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Whatever the explanation, the ideal of the neutral state came to represent a central form of legitimation during the late nineteenth century. At just this moment, Classical Legal Thought emerged as perhaps the dominant expression of the idea of neutrality.
Taxation and the Idea of Neutrality
The power of taxation presented the most formidable difficulties for nineteenthcentury jurists intent upon establishing a neutral state by limiting the redistributive capacities of government. The English constitutional tradition provided virtually no legal limitations on redistributive legislative designs. The great constitutional struggles of the seventeenth century were waged entirely over the legitimate constitutional powers of king and Parliament, not over whether there were general limitations on the government's power to tax.
When Michigan's Chief Justice Thomas Cooley came to write his Treatise on the Law of Taxation in 1876, he had to concede in his opening pages that the constitutional tradition provided few legitimate grounds for judicial restrictions:
The power of taxation is an incident of sovereignty, and is coextensive with that of which it is an incident. All subjects, therefore, over which the sovereign power of the state extends are, in its discretion, legitimate subjects of taxation; and this may be carried to any extent to which the government may choose to carry it. In its very nature it acknowledges no limits, and the only security against abuse must be found in the responsibility of the legislature which imposes the tax to the constituency who are to pay it. The judiciary can afford no redress against oppressive taxation, so long as the legislature, in imposing it, shall keep within the limits of legislative authority .63
By importing his conception of "fixed principles of justice" into his definition of "legislative authority," however, Cooley was eventually able to establish anti redistributive tax principles.64 Yet he was never able entirely to constitutionalize limits on a taxing power that had been derived from a long tradition of wide legislative discretion.
Cooley's most important contribution to the constitutional law of taxation was to formalize the norm of "equal and uniform" taxation as a guiding principle of American constitutional law. In this sense, his treatise represented the culmination of a generation of efforts in the states to amend their constitutions in order to add equal and uniform tax provisions.
A vast expansion of state taxation had begun during the 1840s in reaction, after the Panic of 1837, to the elimination of extensive state revenues derived from canal tolls. Urbanization after the Civil War also produced a massive increase in local property taxes devoted to public works; and by 1875, systems of special assessments, primarily for road building, had "of late years become very frequent and extensive."65
Between 1840 and 1870, a movement to add strict constitutional provisions requiring equal and uniform taxation prevailed in the vast majority of states. Whereas in 1792 the state constitutions of ten of the thirteen former colonies contained no such restrictions, and even the remaining three (Maryland, Massachusetts, and New Hampshire) had promulgated only vague constitutional provisions, "there was a sharp turn in practice" in 1818-18zo, and after that time almost all newly admitted states included some type of uniformity clause in their constitutions. 66 But it was only after a flurry of activity during the period 1845-1851 that equal and uniform taxation became the constitutional norm in the states.67
Cooley wrote his treatise for the purpose of codifying these new developments in the constitutional law of taxation. The reader, he acknowledged, might think "that on some points, too much importance has been attached to those fundamental principles which restrict the power to tax" until "one considers how vast is this power, how readily it yields to passion, excitement, prejudice or private schemes, and to what incompetent hands its extention is usually committed."68
The Treatise on Taxation is duly modest about the "serious and often insurmountable difficulties in the way of equal taxation.. . ."69 "Perfect equality" in the assessment of taxes, Cooley constantly reiterated, is practically unattainable.70 Yet, despite cautious pragmatism about the difficulties of institutionalizing the principle of equality, Cooley had no doubt whatsoever concerning the correctness of the principle.
