LEGAL OBJECTIONS TO THE MASSACHUSETTS SYSTEM. — In maintaining the position that conflicting laws and decisions render it impolitic, if not impossible, to assess a very large proportion of the personal property of the community, the commissioners specify several important classes of this property, and cite the legal decisions which seem to sustain their views.

A brief examination of their authorities is desirable, that an opinion may be formed as to the correctness of their conclusion. They claim, First, that "imported goods, wares and merchandise, in original packages, in possession of the merchant importer," cannot be taxed; the question of the right of a State to tax being decided negatively, in their opinion, by the Supreme Court of the United States, in the case of Brown v. the State of Maryland (12 Wheaton, 449). The point involved was “the legality of a license tax imposed by the State, as a prerequisite to the right to sell an imported article." There is certainly a broad distinction between the prohibition of a right to sell an imported article, and the right to tax the same as property. The decision of the United States Court was to the effect that the State could not enact a law that would prevent the sale of such property, and did not touch the question of the right to tax. In a recent decision of the Supreme Judicial Court of Massachusetts (Dunbar v. Boston, 101 Mass. 317), where the question was raised that the Commonwealth could not tax a stock of liquors, the sale of which by her laws she had declared illegal, the court sustained the tax, upon the ground that the case did not show that the goods could not be legally sold. As the law stood at the time the decision was given, but one class of the plaintiff's stock of intoxicating liquors could legally be sold; and that was his importations in the original packages. The Second position of the Commissioners, that "bonds, notes and other securities, or evidence of indebtedness of the United States," are exempt from taxation, will, of course, be admitted without question. Whatever may be thought of the policy that withdrew so

large an amount of the capital of the country from assessment, held as it is to a very large extent in the hands of our wealthiest citizens, the expediency of the exemption would, perhaps, be more generally questioned, if it could be known to how great an extent these bonds are made to assist other property in evading taxation.

Third. "The deposits and the surplus of the savings banks," not taxed by the State of New York, are conceded by the commissioners to be legitimately within the control of the State, for the purpose of taxation.

The annual assessment of this class of personal property by the Commonwealth of Massachusetts, to the amount of threefourths of one per cent on their gross deposits, although it incidentally taxes the United States bonds in which these banks are largely invested, will not probably be objected to, except upon the ground of policy.

Fourth. "Indebtedness. The commissioners, while expressly declining to recognize, ❝ that the debt obligations of individuals are legitimate objects of taxation," do not affirm that any legal obstacles prevent their assessment. But their position, "that a refusal to allow indebtedness to offset valuation, would, if thoroughly carried out, be destructive of commerce and business," would seem to be answered by the fact, that Massachusetts has, for many generations, refused to allow such deductions to the holders of either real or personal property; and that her assessments upon homes and other real estate incumbered by mortgage, upon stocks of goods and tangible property upon which debts were due, have been uniformly collected, while her advance in general prosperity is indicated by all available statistics. In their enumeration of property, the assessment of which in the opinion of the commissioners is illegal, or of doubtful legality.

The fifth class is "personal property belonging to citizens, but actually situated out of the state." Their conclusion upon this

question, and the double taxation that is incident to it, is, "that the practice of Massachusetts, Rhode Island, and other states in taxing property of a visible, tangible character, situated beyond and without their own territory, is contrary alike to the spirit of international or interstate law, to the just powers of any state, and to the principles of justice and equity." In view of the fact that there probably does not exist in any part of the world, a tariff or revenue law, of any state or nation, that was not enacted with reference solely to the material interests of the sovereignty that created it, it is, perhaps, a little unreasonable, that any one of the great family of nations or sisterhood of states, should be urged to yield up a substantial revenue, upon the abstraction that its collection is contrary to the equitable principles of international or interstate law. Of legal decisions touching this question, the commissioners cite but one; the opinion of the New York Court of Appeals in the case of Hoyt v. the Commissioners of New York (23 New York, 240).

