Springer v. United States
Encyclopedia
Springer v. United States, 102 U.S. 586
(1881), was a case in which the United States Supreme Court
upheld the Federal income tax
imposed under the Revenue Act of 1864
.
had filed a Federal income tax return for the tax year 1865 showing $50,798 in income and $4,799 in income tax, but refused to pay the tax. Springer's income was from two sources: income in his profession as an Attorney at law, and interest income on United States bonds.
After Springer's failure to pay the tax, the Federal tax collector advertised Springer's properties for sale to satisfy the tax liability. In 1867 and 1874, the tax collector sold two pieces of real estate owned by Springer in Springfield, Illinois (one of which was Springer's residence), apparently without physically seizing the properties or ejecting Springer from the properties. The properties were deeded by the tax collector to the United States government. One of the deeds recited the statutory authority for the sale as being an Act of Congress of "July 1, 1862" as amended by an Act of "March 30, 1864."
In 1874, the government filed a lawsuit of ejectment
against Springer with respect to the previously sold properties. In the ejectment action, Springer challenged the constitutionality of the 1864 Act.
, Adam Smith
, and others.
Springer made various other arguments, one of which was that although there was an Act of Congress bearing the date "July 1, 1862," there was no such Act that had been amended on "March 30, 1864," the amendment date cited in one of the deeds. Springer indicated that the statute in question may have been the Act dated June 30, 1864, as amended by an Act dated March 3, 1865, and argued that if this was correct, the 1864 Act did not authorize the sale of the real estate by the Federal tax collector.
), as amended by the Act of March 3, 1865. The Court rejected Springer's argument that the 1864 Act did not authorize the sale by the tax collector.
The Court then upheld the unapportioned income tax imposed under the 1864 Act, rejecting William Springer's argument that the income tax was a "direct tax" within the meaning of Article I.
After further examining the contemporaneous writings of James Madison
and Alexander Hamilton
, the Court quoted Hamilton as asserting that direct taxes should be held to be only "capitation or poll taxes, and taxes on lands and buildings, and general assessments, whether on the whole property of individuals or on their whole real or personal estate. All else must, of necessity, be considered as indirect taxes". Comparing Hamilton's understanding of the clause to the facts of the case, the Court stated:
The Court concluded that "whenever the government has imposed a tax which it recognized as a direct tax, it has never been applied to any objects but real estate and slaves",, and ultimately held "that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate; and that the tax of which the plaintiff in error complains is within the category of an excise or duty".
, where the Court ruled that a tax on income from property in the form of interest, dividends or rent should be treated as a tax on the property itself, and therefore as a direct tax required to be apportioned. The Sixteenth Amendment to the United States Constitution
later overruled the Pollock decision and made clear that there was no requirement for apportionment of income taxes. Later still, in Bowers v. Kerbaugh-Empire Co.
, the Supreme Court reviewed Pollock, the Corporation Excise Tax Act of 1909 and the Sixteenth Amendment, and concluded that Congress had always had the unfettered power to tax income, as set forth in Springer.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1881), was a case in which the United States Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
upheld the Federal income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
imposed under the Revenue Act of 1864
Revenue Act of 1864
The Internal Revenue Act of 1864, 13 Stat. 223 , increased the income tax rates established by the Internal Revenue Act of 1862. The measure was signed into law by President Abraham Lincoln.-Provisions:...
.
Background
William M. SpringerWilliam McKendree Springer
William McKendree Springer was a United States Representative from Illinois.He was born near New Lebanon, Sullivan County, Indiana, May 30, 1836; moved to Jacksonville, Illinois, with his parents in 1848; attended the public schools in New Lebanon and Jacksonville and the Illinois College at...
had filed a Federal income tax return for the tax year 1865 showing $50,798 in income and $4,799 in income tax, but refused to pay the tax. Springer's income was from two sources: income in his profession as an Attorney at law, and interest income on United States bonds.
After Springer's failure to pay the tax, the Federal tax collector advertised Springer's properties for sale to satisfy the tax liability. In 1867 and 1874, the tax collector sold two pieces of real estate owned by Springer in Springfield, Illinois (one of which was Springer's residence), apparently without physically seizing the properties or ejecting Springer from the properties. The properties were deeded by the tax collector to the United States government. One of the deeds recited the statutory authority for the sale as being an Act of Congress of "July 1, 1862" as amended by an Act of "March 30, 1864."
