Springer v. United States, 102 U.S. 586 (1885)

LINK: https://scholar.google.com/scholar_case?case=3081110958181951212

SIGNIFICANCE: George Springer reaped interest income from United States bonds. So he was not difficult for the Collector to locate to demand that Springer file a return and pay tax on that. Springer followed the instructions on the form and reported not only his interest from U.S. bonds but also his professional fees he collected as an attorney.

He then refused to pay, arguing the tax law was an unconstitutional direct tax. This did not work out well for Springer. Eventually his farm was seized and sold.

The Supreme Court rejected Springer’s argument that the law AS WRITTEN was an unapportioned direct tax. The SCOTUS upheld the 1864 tax as an indirect tax in the nature of an excise.

The question, what is a direct tax, is one exclusively in American jurisprudence. The text-writers of the country are in entire accord upon the subject.

Mr. Justice Story says all taxes are usually divided into two classes, — those which are direct and those which are indirect, — and that “under the former denomination are included taxes on land or real property, and, under the latter, taxes on consumption.” 1 Const., sect. 950.

Chancellor Kent, speaking of the case of Hylton v. United States, says: “The better opinion seemed to be that the direct taxes contemplated by the Constitution were only two; viz., a capitation or poll tax and a tax on land.” 1 Com. 257. See also Cooley, Taxation, p. 5, note 2; Pomeroy, Const. Law, 157; Sharswood’s Blackstone, 308, note; Rawle, Const. 30; Sergeant, Const. 305.

We are not aware that any writer, since Hylton v. United States was decided, has expressed a view of the subject different from that of these authors.

Our conclusions are, that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate; and that the tax of which the plaintiff in error complains is within the category of an excise or duty. Pomeroy, Const. Law, 177; Pacific Insurance Co. v. Soule, and Scholey v. Rew, supra.

The interest from United States Bonds that Springer owed income tax on had a federal nexus, meaning it was a payment FROM the United States government. It was thus one of the few “U.S. sources” there is in the code. So of course he owed income tax on the interest.

In Springer, the nexus already existed to the U.S. bond income but was EXTENDED to all of Springer’s earnings via Springer’s own self-assessment!