Snyder v. Bettman/Dissent White
Mr. Justice White, with whom concur Mr. Chief Justice Fuller, and Mr. Justice Peckham, dissenting:

It is conceded in the opinion of the court that the bequest upon which it is sought to levy the United States inheritance tax was made to a municipal corporation for a public, that is, a governmental, purpose. This being the admitted premise, I cannot give my assent to the proposition that the tax can be imposed. Nothing is better settled than that the United States has no power to tax the governmental attributes of the states, and that municipal corporations are agencies of the states, and not subject, as to their public rights and duties, to direct or indirect taxation by the United States. The doctrine has nowhere been more clearly stated than in Pollock v. Farmers' Loan & T. Co. 157 U.S. 429, 583, 584, 39 L. ed. 759, 820, 15 Sup. Ct. Rep. 673, 690. In that case, despite the division of opinion on other questions, the court was unanimous in holding that, in any event, income subject to taxation by the United States could not include interest derived from municipal bonds, because to include such interest in income subject to taxation would amount at least to an indirect charge upon a state governmental agency. Speaking through Mr. Chief Justice Fuller, the court said:

'The constitution contemplates the independent exercise by the nation and the state, severally, of their constitutional powers.

'As the states cannot tax the powers, the operations, or the property of the United States, nor the means which they employ to carry their powers into execution, so it has been held that the United States have no power under the Constitution to tax either the instrumentalities or the property of a state.

'A municipal corporation is the representative of the state, and one of the instrumentalities of the state government. It was long ago determined that the property and revenues of municipal corporations are not subjects of Federal taxation. The Collector v. Day, 11 Wall. 113, 124, sub nom. Buffington v. Day, 20 L. ed. 122, 126; United States v. Baltimore & O. R. Co. 17 Wall. 322, 332, 21 L. ed. 597, 601.'

It is true that in United States v. Perkins, 163 U.S. 625, 41 L. ed. 287, 16 Sup. Ct. Rep. 1073, and Plummer v. Coler, 178 U.S. 115, 44 L. ed. 998, 20 Sup. Ct. Rep. 774, it was held in the one case that an inheritance tax of the state of New York could be taken out of a bequest to the United States, and in the other that a bequest of bonds of the United States was subject to a state inheritance tax. It is also true that in Knowlton v. Moore, 178 U.S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747, it was decided that the United States had the power to impose an inheritance tax. But the ruling in none of these cases, in my opinion, sustains the decision now made. The power of the state of New York, which was upheld in both the Perkins and Coler cases, rested not simply on the authority of that state to impose an inheritance tax, but upon its admitted right to regulate the transmission or receipt of property by death. On the other hand, the right of the United States to levy and inheritance tax, which was upheld in Knowlton v. Moore, was based solely upon the power of the United States to tax, and that case, therefore, conveys no intimation that there is authority in the United States to levy an inheritance tax upon an object which it has no power under the Constitution to tax at all, either directly or indirectly. The distinction between the two, that is, between the broader power of a state, resulting from its authority not only to tax but also to regulate the transmission or receipt of property by death, and the narrower power, that is, of taxation alone, vested in the government of the United States, was explicitly pointed out in Knowlton v. Moore, 178 U.S. at page 57, 44 L. ed. at p. 976, and 20 Sup. Ct. Rep. at p. 754. Moreover, attention was specially directed to the obvious distinction between the two on page 58, L. ed. p. 977, Sup. Ct. Rep. p. 754, where it was said:

'Of course, in considering the power of Congress to impose death duties, we eliminate all thought of a greater privilege to do so than exists as to any other form of taxation, as the right to regulate successions is vested in the states, and not in Congress.'

