the owner may reside in another state (New Orleans v. Stempel). This may result in double taxation, that is, in the case of personal property the owner may be taxed on such property where he resides, though the property itself is in another state, and the state in which the property actually is may levy taxes thereon regardless of the fact that the owner lives and is taxed on such property in another state. It is, of course, inequitable that the owner of property should be compelled to pay taxes thereon in two distinct jurisdictions, but it is impracticable entirely to avoid such results under present methods of taxation.

Double taxation also results from the levying of taxes on real property for its full value in the state where the property is situated, while one to whom the owner owes indebtedness secured by mortgage on the property is also taxed on the notes evidencing such indebtedness and the mortgages given to secure them; but it seems to be impracticable to avoid such a result without, in some cases, allowing persons to escape taxation on property with which they are justly chargeable. Perfect equality and equity as to the burdens of taxation cannot be attained, and the best that can be done is to adopt such a basis for the levying of taxes and such methods for their collection as shall on the one hand afford necessary public revenue, while on the other they are apportioned as fairly and justly as may be among the persons and property subject to the taxing power.

But taxes cannot be imposed upon property which is in no sense within the jurisdiction of the taxing power. If neither the property nor the owner is within the state, then no tax can be imposed by the state. For instance, it has been held in Murray v. Charleston that if municipal bonds are owned by a non-resident of the state, the legislature cannot authorize the municipality issuing and under obligation to pay interest on such bonds to deduct a portion of the interest by way of taxes as against the non-resident owner of the bonds. For similar reasons the state in which is situated real property that is mortgaged to a non-resident cannot require that a part of the interest on the mortgage indebtedness be paid by the debtor

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to the state by way of tax against the non-resident owner (State Tax on Foreign-Held Bonds). But there seems to be no legal objection to requiring a non-resident mortgagee to pay taxes on his interest in the mortgaged real property where the property is situated. (See Savings Society v. Multnomah County.)

73. Taxation of Government Officers or Agencies.

It results from the peculiarities of our dual government, involving the co-existence within the same territorial limits of federal and state authority, that neither government can tax the property, the agencies, or the instrumentalities of the other. Thus a state cannot tax lands or buildings belonging to the federal government (Wisconsin Central R. Co. v. Price County), nor can a state, without the permission of the federal government, tax as property the bonds or currency issued by the federal government, though owned by private individuals. It has frequently been said, and the statement is considered to be an axiom, that the power to tax involves the power to destroy, and if a state could tax the persons who owned bonds or currency of the federal government, it could thereby make it more difficult for the federal government to borrow money by the issuance of bonds, interfere with its proper regulation and control of the currency, and thus impair its efficiency. Therefore, a bank having a portion of its capital stock invested in United States bonds cannot be directly taxed by the state on the portion of its capital stock thus invested (Bank of Commerce v. New York City); but there seems to be no valid reason why the owners of shares of stock in a bank should not be taxed on the basis of the value of such shares, though the property of the bank may be to some extent invested in United States bonds. For similar reasons, currency issued by the United States government was held not to be subject to state taxation in the hands of persons holding it; but the statutes of the United States now authorize the taxation of United States currency, the same as other money held by individuals (see Act of 1894), and such consent by the United States removes any objection to such taxation by the states.

National bank notes are subject to state taxation under the federal statute which authorizes the creation and operation of the national banks as well as under the statute relating to taxation of treasury notes just referred to. The same reasons which require the exemption of United States property and the bonds and currency issued by the United States from state taxation except by the consent of the federal government, also require that the officers of the federal government shall not be taxed on their salaries by the states in which they reside (The Collector v. Day and Dobbins v. Commissioners).

On the other hand, the federal government cannot impair or interfere with the legitimate operations of the state governments. Therefore, the federal government has no authority to exact an income tax from state officers on the basis of their salaries; nor to require federal stamps to be placed on the processes of state courts, or on state bonds or warrants, or on the bonds of state officers. Neither government has any power to interfere with the other in the exercise of its legitimate functions.

