§ 75] Specific Limitations. 133 whether the tax is apportioned according to the benefit enjoyed. These are questions to be primarily determined by the taxing power, but it is for the courts to say ultimately, in any particular case, whether the determination reached is reasonably consonant with the requirement of uniformity. License taxes on occupations are a proper means of raising revenue, but they are often imposed as a means of police regulation of occupations or forms of business which are properly subject to such regulation, and as thus imposed, the same restrictions as to uniformity are not applicable as where the object is to raise revenue only. Licenses to sell intoxicating liquors may be restricted to a limited number of persons in the city and refused to others; or licenses to practice medicine or dentistry or pharmacy may be denied to those not having certain qualifications; or licenses may be exacted from those engaged in certain kinds of business, although not required of those engaged in other kinds of business. An example of an exaction in the form of a tax which is properly imposed for other reasons than to raise revenue is the federal tax on the currency of state banks. As an exercise of the taxing power, such an exaction could not, perhaps, be justified; but the power of the federal government to regulate the currency is a sufficient justification for an exaction, the result of which is practically to prevent the issuance of paper money by corporations chartered by a state, and to limit the use of such money to the notes issued by the federal government directly, and national bank notes issued by corporations chartered under its authority (Veazie v. Fenno). 75. Specific Limitations on State Power to Tax. Aside from the general limitations resulting from the requirements of due process of law and equal protection of the laws, the federal constitution contains some specific limitations on the state taxing power. The laying and collection of duties, imposts, and excises is a legitimate method of exercising the power of taxation; but by the federal constitution authority to raise taxes by this method is specifically conferred on the federal government (Art. I, § 8, ¶ 1), and while this does not in itself exclude the exercise of like power by the states, nevertheless it is specifically provided that "No state shall without the consent of Congress lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws" (Art. I, § 10, 2), and that "No state shall without the consent of Congress lay any duty of tonnage" (Art. I, § 10, ¶ 3). These restrictions, while they relate specifically to the state power to tax, seem to be intended to prevent interference by the states with freedom of commercial intercourse. The provision that Congress shall have power "To regulate commerce with foreign nations and among the several states and with the Indian tribes" (Art. I, § 8, ¶ 3), has been interpreted also as restricting the levying of state taxes on foreign or interstate commerce. The extent to which this clause restricts state taxation will be considered in the chapter relating to the regulation of commerce. (See below, § 92.) The validity of state inspection laws, and of state taxes on boats and vessels, has been the subject of some discussion, but the matter is not of sufficient general importance to justify further elaboration. It is sufficient to say that few attempts have been made by the states to impose taxes for the enforcement of state inspection; and that taxes on boats and vessels have been sustained where they are reasonably calculated to reach the value of the property itself, so far as it is within the jurisdiction of the states, the tonnage tax prohibited being considered to be a tax on boats and vessels based upon their capacity rather than their value. 76. Methods of State Taxation. The requirement of due process of law does not necessitate judicial proceedings to determine the amount of tax to be paid by each person and to enforce the tax as against his property. (See Kentucky Railroad Tax Cases. Also see below, § 257.) The usual method of assessment and levy for the purpose of determining the amount of tax to be paid, and of seizure and $77] State and Federal. 135 sale to enforce such payment, if the tax becomes delinquent, are themselves due process of law. But there must be a procedure of some kind to fix the valuation of the property for the purposes of taxation, and some apportionment of taxes on the basis of such valuation, and the taxpayer must have some kind of notice to enable him to pay before his property is seized. The ordinary public taxes which are based on property owned are usually apportioned by means of an assessment of the value of the property, made by proper officers, for determining the amount belonging to each taxpayer; and following the assessment there is usually a levy made by some proper board or tribunal which determines the amount which each property owner must pay in order that the desired aggregate sum of public money shall be raised. As to the general public taxes. which are levied in accordance with law on assessments regularly provided for, the law itself constitutes sufficient notice, and the taxpayer is bound to ascertain the sum required of him and pay it within the time required by the general statutes; but as to special taxes for public improvements and the like, the taxpayer is entitled to some specific notice of the proceeding in which it is to be determined whether he or his property is within the class subject to the tax, and of the amount which he is required to pay, so that he shall have opportunity to make payment. On failure to pay either a general or a special tax, the property of the taxpayer may be seized and sold; but he may by judicial proceedings question the validity of the tax sought to be exacted. 