An extract from this decision in their report would seem to show that a class of personal property has been removed from her taxation, which, in Massachusetts, has been assessed from time immemorial. The legality of such assessments in this Commonwealth have been contested; but they have uniformly been sustained by the Supreme Judicial Court. (Dwight v. Boston, 12 Allen, 316. Bemis et al v. Boston, 14 Allen, 366. Great Barrington v. Berkshire, 16 Pick. 572.)

The sixth class discussed is "property in transitu "; and under this head is included goods consigned for sale by non-residents. The commissioners refer to a case, Parker Mills v. Commissioners of New York, in which the Court of Appeals decided that property sent into the State for sale was not taxable, although the owner of the property had established a depot, and sold by an agent in the city of New York, mainly upon the ground, that the State had made no law requiring such property to be

assessed. A similar decision, for the same reason, would undoubtedly be given by Massachusetts courts as to goods consigned for sale; but not as to goods sold by an agent, in a store hired by a non-resident. "What a man does by his agent he does himself." The right of the States to tax this class of property has been affirmed by the Supreme Court of the United States, in the case of Woodruff v. Parham (8 Wallace, 138).

The seventh position of the commissioners is to the effect that "negotiable instruments," (the principal of which are the bonds of States, and the stocks and bonds of corporations, and which are known to Massachusetts law as "shares in moneyed corporations," and "public securities,") are not taxable, except by the States which create the securities, or charter the corporations by whom they are issued. To the decisions of the English courts and the practice of that government, which taxes the non-resident holders of its national debt, and then declares "that Russian, Danish, and Dutch government bonds, payable to bearer, have a situs where they are actually situated and may be there taxed for probate duty," notwithstanding those governments may have followed the examples of their own, and themselves have taxed the debt; and to the opposite and inconsistent position of New York upon this question, and to the various and contradictory decisions of other States; it may be sufficient to answer, that they do not touch the right of the several States to tax this class of property, if their organic and statute laws permit it. The only case cited by the commissioners (Northern Railroad v. Jackson, 7 Wallace, 262), in which the question was presented to the United States Supreme Court, was an attempt on the part of the State of Pennsylvania to tax the company for the bonds held by a non-resident, upon the property of a road, which was but partly within the State, and which, to a certain extent, was a Maryland corporation. The court, while denying the right to tax under these circumstances, laid down the rule that the State could assess this class of securities,

if she confined her taxation to those issued exclusively by her own corporations; and the Court, certainly, did not intimate that the non-resident was not taxable for these bonds, as personal property, in the place of his domicil. The right to tax shares held by the citizens of Massachusetts, in corporations chartered by other States, where the whole property of the corporation was beyond the jurisdiction of the Commonwealth; or to assess the shares of Massachusetts corporations; her own bonds, and those of her cities and towns, and of States and municipalities beyond her borders, has been never questioned without being sustained by the Supreme Judicial Court of Massachusetts. (Great Barrington v. Berkshire, 16 Pick. 572. Dwight v. Boston, 12 Ailen, 316. Hall v. Middlesex, 10 Allen. 100.)

The commissioners also call attention to the fact, that under the laws of New York, this class of property can be transferred to a trustee out of the State, and so escape taxation. Massachusetts long since covered this point, by providing that in such case, the tax upon the property should be paid by the person to whom the income was payable.

The eighth classification by the commissioners, relates to the "situs of ships, for the purpose of local taxation." The only decision of the United States Supreme Court quoted by them (Hays v. The Pacific Mail Steamship Co. 17 Howard, 713) goes only to the point, that the vessels of that company were not taxable in a port where they were temporarily located, but were rightly taxed in the port where they were registered. The decision did not touch the point as to the taxation of the stock of this company in the hands of the citizens of the several States, or the right to assess the joint owner of shipping in the place of his domicil, other than the port of registry. The Supreme Judicial Court of Massachusetts have decided (Peabody v. Essex, 10 Gray. 97) that the shipping of a copartnership is taxable at the place of the firm domicil, which may be other than the port of registry.