Some of the functions of the federal government may be carried on by corporations organized under its authority. Thus in McCulloch v. Maryland it was held that the property of a branch of the United States Bank, chartered by Congress, was exempt from state taxation. Under its authority to regulate post-offices and post-roads and provide for the carrying on of its necessary operations in the transportation of property and troops, the federal government has also granted charters or franchises; and it has been held (Pacific Railroad Cases) that the franchises of such corporations, and the property used by them in carrying on the operations authorized by the federal government, are not subject to state taxation. But the fact that a railroad company enjoys a franchise granted to it by the federal government does not necessarily exempt it entirely from taxation by a state in which it carries on its business. The rule seems to be that such a corporation is exempt from state taxation only so far as it is using its property in the performance of the functions authorized by the federal government.

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74. Due Process of Law as to Taxation; Rule of

Uniformity.

While the states may exercise a large discretion as to the purposes for which taxes shall be imposed, the property from which they shall be derived, and the methods in which they shall be levied and enforced as against such property, there are limitations in the federal constitution on the exercise of these powers which must always be borne in mind. The provisions of the Fourteenth Amendment to the federal constitution prohibiting states from depriving any person of property without due process of law, and from denying to any person the equal protection of the laws, are applicable to taxation as well as to other forms of the exercise of state power. "Due process of law" in this connection means that taxes must be for a public purpose, and imposed and collected in the usual methods applicable to the raising of revenue. These usual methods will be briefly described in a subsequent section of this chapter. But an attempt by the state in any method to exact taxes from persons or property not within its jurisdiction, or for a purpose not essentially public in its nature, would be an attempt to take property without due process of law, and therefore unlawful. The state cannot under the pretence of taxation impair fundamental individual rights to property. It cannot exact money from one person to pay it over to another for purposes which are not public, for this would not be a legitimate exercise of the power of taxation.

The very nature of the power to raise money by means of taxation involves the idea of an apportionment of the burden in accordance with some principle of uniformity. Absolute uniformity is impracticable and it would be equally inexpedient. The legislative power may, in its discretion, adjust the burdens of government so as to make them fall in some measure in accordance with the benefits resulting and the protection afforded. Different classes of property may be taxed in different methods, and different classes of persons may be required to contribute to the maintenance of government in different ways;

and as long as the classifications made are reasonable and general, they will not be objectionable, though they may result in some measure of inequality. But if the lands of non-residents are taxed on a higher valuation, or at a higher rate than the lands of residents; or if some persons are required to pay a higher charge for the privilege of pursuing a particular occupation than other persons, the uniform operation of the law required by the Fourteenth Amendment is denied, and the distinctions thus attempted would be invalid.

The principle of uniformity requires some correspondence between burdens and benefits. The general advantages of government as to the protection of persons and property constitute all the benefits necessary to sustain a general tax applicable to persons and property within the jurisdiction of the state; but as to municipal taxes and special taxes for improvements, the question may sometimes be raised whether the person or property taxed is within the benefit of the tax in such sense as to authorize its imposition. Thus general municipal taxes may properly be laid on all property within the municipal limits; but if it is attempted to bring within the municipal limits agricultural land, which is not in any way benefited by the municipal government, it may well be said that the owner of such property does not belong to the class of persons, and his property does not belong to the class of property, which can properly be subjected to such taxes; and that the tax is not therefore levied according to the principle of uniformity. (See Kelly v. Pittsburg.)

Similar considerations apply to special assessments for public improvements, such as the paving of streets, the construction of sewers, and the like. These objects are sufficiently public. in their nature to justify a general municipal tax therefor upon all property within the municipality. But property deriving a peculiar advantage from such improvements may properly be required to pay a special tax therefor by reason of such special benefit (see French v. Asphalt Co.), and the question often arises whether specific property is justly included within the class of property deemed to be especially benefited, and