statute law at all, although the contrary is often assumed. It was a customary right long before the Conquest and prior to any statute of which we have record. It is treated by legal historians as "our common law of inheritance." In the latest authoritative history of the English law, that by Pollock and Maitland, the authors say that "in calling to our aid a law of intestate succession, we are not invoking a modern force," and that "the time when no such law existed is in strictest sense a prehistoric time." We find that it was a right already established in every one of the thirteen original states at the time the national government was founded; that it has always existed in civilized countries, so far as we have any knowledge; that it was recognized in the Twelve Tables as a right among the Romans; that it was a right long before among the Egyptians, and that it pervades the Mosaic law. A distinguished writer declares it to be the general direction of Providence itself. And Chancellor Kent said that "nature and policy have equally concurred to introduce and maintain this primary rule of inheritance in the laws and usage of all civilized nations."

The power of testamentary disposition undoubtedly developed as a limitation upon the right of inheritance and in order to prevent escheat for want of heirs. But however originating or evidenced--whether in old customs or in the practice of _post-obit_ gifts--the right has been recognized from time immemorial. As Blackstone said in his "Commentaries," "in England this power of bequeathing is coeval with the first rudiments of the law, for we have no traces or memorials of any time when it did not exist."

Whatever may be the general language to be found in some judicial decisions, and whatever may be the extreme power of our state legislatures in the abstract, it is hardly conceivable that any state would attempt to escheat or confiscate all the property of decedents to the exclusion of children and near relatives, or that it would wholly deny the right of testamentary disposition. At any rate, if escheat or confiscation were ever decreed, it would have to be by laws applying equally to all decedents, and not merely to a selected class. The guaranties of the fourteenth amendment would prevent any discrimination.

But, however unlimited the power of the states may be in this regard, there can certainly be no doubt that it was not the intention of the framers of the Constitution of the United States to delegate to Congress the power to regulate successions to the estates of decedents or the privilege of testamentary disposition or inheritance. No one has yet seriously claimed that any such authority is within the legitimate sphere of the national government as contemplated by its founders. The power of regulating successions to the property of decedents was reserved to the states, and the courts would undoubtedly hold that any direct attempt on the part of Congress to regulate successions as such, or the ownership or transfer of property, was in excess of its powers. In dealing with successions, therefore, Congress can only exercise the power of taxation.

Yet it is urged that, as Congress has the power to tax successions, it may under the guise of exercising that power regulate inheritances and thereby break up large fortunes and force a redistribution of wealth. In other words, the argument is that Congress may, under the cover or pretense of a tax law, accomplish indirectly an object which, for want of power, it could not accomplish directly, although the accomplishment of this object would constitute a deliberate encroachment upon the reserved rights of the states.

There is great danger in this view, and it opens the door to abuse by Congress of the power of taxation. If a federal statute purports on its face to be a tax measure, and in fact to some extent operates to that end, the courts cannot ordinarily set it aside, even though the motive for its enactment be to accomplish an object not entrusted to the national government. The jurisdiction of the courts is limited. Legislation which seeks to effect illegitimate ends cannot always be nullified. The power of Congress to levy a graduated inheritance tax as a revenue measure would be practically unlimited unless, in the particular instance, the law were so extravagant, and its unconstitutional object so plain, as to establish beyond doubt an unauthorized purpose. It is not within the province of the judicial power to determine whether a given tax which raises revenue is reasonable or unreasonable, or to inquire into the motives of Congress in enacting the law. The courts might not, therefore, be able to set aside an inheritance tax law passed by Congress even if it absorbed fifty per cent. or more of successions, although it might be quite apparent that the real object of the law was to invade the province of the states and to regulate inheritances in clear violation of the spirit of the Constitution.