77. Federal Taxation. As the federal government is one of enumerated powers rather than of general powers, we find the power to levy taxes expressly conferred upon Congress in the federal constitution. Perhaps the power to levy taxes for the purpose of carrying out the objects for which the federal government was created would have been necessarily implied without specific provision; but one of the difficulties attending the form of government provided for by the Articles of Confederation was that it could not exercise the power of taxing persons or property, but was dependent on contributions from the state governments; and while the Congress of the Confederation could apportion among the states the charges of war and of other expenses incurred for the common defence and welfare, no method was provided by which the states could be compelled to raise and turn over to the federal government the sums thus apportioned to them. It was to be expected, therefore, that the framers of the federal constitution should incorporate therein. some specific provision by which the federal government should have this power so essential to its existence. This specific authority is given in the following clause: "The Congress shall have power: - To lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts, and excises shall be uniform throughout the United States" (Art. I, § 8, ¶ 1). The power to tax for the purpose of raising public money is thus specifically given, and the purposes for which taxes may be levied and collected are as broad as the needs of the government can possibly be, for any public purpose within the scope of the powers given to the federal government would fall within the authority to raise revenue, "To pay the debts and provide for the common defense and general welfare." Within this general authority, it is for Congress to determine what is a proper purpose and the method and extent of exercising the taxing power. The power to tax thus given to Congress undoubtedly extends in a general way to all persons and property within the jurisdiction of the United States. But the further specification of the power to lay and collect duties, imposts, and excises, with the concluding limitation that they shall be uniform throughout the United States, suggests a distinction between such duties, imposts, and excises which are required to be uniform, and direct taxes which, by other provisions, are required to be apportioned among the several states according to population (Art. I, § 2, 3, and § 9, 4). These two forms of federal taxation will therefore be separately considered. § 78] Duties, Imposts, and Excises. 137 78. Duties, Imposts, and Excises. As a matter of practical expediency, the power of federal taxation for the raising of public revenue is exercised almost entirely by the levy and collection of duties, imposts, and excises. These are merely different forms of taxes. "Duties and imposts" cover levies on imports and exports of commodities; and the power to levy these, in its discretion, is restricted only by two clauses, the one included in the general provision already quoted that they shall be uniform; and the other in the clause providing that, "No tax or duty shall be laid on articles exported from any state (Art. I, § 9, ¶ 5). In the exercise of the power to levy and collect duties and imposts, import duties are levied which are either (1) specific, that is, in accordance with quantity, or (2) ad valorem, that is, in accordance with value, upon very many classes of goods brought from foreign countries; and from this source a large portion of the revenue of the United States government is derived. The extent to which this taxing power shall be carried, and the methods in which it shall be exercised, are peculiarly within the discretion of Congress, and as the states cannot levy taxes on imports or exports, as already indicated, this is a source of revenue available only to the United States. The term "excises " applies to taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon the privilege of pursuing occupations, upon corporate privileges, and the like. The power of levying and collecting such taxes is exercised in a variety of ways. Thus manufacturers of alcohol and various forms of liquors containing alcohol, and manufacturers of tobacco in various forms, are required to pay taxes on their manufactured products; sellers of such products, whether at wholesale or retail, are required to pay a license fee for the privilege of carrying on their business; license fees are also required for the privilege of conducting other forms of business or engaging in specified occupations; and when specific emergencies have necessitated special rev、 |