asion,
which otherwise might exist, for an apportionment among the
states of taxes laid on income, whether it be derived from one
source or another....

[Footnote 1: _Peck v. Lowe_, 247 U.S., 165.]

In a case decided a little earlier[1] the Court, speaking through Chief
Justice White, had said:

By the previous ruling (i.e., in _Brushaber v. Union Pacific
Railway Co._, 240 U.S., 1) it was settled that the provisions
of the Sixteenth Amendment conferred no new power of
taxation....

[Footnote 1: _Stanton v. Baltic Mining Co._, 240 U.S., 103, 112.]

From what has been said it will be evident that the doctrine of
exemption of state and municipal bonds from federal taxation is firmly
embedded in our law and has not been affected by the Sixteenth
Amendment.

Whether it is a doctrine suited to present-day conditions is a question
outside the scope of this paper.

The fear of federal encroachment, so strong in the minds of the makers
of our Constitution, has become little more than a tradition. To many it
doubtless will seem that any rule of law which operates to prevent the
nation, in the great exigency of war, from taxing a portion of the
property of its citizens is pernicious and should be changed.

If this be the view of a sufficient number the change can and will be
made. Lawyers think, however, that it will have to be done by the
orderly method of constitutional amendment, not by passing taxing
statutes which a reluctant Court will be obliged to declare
unconstitutional.

Just now the tide of popular sentiment is setting strongly toward such a
change. It was advocated in a recent Presidential message.[1] The
immunity enjoyed by state bond issues is coming to be regarded less as a
safeguard of state rights than as a means whereby the rich escape
federal income surtaxes. One is tempted to predict that the next formal
amendment of the Constitution will deal with this subject. If so,
another inroad will have been made by the General Government on the
failing powers of the states.

[Footnote 1: Message of President Harding to Congress, December 6,
1921.]

X

IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL?[1]

[Footnote 1: Since this chapter was first published in 1909 as an
article in the _Outlook_ magazine the specific question propounded in
its title has been settled by the Supreme Court (_Flint v. Stone Tracy
Co._, 220 U.S., 107). The paper is here reproduced, howe