Nothing could be better calculated ultimately to undermine our whole system of constitutional government than the idea that the courts alone are the guardians of the Constitution and that Congress may rightfully enact any statute which the courts cannot properly nullify. The truth is that the duty of preserving and defending the Constitution in all its integrity is vested in Congress and the President far more than in the courts, and that if Congress and the President do not observe the restraints and limitations imposed by the Constitution, Congress may pass many statutes which are unconstitutional in substance but which the courts cannot set aside. It is often urged that all questions of constitutionality should be left to the courts and not be passed upon by Congress or the President. The true doctrine, however, is that Congress should not enact and the President should not approve any statute which they, as the agents and representatives of the people, are not satisfied seeks to accomplish a legitimate end within the scope of some power delegated to Congress and not reserved to the states or to the people. They should first determine, as their oath of office requires, whether, according to their best judgment, the act is or is not constitutional. It was the distinct intention of the framers of the Constitution, and they so provided in express words, that every member of Congress, every senator and every representative, should be bound by oath or affirmation to support the Constitution, and that the President, especially, should be charged with the duty of preserving, protecting and defending it to the best of his ability. This duty extends not only to the letter but to the spirit of the Constitution. It will be a lamentable exhibition of a lack of what may well be termed constitutional morality if, in the debates on the pending measures, we shall again hear the suggestion that objects concededly outside the scope of any power delegated to the national government may nevertheless be accomplished indirectly by means of a federal inheritance tax, in violation of the reserved rights of the state governments.

If, in framing an inheritance tax law, Congress will bear in mind that the regulation of successions to the property of decedents is a matter solely within the jurisdiction of the states and ought not to be usurped by the federal government, the object of raising revenue alone may lead to fair and reasonable taxes levied impartially upon all who should be called upon to pay for the support and maintenance of the common government whose protection they enjoy. It would then, perhaps, be better appreciated that the states have important and extensive governmental functions to perform; that they need inheritance taxes for the support of their governments, schools, charities, police and public improvements, and that any heavy federal succession taxes would embarrass and cripple them. It is, of course, one thing to resort to a federal inheritance tax as a temporary war measure, when patriotism inspires ready acquiescence and willing sacrifice, and quite a different thing to establish such a tax as a permanent method of raising national revenue in times of peace and prosperity when the effect may be to withdraw that source of revenue from the states.

The subject of federal income taxes remains to be considered. There is no doubt that any state may levy income taxes. Nor is there any doubt that, under the federal Constitution as it now stands, Congress may levy an income tax provided it be apportioned according to population as required in regard to all direct federal taxes. There is also no doubt that Congress, by means of an excise tax, may reach income derived from any business or profession, and that any such tax, being essentially an excise tax on business, need not be apportioned but need merely be uniform throughout the United States. For example, a tax on the earnings of railroads and manufacturing businesses could be levied without apportionment, and it would produce a large revenue. It would also have the advantage of tapping income at the source. A tax by Congress on lands and personal property as such would, no one disputes, be a direct tax and subject to the rule of apportionment, and a tax on the income of property is in substance and practical and legal effect the equivalent of a tax on the property itself.

As Chief Justice Fuller said in the Income Tax cases: "The acceptance of the rule of apportionment was one of the compromises which made the adoption of the Constitution possible, and secured the creation of that dual form of government, so elastic and so strong, which has thus far survived in unabated vigor. If, by calling a tax indirect when it is essentially direct, the rule of protection could be frittered away, one of the great landmarks defining the boundary between the nation and the states of which it is composed, would have disappeared, and with it one of the bulwarks of private rights and private property."[61]

Nor is the rule of apportionment in itself unfair, even under the conditions existing to-day. If a direct income tax were now levied and duly apportioned among the states according to population as required by the Constitution, the smaller states would pay comparatively little and the more populous and richer states would have to bear what would seem to be their full share of national taxation. New York would then have to pay approximately ten per cent. of such a tax, Pennsylvania eight per cent., Illinois six per cent., Ohio five per cent., whilst Nevada would pay only one-twentieth of one per cent. and Delaware one-quarter of one per cent., although these two states have a representation in the Senate equal to that of New York and Pennsylvania. Indeed, ten states would have to pay more than one-half of any direct tax, leaving the balance to be divided among the remaining thirty-six states according to their population. On the other hand, if a graduated income tax such as is now proposed were levied without regard to apportionment, and all incomes of $4,000 and under were exempted, the effect would be to cast more than ninety per cent. of the entire tax upon the inhabitants of less than one-third of the states.

