State in conflict with the Constitution and laws of the United States, and therefore void.

The validity of such statutes depended not so much on their literal import as on the effect which they were calculated to produce. A law imposing a burdensome and almost impracticable condition on the shipmaster as a pre-requisite to landing his passengers, with an alternative payment of a small sum of money for each one of them, was a tax on the shipowner for the right to land such passengers, and virtually on the passenger himself, because the master would presumably make him pay it in advance as part of his fare. Such an enactment was a regulation of commerce which could not be made consistently with the exclusive power of Congress over the same subject. If, as had been contended, the regulation fell within the police power of the States, still that power could not be so exercised as to impair any power which was vested in the General Government. The court did not decide whether or not a State may, in the absence of legislation by Congress on the subject, pass a statute strictly limited to defending itself against paupers, convicted criminals, and other persons of that class, but was of opinion that to Congress rightfully and appropriately belongs the power of legislating on the whole subject.

Goods passing through a State on their way to another State or foreign country are within the commercial power of the United States and cannot be taxed by the State, although the transit is temporarily arrested or delayed by accidental causes; and such also is the rule as to passengers.2 But it does not apply to goods deposited in a State on their way through it to another State, although the owner intends them for exportation.3

The cases afford ground for the following inferences:

1st. The States cannot enact any law that will operate as a tax on imports from abroad while they are in the importer's hands and held by him for commercial purposes; but this rule

1 Hall v. De Cain, 116 U. S. 485; Coe v. Errol, 116 U. S. 517, 528. 2 Crandall v. Nevada, 6 Wallace, 35; post, p. 470.

Coe v. Errol, 116 U. S. 517, 528.

OF PRODUCTS OF OTHER STATES.

275

is intended for the protection of commerce with foreign nations, and will not be carried further than the end requires. Therefore it does not apply to goods which have been sold by the importer, nor to those which he retains for his own use. The clock on a man's mantelpiece, the carriage which he drives or lets, and the watch which he wears, are therefore equally liable to taxation, whether they are imported or acquired in any other way. In determining such questions the court will have regard to the effect of the law rather than to its form, and an act providing that every one who sells imported goods shall pay for and obtain a license, will be regarded as a tax on the goods themselves.

2d. Imports from other States are subject to local taxation, although it must not be unequal, or impose a greater burden than that borne by the products of the State which lays the tax. There are two rules, - one that the States shall not so tax imports as to impede foreign commerce; the other, that a State shall not by taxation or otherwise place the products of a sister State in a less advantageous position than her own. The former precludes taxation until the goods. have been disposed of by the importer or are no longer held by him as articles of commerce; the latter where the tax is in effect the discrimination which the Constitution prohibits.

3d. Importation from other States cannot be taxed, although the imports may; and hence a State cannot require a sum certain to be paid for every ton or hundredweight of goods brought into the State. And a tax on the freight paid for the carriage of such goods would be equally invalid.

The second section of the fourth article of the Constitution, which provides that the citizens of each State shall be entitled to all the privileges and immunities of the citizens of the several States, may also operate as a restraint on the States by precluding the imposition of any tax that will operate unequally on the citizens of another State by subjecting them to a greater burden than that borne by the citizens of the State which lays the tax; and it is immaterial that the

1 The State v. Furbush, 72 Me. 193; The State v. North, 27 Mo.

tax is also an exercise of the police power and designed to regulate or prevent the sale of intoxicating liquors.1 A State cannot, therefore, exact a larger sum from the inhabitants of a sister State for the privilege of selling goods, issuing policies of insurance, or pursuing any other trade or calling, than it demands from its own citizens. The question arose in Ward v. The State of Maryland,2 where a law of Maryland providing that non-residents 'should not make sales within the State without paying for and obtaining a license, and mak ing a neglect or violation of the act a penal offence punishable by fine and imprisonment, was held to contravene this rule.

It was decided on like grounds in Guy v. Baltimore 3 that an ordinance requiring vessels laden with the products of other States, to pay a larger sum for the use of the public wharves of Baltimore than that exacted where the cargo consisted of articles grown or made in Maryland, was in conflict with the Constitution of the United States. Such fees. must be regarded, not as a compensation for the use of the city property, but as a mere expedient or device to foster the domestic commerce of the State at the expense of the other members of the United States. Although the power of the General Government does not extend to the purely internal commerce of a State, it may be exerted within the State to protect the products of other States and countries from an injurious discrimination founded on their origin.