[A]re there not cases which on their face are manifestly so unequal and unjust as to furnish conclusive evidence that equality has not been sought for but avoided; that oppression, not justice was desired, and confiscation, not taxation intended?7'
The central purpose of the Treatise on Taxation, then, was precisely to distinguish between "taxation" and "confiscation" by establishing the norm of equality as a "fixed principle of justice,"72 a "fundamental principle which [would] restrict the power to tax."73 For if the principle of inequality were "once admitted there is no reason but its own discretion why the legislature should stop short of impos ing the whole burden of government on the few who exhibit most energy, enterprise and thrift."74 Thus, under the inspiration of recent state constitutional changes, Cooley sought to shift the law of taxation away from its historic association with unfettered legislative sovereignty and to articulate clear constitutional barriers against the use of taxation for redistributive ends. Compared to other constitutional restrictions on the redistributive impulse, the movement to constitutionalize the taxing power was a relative latecomer in American law, reflecting the fact that until the 1840s taxation played only a minor role in state financing.
There were substantial difficulties confronting anyone who wished to constitutionalize the law of taxation. Treating equality as a fundamental principle of justice, Cooley sought to make this norm applicable regardless of whether a state had specifically incorporated it into its constitution. For this purpose, he enthusiastically cited a Kentucky case that derived constitutional limitations on taxation from "the declared ends and principles of the fundamental laws. Among these political ends and principles, equality, as far as practicable, and security of property against irresponsible power, are eminently conspicuous in our state constitution. "7S
Cooley's argumentative strategy is a prominent example of what Edward Corwin has called the "doctrine of implied limitations."76 Since separation of powers is a basic doctrine of American constitutional law, the argument went, the legislative branch is confined to acts of legislation. Taxation is within the definition of the legislative power only when it is used to raise revenue. It follows that an unequal tax, being clearly for redistributive purposes, is not within the legislative power. Unequal taxation was thus defined to be in fundamental conflict with the theory underlying separation of powers and was unconstitutional even without a specific provision requiring equal and uniform taxation.
Another version of the effort to create implied limitations on the taxing power was to derive such limitations from constitutional provisions requiring just compensation for a taking of property. "[W]henever the property of a citizen shall be taken from him by the sovereign will, and appropriated without his consent to the benefit of the public, the exaction should not be considered as a tax unless similar contributions be made by the public. . . ."77 In Pennsylvania, which did not have a constitutional provision requiring equal and uniform taxation, the judges in 1871 held a local special assessment unconstitutional. Anticipating the spirit of Cooley's treatise, they declared that unless taxation is "reasonably just and equal in its distribution," it "is confiscation, not taxation, extortion not assessment."78 Any other conclusion would result "in the overthrow of the right of private property. 1179
The Uses of the State Taxation Decisions
The Supreme Court justices who struck down the federal income tax in 1895 came to legal maturity when the central constitutional question of taxation fo cused on the power of municipalities to issue bonds in order to encourage the building of railroads. After the Civil War, Midwestern towns outdid each other with promises of financial subsidies in order to encourage railroads to build lines through the towns. Eventually, especially after the Panic of 1873, many towns defaulted on these bonds, and courts in Iowa, Michigan,
and other states were besieged by the lawsuits of disappointed municipal bondholders.
Judge Thomas Cooley of Michigan and U.S. Supreme Court Justice Samuel F. Miller of Iowa were among many Midwestern jurists whose legal views on taxation were deeply affected by the bond cases.80 Both Cooley and Miller wrote judicial opinions that deprived bondholders of relief on the ground that municipalities did not have the power to spend and hence to tax for "non-public" purposes. 81
The "public purpose" doctrine in taxation was an extension of constitutional principles that had been forged in many state courts during the antebellum period to limit the power of the state to take property for non-public purposes.82 Its extension to taxation after the Civil War was an important development in the movement toward legal integration during the late nineteenth century. The powers of eminent domain and taxation, formerly treated under widely divergent legal conceptions, began to be subordinated to a common set of anti-redistributive principles after the Civil War.
