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Collector v. Day
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| Collector v. Day | |
| Reference: 78 U.S. 113 | |
| Term: 1871 | |
| Important Dates | |
| Argued: February 3, 1871 Decided: April 3, 1871 | |
| Outcome | |
| United States Circuit Court for the District of Massachusetts affirmed | |
| Majority | |
| Chief Justice Salmon Chase • Samuel Nelson • Nathan Clifford • Noah Swayne • Samuel Miller • David Davis • Stephen Field • William Strong | |
| Dissenting | |
| Joseph Bradley | |
Collector v. Day is a case decided on April 3, 1871, by the United States Supreme Court, which upheld the decision of the United States Circuit Court for the District of Massachusetts and ruled Congress did not have the power to tax the incomes of state employees. The decision was reversed in Graves ex rel. O'Keefe v. New York in 1939 when the Supreme Court ruled the state of New York had the authority to levy a nondiscriminatory income tax on a federal employee who resided in the state.[1]
Why it matters: The Supreme Court's decision exempted state employees from federal taxes. Writing for the court, Justice Samuel Nelson argued for a dual federalist understanding of America's political system in which the state and federal governments constitute "separate and distinct sovereignties, acting separately and independently of each other, within their respective spheres." Graves v. New York superseded this precedent in 1939, allowing state governments to tax federal employees (and, by extension, allowing the federal government to tax state employees). Click here to read more.
Background
The federal government passed a series of laws between 1864 and 1867 establishing a 5% tax on income earned over $1,000. The tax applied to all capital gains, profits, and incomes of U.S. citizens.[1]
A collector of internal revenue assessed a $61.50 tax under the federal law on Massachusetts Court of Probate Judge J.M. Day. Day paid the tax and filed a lawsuit against the collector to recover the payment. Day argued the federal government did not have the explicit authority under the Constitution to tax incomes paid out of state treasuries, claiming it encroached on state powers.[1]
The United States Circuit Court for the District of Massachusetts ruled that applying the tax to state employees was unconstitutional and the collector appealed the case to the Supreme Court.[1]
Oral argument
Oral argument was held on February 3, 1871. The case was decided on April 3, 1871.[1]
Decision
The Supreme Court decided 8-1 that Congress could not tax the incomes of state officials based on the Tenth Amendment and the inability of states to tax federal officials similarly.[1]
Opinions
Opinion of the court
Justice Samuel Nelson, writing for the court, argued that the Constitution did not expressly allow the federal government to tax state governments or the instruments of their operations (such as state employees) and that such taxing powers are implicitly denied under the Tenth Amendment.
| “ | The Constitution guarantees to the states a republican form of government, and protects each against invasion or domestic violence. Such being the separate and independent condition of the states in our complex system, as recognized by the Constitution, and the existence of which is so indispensable, that, without them, the general government itself would disappear from the family of nations, it would seem to follow as a reasonable if not a necessary consequence that the means and instrumentalities employed for carrying on the operations of their governments, for preserving their existence, and fulfilling the high and responsible duties assigned to them in the Constitution, should be left free and unimpaired, should not be liable to be crippled, much less defeated by the taxing power of another government, which power acknowledges no limits but the will of the legislative body imposing the tax.[1][2] | ” |
Dissent
Justice Joseph Bradley argued that every state official was also a citizen of the United States and equally responsible for paying taxes to sustain the federal government, which had the explicit power to raise taxes. Justice Bradley argued the federal government's taxing power did not stop at state government officials.
| “ | I dissent from the opinion of the Court in this case because it seems to me that the general government has the same power of taxing the income of officers of the state governments as it has of taxing that of its own officers. It is the common government of all alike, and every citizen is presumed to trust his own government in the matter of taxation. No man ceases to be a citizen of the United States by being an officer under the state government. I cannot accede to the doctrine that the general government is to be regarded as in any sense foreign or antagonistic to the state governments, their officers, or people; nor can I agree that a presumption can be admitted that the general government will act in a manner hostile to the existence or functions of the state governments, which are constituent parts of the system or body politic forming the basis on which the general government is founded. The taxation by the state governments of the instruments employed by the general government in the exercise of its powers is a very different thing. Such taxation involves an interference with the powers of a government in which other states and their citizens are equally interested with the state which imposes the taxation. In my judgment, the limitation of the power of taxation in the general government which the present decision establishes will be found very difficult of control.[1][2] | ” |
Aftermath
| Federalism |
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| •Key terms • Court cases •Major arguments • State responses to federal mandates • Federalism by the numbers • Index of articles about federalism |
Collector v. Day was superseded in 1939 when the Supreme Court ruled in Graves v. New York that the state of New York had the authority to levy a nondiscriminatory income tax on a federal employee who resided in the state. The court decided such taxation of individual employees was not a tax on the federal government itself or its operations and that, likewise, a federal tax on individual incomes of state employees was not an unconstitutional tax on state governments. To read more about the decision, click here.
See also
- Separation of powers
- Supreme Court of the United States
- History of the Supreme Court
- Dual federalism
External links
- Full text of case syllabus and opinions (Justia)
- Supreme Court of the United States
- Search Google News for this topic
Footnotes
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