I may repeat what has been elsewhere stated, that corporations chartered by other States are not citizens within the meaning of the clause, and may consequently be taxed at a higher rate than that imposed on individuals or companies chartered by the legislature which lays the tax, or more accurately be required to pay a license fee for the privi- · lege of transacting business within the State and enjoying the protection of its laws.4

1 Walling v. Michigan, 116 U. S. 446, 457.

2 12 Wallace, 418.

8 100 U. S. 434.

4 Paul v. Virginia, 8 Wallace, 168; Philadelphia Transportation Association v. New York, 119 U. S. 110.

LECTURE XVII.

-

General Principles of Taxation. Distinction between Taxation and Confiscation. Illegality of a Tax not levied for a Public Purpose. — Unequal Burdens of a Protective Tariff. Legislative Appropriation of Money raised by Taxation for the Benefit of Individuals. — Difficulty of defining Public Purposes. - Industrial Enterprises. Aiding the Inhabitants to rebuild a Town destroyed by Fire. Repayment of Debts incurred by Individuals for Public Purposes. -- Schools, Almshouses, and Hospitals. - Pensions. — Dikes. — Irrigation. — Drainage. Uniformity essential to Taxation. — Classification for Purposes of Taxation a Legislative Function. Taxation of the Whole for the Benefit of a Part. Municipal Taxation of Rural Property for Urban Improvements. Taxation of a Part for the Benefit of the Whole. Assessment of Damages for opening Streets. — Taxation in Proportion to Benefit, the True Rule of Apportionment. The Ascertainment of the Benefit. - Taxation of Railway or Municipal Bonds held by Nonresidents. Concurrent Taxation by the States and the United States.

TAXATION has been defined as the subtraction of a small

portion of the constantly accumulating mass of private property for the purpose of the government by which the tax is imposed, and is distinguished from confiscation by the end in view, which is to provide for the defence, security, and welfare of the community, including the persons who pay the tax. Agreeably to the Fifth Amendment and the organic laws of the various States, "Private property shall not be taken for public use without just compensation." Taxation is such a taking, and would be at variance with these guaranties but for the presumption that the citizen is benefited through the appropriation of the money raised by the tax in some just proportion to the sum which he is compelled to pay. It follows

1 Hammett v. Philadelphia, 65 Pa. St. 146, 152; Kelly v. The City of Pittsburg, 85 Pa. St. 170, 184; Lexington v. McQuillan, 9 Dana, 513; Tidewater Co. v. Coster, 3 C. E. Green, 518; The People v. The Mayor of Brooklyn, 4 Comstock, 419, 424; Livingston v. Paducah, 80 Ky. 656.

that when the proceeds are by the terms of the act to be appropriated to a private purpose, as where an act of assembly required insurance, trust, and annuity companies to pay two per cent of their gross earnings to an association for the relief of disabled firemen, the presumption is rebutted, and the tax illegal.

Such a measure may be termed "taxation," but is in effect taking the property of one man to bestow it on another, and contrary to the fundamental rule that no one shall be deprived of life, liberty, or property, save by the judgment of his peers or the law of the land.1 Had the tax been for the support of a fire department, it would have been valid, as tending to an end in which the insurance companies and the community were alike interested; but charity to disabled firemen is no more a public use than if it were bestowed on sufferers of any other class.2

To warrant taxation, the purpose must consequently not only be beneficial, but concern the public. A merely private benefit is not enough, although conferred upon the parties who oppose the tax and affording an ample compensation; because under a free government, when no public considerations are involved, every man should be allowed to choose for himself. An act authorizing commissioners to construct the dikes, flood-gates, ditches, and other works requisite for draining a marsh or bog at the expense of the owners, without inquiring whether the undertaking is demanded by, or conducive to, the welfare or health of the community, is therefore not less unconstitutional, if viewed merely as a tax, because the benefit will more than repay the debt.3

So the legislature cannot authorize a municipal corporation to issue bonds for the purpose of lending them to persons engaged in manufacturing within its limits, because such a grant implies the right and duty to tax as a means of pay

1 Philadelphia Association v. Wood, 39 Pa. 73; Weber v. Reinhard, 73 Pa. 370, 373; Butler v. Supervisors, 26 Mich. 29.

2 Parkersburg v. Brown, 106 U. S. 487, 501.

Scott v. Philadelphia, 81 Pa. 80; Butler v. The Supervisors, 25 Mich. 29. See Wurtz v. Hoagland, 114 U. S. 606; post, p. 289.