The views of Cooley and Miller on the bond cases were expressions of.long- standing Jacksonian fears that the state would be used to favor special interests at the expense of the public interest. Earlier Jacksonian attacks on corporate monopolies and on the use of the eminent domain power to subsidize transportation companies were eventually generalized into an ideal of a neutral state free from the corruption of "class legislation." "To lay with one hand the power of the government on the property of the citizen," Justice Miller wrote in Loan Association v. Topeka (1874), "and with the other to bestow it upon favored individuals to aid private enterprises and build up private fortunes, is none the less a robbery because it is done under the forms of law and is called taxation. " 83
Traditional conservative fears that the state might be used to protect debtors or to take property in order to equalize wealth were thus matched by neo-Jacksonian anxieties that the state would be taken over by corporate interests. It is important to recognize that these twin fears of state power combined to produce laissez-faire ideology after 1850.84
If the public purpose doctrine brought the eminent domain and taxing powers into the same sphere of legal discourse, it was only a matter of time before the question of what constituted a taking under eminent domain law would be extended to the taxing power as well. If it was clear, as antebellum judges had frequently reiterated, that the state could not take the property of A and give it to B, could the taxing power be used to accomplish the same illegitimate objective? How, in short, could one distinguish between a tax and a taking?
By degrees, then, judges and jurists, aided by state constitutional provisions, worked their way to the principle that only equal taxation could avoid the charge that the use of the taxing power was simply a disguised form of confiscation.
The Federalization of Taxation Doctrine
In 1873, Justice Miller wrote his famous opinion in The Slaughterhouse Cases,"S holding that the recently ratified Fourteenth Amendment, and in particular its privileges and immunities clause, had introduced only minor limitations on state power. The facts of the case seemed to present an extreme version of the Jacksonian nightmare of the use of state power to favor special interests.
Miller's majority opinion resisting the constitutional challenge to a New Orleans slaughterhouse monopoly was dominated by his effort to prevent the Fourteenth Amendment from becoming a centralized charter of federal regulation that would overthrow the federal system. The dissents of Justices Stephen Field and Joseph Bradley were classical Jacksonian polemics on the evils of monopoly, polemics that on other occasions Miller himself endorsed with enthusiasm.
Progressive historiography, written from the perspective of the subsequent development of "substantive due process" and its culmination in Lochner v. New York,86 has tended to overlook the considerable substantive agreement in the social visions of justices Miller, Field, Bradley, and, later, even John Marshall Harlan. In the 187os and 188os, the real source of division in the Supreme Court, except perhaps over questions of race, turned on different views of the dangers of federal power and of governmental centralization, not on substantive conceptions of social justice.
A Miller opinion written one year after the Slaughterhouse decision underlines this interpretation. Loan Association v. Topeka (1874) was a diversity case87 in which Miller held that a city had no power to issue municipal bonds to subsidize private enterprise. In a diversity case, Miller felt free to decide the question under state constitutional law, so that the reach of the Fourteenth Amendment did not need to be addressed. Deciding as if he were a state court judge, he held that even in the absence of any express constitutional provision, a tax not for a public purpose was in reality a taking. The power of taxation, Miller wrote, "can as readily be employed against one class of individuals and in favor of another, so as to ruin the one class and give unlimited wealth and prosperity to the other, if there is no implied limitation of the uses for which the power may be exer- cised."88 Three years later, he made it clear that, out of respect for the federal system, he was unwilling to extend these views to the Fourteenth Amendment.89
By contrast, Justice Field sought to force just such an expansive view of the Fourteenth Amendment on the Supreme Court. In two circuit court tax cases in 1882. and 1883, he held that a California statute providing different tax rates for individual and corporate property was a violation of the equal protection clause of the Fourteenth Amendment.90 "Unequal exactions in every form, or under any pretense, are absolutely forbidden," Field wrote, "and of course unequal taxation, for it is in that form that oppressive burde.ls are usually laid."91 "What is called for under a [state] constitutional provision requiring equality and uniformity in the taxation of property must be equally called for by the fourteenth amendment," Field concluded.92
Field's circuit court decisions were affirmed by the Supreme Court but on very limited grounds.93 Before its decision in Pollock v. Farmers' Loan & Trust Co. (1895),9' in fact, the Supreme Court managed to avoid the question Field had already decided. By the time of this decision, however, the distinction between a legitimate tax and a tax that was really an illegitimate taking had been turned into a deeply ingrained part of American constitutional doctrine. It was buttressed by the simultaneous de-physicalization of the takings doctrine during the preceding generation, a development that eliminated earlier conceptual blocks to regarding taxes and takings as in the same sphere of legal discourse.95
Progressive constitutional historiography has regarded Pollock as one of the prime examples of judicial usurpation during the 1890s.96 It is true that the formal holding of the Supreme Court, that a federal income tax was a direct tax requiring apportionment among the states according to population, was contrary to a small number of earlier Supreme Court precedents that consistently limited the category of what constituted a direct tax. 97 Yet, if we regard the direct-indirect tax provision as the most acceptable available federal constitutional vehicle for expressing more fundamental ideas about taxation that had crystallized in state courts during the preceding half century, the result reached should have come as no surprise.
