Pollock v. Farmers' Loan & Trust Company 1895
| Author | Daniel Brannen, Richard Hanes, Elizabeth Shaw |
| Pages | 1108-1113 |
Page 1108
Appellant: Charles Pollock
Appellee: Farmers' Loan & Trust Company
Appellant's Claim: That the Income Tax Act of 1894 violated the tax powers of Congress as provided in Article I of the U.S. Constitution.
Chief Lawyers for Appellant: William D. Guthrie, Clarence A. Seward, Joseph H. Choate
Chief Lawyers for Appellee: Herbert B. Turner, James C. Carter
Justices for the Court: David Josiah Brewer, Henry Billings Brown, Stephen Johnson Field, Chief Justice Melville Weston Fuller
Justices Dissenting: Horace Gray, John Marshall Harlan I, George Shiras, Jr., Edward Douglas White (Howell Edmunds Jackson did not participate)
Date of Decision: May 20 1895
Decision: Ruled in favor of Pollock by finding the general income tax provision of the act unconstitutional.
Significance: After striking down the income tax law, the income tax issue did not fade. Demand for a constitutional amendment grew to give Congress power to levy an income tax. Eighteen years later the Sixteenth Amendment was adopted authorizing Congress to impose income taxes without the taxing restrictions originally written in the Constitution.
Page 1109
During the latter decades of the nineteenth century, the U.S. economy was completing its transition to a more industrialized society. Big business, run by a few elite industrialist leaders, was gaining control of the nation's economy which had earlier been based largely on farming and agriculture earlier. An agrarian reform movement grew in the 1870s and 1880s for the purpose of defending the interests of farmers from the potential economic threats of big business. During the 1890s the agrarian (farming) movement gave way to a broader political reform movement called Populism. The movement included not only farmers, but workers, small business owners and anyone else subject to economic policies of big business.
A key goal of the Populists was passage of an income tax which would place a greater burden on the wealthy to finance government services. An income tax is a charge applied to the money made by individuals and corporations coming from business, investments, real estate earnings, and other sources. A national income tax had existed earlier, created in 1862 to raise revenue to pay expenses of the American Civil War (1861–1865). But, it was repealed in 1872.
With a national economic crisis in 1893 declining government revenues made adoption of an income tax system more attractive to a broader population. The following year, Congress passed the Income Tax (Wilson-Gorman Tariff) Act of 1894, establishing the first peacetime income tax. A two percent tax was placed on incomes over $4,000, which actually affected only about two percent of the wage earners in the nation. The tax was not well received by the wealthier citizens.
The Farmers' Loan & Trust Company was an investment bank that...
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