Nearly twelve years have passed since the decision of the Income Tax cases, and there has been ample time to amend the Constitution if the people had so desired. But, instead of submitting an amendment such as was introduced in the House of Representatives last week, it is suggested by some that an attempt should be made to disregard or circumvent the Constitution as interpreted by the Supreme Court and to speculate on the change of its personnel and the chance of different views on the part of new incumbents. Surely, the simpler and wiser course would be to ascertain the wishes of the people in the manner provided by the Constitution. Assuming, as is so frequently asserted, that the people generally want a federal income tax, ratification of an amendment can be readily secured. The Congress, by a vote of two-thirds of both houses, can at once propose the necessary amendment, which will become effective when ratified by three-fourths of the states. The ratification can probably be secured in less than six months if there really exists any general sentiment in favor of such an amendment, for more than three-fourths of the state legislatures meet this winter. If deemed necessary, conventions could be called to meet within a few months. In any event, the delay ought not to exceed fourteen months.

No student of our institutions can doubt that amendments to the Constitution will soon be thought necessary, and that such amendments will be submitted to the people. Our political system has not ceased to grow. Conditions are constantly changing, and powers which were adequate for the government of a federation of agricultural states may become insufficient for the necessities of the national government of a highly commercial and manufacturing people, with world-wide interests. Mr. Root's eloquent speech last night before the Pennsylvania Society has shown us how inevitably and irresistibly we are tending toward centralization. But it is mischievous and dangerous for the people to be taught that there is great or insurmountable difficulty in securing amendments to the Constitution in order to supply its defects or to meet changed conditions and that they must therefore accomplish their wishes by indirect means or by perverting delegated powers. The future contentment of the American people requires that they shall feel that they may readily, and are at liberty to, amend their organic law according to their mature judgment whenever they deem it necessary to do so. All that can be asked is that they shall act deliberately in the manner provided by the Constitution and under circumstances calculated to afford time and opportunity for error to be exposed, for theorizing and clamor and prejudice to exhaust themselves and "for the sober second thought of every part of the country to be asserted." If, then, it be determined to give to the national government the power to levy income taxes without apportionment, or to control successions to the estates of decedents, or any other power, the will of the sovereign people will have to be obeyed. But let us hope that when amendments are adopted they will be conservative and wise, that the reserved powers of the states will not be heedlessly curtailed to the embarrassment of the states, and that it will be appreciated that local self-government is still essential to the perpetuation of our republican and federal institutions.

FOOTNOTES:

[Footnote 59: Address delivered before the National Civic Federation at its annual meeting held in New York, December 13, 1906.]

[Footnote 60: Constitutional Limitations, 7th ed., p. 705.]

[Footnote 61: 157 United States Reports, p. 583.]

THE DUTY OF CITIZENSHIP[62]

At the outset of our deliberations, Republican delegates, it may be interesting to recall the circumstances of two prior national campaigns in which political symptoms and dissensions were quite analogous to those existing to-day. When the Republican state convention met in 1880, and again in 1896, the outlook for the success of the Republican party had for a time been discouraging. In each of these campaigns there were many who feared that the party had been disrupted and that its usefulness might be coming to an end. In each campaign a wave of false doctrine, sentimentality and prejudice threatened to drown reason amid the prevailing excitement, clamor and declamation. But in each courage and soberness came before November, and the common sense, honesty, sanity and patriotism of the American people supported the sound principles and policies of national and constitutional government for which the Republican party stands.

During the first three months of the political campaign of 1880, it seemed as though the Democratic candidate would be elected. The nomination of General Hancock had been received with great demonstrations of enthusiasm. He was personally attractive and popular, and at the outset little attention was paid to the fact that the platform of his party was radical and had declared in favor of "a tariff for revenue only" with the consequent abandonment of the protective system. The Republicans were not united; in some states they were hopelessly divided. The defection was certain to be large. In many Republican states the Greenback party, with its financial and social heresies, had increased enormously in strength, and it had nominated a national ticket. Maine had been carried in September by a combination of Greenbackers and Democrats. In November the Republican party was to lose New Jersey, California and Nevada, and, for the first time since the Civil War, it would fail to receive any electoral votes from the states south of Mason and Dixon's line. Yet Garfield was elected by 214 electoral votes against 155 for Hancock. New York, which had gone Democratic in 1876 with a plurality of 32,700, went Republican in 1880 with a plurality of 21,000. Thus we see that, although there was then schism and dissension in the Republican ranks, and although the party lost Maine in September and New Jersey, California and Nevada in November, as well as every southern state, its candidates nevertheless were elected.