In 1874, the government filed a lawsuit of ejectment
Ejectment
Ejectment is the common law term for civil action to recover the possession of and title to land. It replaced the old real actions as well as the various possessory assizes...
against Springer with respect to the previously sold properties. In the ejectment action, Springer challenged the constitutionality of the 1864 Act.
Issues raised
Springer's challenge was based on the contention that the income tax imposed by the statute was a direct tax not apportioned among the states according to the population of each state under Article I of the Constitution. To support his contention that the tax was direct, Springer cited the definitions of direct taxes by John Stuart MillJohn Stuart Mill
John Stuart Mill was a British philosopher, economist and civil servant. An influential contributor to social theory, political theory, and political economy, his conception of liberty justified the freedom of the individual in opposition to unlimited state control. He was a proponent of...
, Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
, and others.
Springer made various other arguments, one of which was that although there was an Act of Congress bearing the date "July 1, 1862," there was no such Act that had been amended on "March 30, 1864," the amendment date cited in one of the deeds. Springer indicated that the statute in question may have been the Act dated June 30, 1864, as amended by an Act dated March 3, 1865, and argued that if this was correct, the 1864 Act did not authorize the sale of the real estate by the Federal tax collector.
Rulings
In an opinion written by Justice Swayne, The Supreme Court agreed with Springer that the recital of the Act of Congress in the deed was incorrect, and that the Act of Congress dated "July 1, 1862" had not been amended on March 30, 1864. The Court stated that the statute in question was actually the Act of June 30, 1864 (see Revenue Act of 1864Revenue Act of 1864
The Internal Revenue Act of 1864, 13 Stat. 223 , increased the income tax rates established by the Internal Revenue Act of 1862. The measure was signed into law by President Abraham Lincoln.-Provisions:...
), as amended by the Act of March 3, 1865. The Court rejected Springer's argument that the 1864 Act did not authorize the sale by the tax collector.
The Court then upheld the unapportioned income tax imposed under the 1864 Act, rejecting William Springer's argument that the income tax was a "direct tax" within the meaning of Article I.
Rationale
The Court set forth a lengthy examination of the history leading to the inclusion of the apportionment requirement in the Constitution:After further examining the contemporaneous writings of James Madison
James Madison
James Madison, Jr. was an American statesman and political theorist. He was the fourth President of the United States and is hailed as the “Father of the Constitution” for being the primary author of the United States Constitution and at first an opponent of, and then a key author of the United...
and Alexander Hamilton
Alexander Hamilton
Alexander Hamilton was a Founding Father, soldier, economist, political philosopher, one of America's first constitutional lawyers and the first United States Secretary of the Treasury...
, the Court quoted Hamilton as asserting that direct taxes should be held to be only "capitation or poll taxes, and taxes on lands and buildings, and general assessments, whether on the whole property of individuals or on their whole real or personal estate. All else must, of necessity, be considered as indirect taxes". Comparing Hamilton's understanding of the clause to the facts of the case, the Court stated:
The Court concluded that "whenever the government has imposed a tax which it recognized as a direct tax, it has never been applied to any objects but real estate and slaves",, and ultimately held "that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate; and that the tax of which the plaintiff in error complains is within the category of an excise or duty".
Aftermath
The holding in Springer was modified in part by the Court in the 1895 case of Pollock v. Farmers' Loan & Trust Co.Pollock v. Farmers' Loan & Trust Co.
Pollock v. Farmers' Loan & Trust Company, , aff'd on reh'g, , with a ruling of 5–4, was a landmark case in which the Supreme Court of the United States ruled that the unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and...
, where the Court ruled that a tax on income from property in the form of interest, dividends or rent should be treated as a tax on the property itself, and therefore as a direct tax required to be apportioned. The Sixteenth Amendment to the United States Constitution
Sixteenth Amendment to the United States Constitution
The Sixteenth Amendment to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results...
later overruled the Pollock decision and made clear that there was no requirement for apportionment of income taxes. Later still, in Bowers v. Kerbaugh-Empire Co.
Bowers v. Kerbaugh-Empire Co.
Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 , was a case in which the United States Supreme Court held that no taxable income arose from the repayment in German marks of loans that had originally been made in U.S...
, the Supreme Court reviewed Pollock, the Corporation Excise Tax Act of 1909 and the Sixteenth Amendment, and concluded that Congress had always had the unfettered power to tax income, as set forth in Springer.