As Pollock was being heard by the U.S. Supreme Court, one of the most influential American jurists, former judge John F. Dillon, delivered a rousing defense of private property before the New York State Bar Association. "(11n our own day," Dillon declared, ". . . great primordial rights, including the right of private property," were being "drawn in question by combined attacks upon them and upon the social fabric that has been builded upon them. This assault upon society as now organized is made by bodies of men who call themselves . . . communists, socialists, anarchists, or by like designations."98 While Dillon's speech addressed the full range of suggested restrictions on the power of property holding, we should pause over the section entitled "Attacks Upon Private Property Through the Exercise of Power of Taxation." 99
"Socialistic organizations," Dillon began, had mounted various "attacks" on private property; "[t]he most insidious, specious and therefore, dangerous" we
re "those that are threatened" concerning "the State's power of taxation." 100
Forasmuch as the power to tax is supposed to involve the power to destroy, it is boldly avowed by many socialistic reformers, and it is implied in the schemes of others, that the power of taxation is an available and rightful means to be used for the express purpose of correcting the unequal distribution of wealth, and that this may be done without a violation of the essential or constitutional rights of property. 101
"[R]easonable and proportional" taxation "imposed as a bona fide means of raising revenue" was entirely legitimate. But when taxes are imposed "for the real purpose of reaching the accumulated fruits of industry, and are not equal and reasonable, but designed as a forced contribution from the rich for the benefit of the poor, and as a means of distributing the rich man's property among the rest of the community-this is class legislation of the most pronounced and vicious type; is, in [a] word, confiscation and not taxation." "Such schemes of pillage" are "violative of the constitutional rights of the property owner, subversive of the existing social polity, and essentially revolutionary." 102
Dillon proceeded to invoke the idea of a neutral state that "knows or ought to know no classes." 103
The one thing to be feared in our democratic republic, and therefore to be guarded against with sleepless vigilance, is class power and class legislation. Discriminating legislation for the benefit of the rich against the poor, or in favor of the poor against the rich, is equally wrong and dangerous. Class legislation of all and every kind is anti-republican and must be repressed. 104
One is struck with the overwhelming attention paid in the arguments before the Supreme Court in Pollock to the income tax's progressive rate structure. Joseph Choate's argument for its unconstitutionality is well known. The income tax, he declared, "is communistic in its purposes and tendencies, and is defended here under principles as communistic, socialistic-what shall I call them-populistic as ever have been addressed to any political assembly in the world." 105 Indeed, the more forthright argument that the progressive features of the income tax violated the constitutional requirement of uniformity of taxation was perhaps the most prominent point before the Court. Attorney General Richard Olney, in his argument in defense of the tax, regarded the absence of uniformity as "the constitutional objection which, notwithstanding all that has been so earnestly and forcibly said on the direct tax part of this controversy, is, I am satisfied, the plaintiffs' main reliance."106