A consideration of the circumstances of the campaign of 1896 will prove even more instructive and encouraging. The Republican party was then divided and threatened with ruin by defections. The leaders in the national convention at St. Louis had courageously refused to bend to the demands and threats of a numerous minority, who were urging a radical platform and a radical candidate. A large number of Republicans had bolted, and they were loudly proclaiming that they alone represented the true and overwhelming sentiment of the party. According to them all else was fraudulent, and all who did not agree with them were accused of having been corrupted by the moneyed interests. It was evident that this faction had set out to rule or ruin their party, and, having failed to coerce it, were determined to overthrow it. They organized a new party, which they called the National Silver party; they assembled in convention at St. Louis amid excitement and posing and virtuous homilies about reformation and social uplift quite similar to those which we have heard during the past summer; they prophesied the death of the Republican party for its alleged betrayal of the people, and they proceeded to endorse the candidacy and views of Mr. Bryan. The Populist party, likewise largely composed of dissatisfied and discontented Republicans, held its national convention at St. Louis, went through similar political performances and emotional displays, and endorsed the Democratic candidate.

It would be difficult to exaggerate the enthusiasm in 1896 for Mr. Bryan. I comment upon it now in order that comparisons may be made and the lesson appreciated. Wherever he moved, immense and excited throngs pressed about him and wildly cheered his utterances. Much of the character of the present campaign was then in evidence. Bryan preached a social reformation and a crusade against established institutions, constitutional government and the supremacy of the law. He played upon envy, discontent and cupidity. He attracted to his standard the remnants of Coxey's "army," which two years before had marched to Washington, calling itself the "Army of the Commonweal of Christ." In our country such movements frequently mask in the robes of religion. Bryan denounced the President then in office. He assailed our judicial system, including the Supreme Court of the United States. He posed as a knight-errant and crusader who sought to uplift the poor and redress the wrongs of the nation. He repeated all the exploded claptrap of demagogues. And his eloquence, together with his apparent sincerity, made him a most dangerous candidate, far more dangerous than are our opponents of to-day.

The combination of Democrats and former Republicans in 1896 was more formidable than if their vote had been divided and the discontented Republicans, Populists and Silverites had nominated a separate ticket. It would have been easier to defeat a divided enemy. Plurality and not majority in each state determines the choice of presidential electors, although a majority of the electors is necessary to elect a President. The situation was very critical because the times were hard, many good reasons for discontent existed, thousands of workmen in every state were unemployed, and agitators and demagogues found ready response to their appeals in the hearts of men who were suffering from hunger.

Yet, even under such conditions, the defense of constitutional government and established institutions was safe in the hands of the thoughtful, sober and patriotic people of the country. A complete revulsion of public feeling took place before November. The Democratic party, which four years before had carried the nation with a plurality of 381,000 and the state of New York with a plurality of 45,500, was defeated by the Republican candidate with a plurality of nearly 604,000 in the nation and over 268,000 in the state. McKinley received 271 electoral votes against 176 for Bryan. That great success was secured in the face of the fact that ten western states which are normally Republican went Democratic; in other words, the Republican candidates were triumphantly elected in 1896 although Colorado, Kansas, Idaho, Montana, Nebraska, Nevada, South Dakota, Utah, Washington and Wyoming all cast their electoral votes for Mr. Bryan.

The task of the Republican party in these prior campaigns was to bring home to the people the vital importance to them of the issues of those campaigns. Similarly our task in this campaign is to convince the voters of the country that they are again called upon to preserve the industrial system upon which the wages, income and property of millions of American citizens are based, as well as to defend the constitutional representative government under which for more than a century we have maintained political, religious and individual liberty and have prospered beyond all nations.