So also, the difference between the two had been previously accentuated in Magoun v. Illinois Trust & Sav. Bank, 170 U.S. 287, 288, 42 L. ed. 1040, 18 Sup. Ct. Rep. 594. There is no confusion between the two classes of cases, and no room in reason seems to me to exist for the assumption that things which are different are nevertheless one and the same. On the contrary, to my mind it appears that misconception will necessarily be caused by confounding wholly different powers and from supposing that, because a particular result is justified where a specified power exists, the same consequence must obtain where the power upon which it depends is wanting. Certainly, I assume, it cannot be said because a state has the right to regulate successions and, therefore, to prevent property from passing by death to the United States, hence, also, the United States must have power, by regulating successions, to prevent property from passing by death to a state or its governmental agencies. And yet, in my opinion, this is the logical consequence of the doctrine that because cause the states may, in virtue of an authority belonging to them, accomplish a particular result as regards the United States, therefore the United States must have the right to bring about the same thing as to the states. The United States not possessing, as the states do, the right to regulate successions, when the United States calls into play its taxing power over the subject of the passage or receipt of property by death, the extent of its authority is to be measured solely by the scope of the taxing power conferred by the Constitution. When, on the contrary, the state imposes a burden upon the passage or receipt of property by death, its right to do so, if not sustainable by the exercise of the taxing power, finds adequate support in the authority vested in it to regulate the transmission or receipt of property on the occasion of death. This was clearly pointed out in United States v. Perkins, 163 U.S. 630, 41 L. ed. 289, 16 Sup. Ct. Rep. 1075, where it was said: 'The legacy becomes the property of the United States only after it has suffered a diminution to the amount of the tax, and it is only upon this condition that the legislature assents to a bequest of it.' Nor, do I see the force of the suggestion that, as the tax in question is imposed upon the property in the hands of the executor before payment and distribution to the legatees, it, therefore, cannot be regarded as tax upon the right of the municipality to receive the legacy. It was held, after great deliberation, in Knowlton v. Moore, 178 U.S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747, that the inheritance taxes levied by the act of Congress were not imposed on the estate of the decedent, but were laid on the passing of the legacies, and on nothing else. It cannot be the intention now to bring about the confusion which must arise from overthrowing this settled doctrine, since it is conceded that the only question for decision is the right of Congress to impose a succession tax upon the bequest to a municipal corporation, for a public purpose. It being admitted that such is the question for decision, I do not perceive how that question can be solved by saying that the tax is not on the passing of the bequest to the municipality, but is imposed on the estate in the hands of the executor before the municipality receives its legacy. It was not only directly held in Knowlton v. Moore that the tax was on the transmission or the receipt of the legacy occasioned by death, and was therefore not on the property, not on the estate, not on the executor, but that it was also held to be a burden imposed on the recipient. The court said (p. 60, L. ed. p. 977, Sup. Ct. Rep. p. 755):

'Certainly, a tax placed upon an inheritance or legacy diminishes, to the extent of the tax, the value of the right to inherit or receive, but this is a burden cast upon the recipient, and not upon the power of the state to regulate.'

This conclusion was absolutely essential to the construction of the statute which was sustained in Knowlton v. Moore. I do not perceive how it can be now held that the tax is valid because it is on the estate in the hands of the executor and not a burden on the recipient, when the case of Knowlton v. Moore, which explicitly holds to the contrary, is expressly approved. It is, however, suggested that the tax is only incidentally on the right of the corporation to receive, and therefore is valid. If 'incidentally' is intended to refer to the subject upon which the tax is levied, then the proposition, in my opinion, only reiterates the misconception to which attention has been previously called, and it besides conflicts with th conceded premise that the question for decision is whether a tax can be validly imposed on the right of a municipal corporation to take a legacy. Such cannot be the question if there is no such question in the case. If the term 'incidentally' conveys the thought that the tax is only indirectly on the corporation's right to take the bequest, and therefore it may be lawfully imposed, the doctrine overthrows the rule announced by Chief Justice Marshall in M'Culloch v. Maryland, 4 Wheat. 316, 4 L. ed. 579, and reiterated in numberless cases since that decision, to the effect that where there is a want of constitutional power to tax a particular object, neither a direct nor an indirect tax can be imposed since the power to tax is the power to destroy. It to me seems that the tax here in question bears more directly upon the right of the corporation to take the bequest than did the tax which was condemned in M'Culloch v. Maryland. Assuredly, the inclusion, in income subject to taxation, of an amount derived from interest on municipal bonds, is less directly on the bonds than is the tax in this case, on the right of the municipality to take; and yet, as I have said, in Pollock v. Farmers' Loan & T. Co. the tax on an income made up in part of interest on a municipal bond was declared to be void, because, even if indirect, it could not be levied where there was no power to tax at all. The distinction was pointed out in Knowlton v. Moore, where, in referring to the statement of Mr. Chief Justice Marshall in M'Culloch v. Maryland, that the power to tax involves the power to destroy, it was said (p. 60, L. ed. p. 977, Sup. Ct. Rep. p. 755):

'This principle is pertinent only when there is no power to tax a particular subject. . . . In other words, the power to destroy, which may be the consequence of taxation, is a reason why the right to tax should be confined to subjects which may be lawfully embraced therein, even although it happens that, in some particular instance, no great harm may be caused by the exercise of the taxing authority as to a subject which is beyond its scope.'

To my mind, no doctrine more dangerous and more subversive of a long line of settled authority in this court could be announced than the statement that, although there is no power whatever to tax a particular object, the courts will nevertheless maintain a tax if it only indirectly puts a burden on the forbidden object, or that the tax may be sustained because, in the judgment of a court, the degree in which the Constitution has been violated is not great. Constitutional restrictions are, in my opinion, imperative, and ought not to be disregarded because, in a particular case, it may be the judgment of a court that the violation is not a very grievous one.

Testing the validity of the tax in this case solely by the extent of the power to tax conferred on the government of the United States by the Constitution, it follows, as the United States has no right to directly or indirectly burden a state governmental agency, that the tax here in question, in my opinion, cannot be sustained.

I am authorized to say that the CHIEF JUSTICE and Mr. Justice Peckham concur in this dissent. 

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