Pollock v. Farmers' Loan & Trust Co.
1895 U.S. Supreme Court case on the constitutionality of federal income taxes / From Wikipedia, the free encyclopedia
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Pollock v. Farmers' Loan & Trust Company, 157 U.S. 429 (1895), affirmed on rehearing, 158 U.S. 601 (1895), was a landmark case of the Supreme Court of the United States. In a 5-4 decision, the Supreme Court struck down the income tax imposed by the Wilson–Gorman Tariff Act for being an unapportioned direct tax. The decision was superseded in 1913 by the Sixteenth Amendment to the United States Constitution, which allows Congress to levy income taxes without apportioning them among the states.
Pollock v. Farmers' Loan & Trust Co. | |
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Argued March 7–8, 11–13, 1895 Decided April 8, 1895 | |
Full case name | Charles Pollock v. Farmers' Loan and Trust Company |
Citations | 157 U.S. 429 (more) 15 S. Ct. 673; 39 L. Ed. 759; 1895 U.S. LEXIS 2215; 3 A.F.T.R. (P-H) 2557 |
Case history | |
Prior | Appeal from the Circuit Court of the United States for the Southern District of New York |
Holding | |
The unapportioned income taxes on interest, dividends, and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and were unconstitutional because they violated the rule that direct taxes be apportioned. | |
Court membership | |
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Case opinions | |
Majority | Fuller, joined by Field, Gray, Brewer, Shiras |
Concurrence | Field |
Dissent | White, joined by Harlan |
Dissent | Harlan |
Dissent | Brown |
Dissent | Jackson |
Superseded by | |
U.S. Const. amend. XVI (in part) | |
Overruled by | |
South Carolina v. Baker, 485 U.S. 505 (1988) (in part) |
The US Congress had introduced an income tax during the American Civil War, but the tax was repealed in 1872. In 1894, Congress passed the Wilson-Gorman Tariff Act, which lowered tariff rates and made up for some of the lost revenue by introducing taxes on income, corporate profits, gifts, and inheritances. Chief Justice Melville Fuller's majority opinion in Pollock held that a federal tax on income derived from property was unconstitutional when it was not apportioned among the states according to representation in the House of Representatives. Fuller also held that federal taxation of interest earned on certain state bonds violated the doctrine of intergovernmental tax immunity. In one dissent, Associate Justice Henry Billings Brown wrote that the majority opinion "involves nothing less than the surrender of the taxing power to the moneyed class."
The Court's decision in Pollock was unpopular but effectively prevented Congress from implementing another income tax over the next two decades since the apportionment requirements were widely regarded as unworkable. The ratification of the Sixteenth Amendment essentially overturned the key holding in Pollock, and Congress established a new federal income tax in the Revenue Act of 1913. The Court's holding regarding the taxation of interest income on certain bonds was later overruled in the 1988 case of South Carolina v. Baker.