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CONSTITUTIONAL LIMITATIONS UPON THE TAXING POWERS OF
$ 521. Constitutional Provisions.
The federal Constitution lays but one express limitation upon the States with reference to the exercise of their taxing powers. This is that “no State shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing the inspection laws; and the net produce of all duties and imposts, laid by any State on imports or exports, shall be for the use of the Treasury of the United States, and all such laws shall be subject to the revision and control of the Congress.” 1
But other clauses of the Constitution restricting generally the powers of the States operate to limit their powers of taxation. Thus, for example, influential in this respect are the provisions that no State shall deprive any person of property without due process of law or deny to any person within its jurisdiction the legal protection of the laws; that no State shall pass any law impairing the obligation of contracts; and that “the citizens of each State shall be entitled to all privileges and immunities of citizens in the several States.” Also there are the implied limitations that no State shall so use its taxing powers as to interfere with the operation of federal agencies; and that, being unable to give an extraterritorial effect to its laws, no State may tax property not within its jurisdiction.
The limitations imposed upon the taxing powers of the States by the “comity” clause are discussed in chapter XII of this treatise. It may, however, be here said that, in general, the clause operates to prevent a State from burdening citizens of other States within its borders with heavier taxes than those laid upon its own citizens. This applies not only to the property of non-citizens but to the business that they may carry on.
1 Art. I, Sec. X, Cl. 2. 2 Art. IV, § 2, Ci. 1.
§ 522. Special Assessments.
The taxing by the State of private property in the form of taxes is held to be justified and not a taking of property for a public use without compensation, upon the theory that compensation is returned in the form of police protection and of other benefits flowing from the existence of the government. A logical extension of this justification permits the State to levy special taxes upon land embraced within a given district where the proceeds of such taxes are to be spent for improvements which, though of general public utility, are yet for the special and peculiar benefit of that district. For, as the court say in Lockwood v. St. Louis,4 “ While the few ought not to be taxed for the benefit of the whole, the whole ought not to be taxed for the benefit of the few. General taxation for a mere local purpose
is unjust; it burdens those who are not benefited and benefits those who are exempt from the burden."
In similarity to this principle that the property peculiarly benefited by a public improvement may be called upon, by a special assessment, to bear the cost thereof, is the principle that, in assessing the damages, when private property is taken for a public purpose under an exercise of the right of eminent domain, the resulting benefits to the owner from the public use to which his appropriated property is part may be subtracted from the value of the property taken. This right thus to set off benefits was denied by the court of appeals of the District of Columbia in several cases, but the Supreme Court of the United States, in Bauman v. Ross” emphatically repudiated the doctrine saying: “ The just compensation required by the Constitution to be made to the owner is to be measured by the loss caused to him by the appropriation [of his property). He is entitled to receive the value of what he has been deprived of and no more.
3 Ward v. Maryland, 12 Wall. 418; 20 L. ed. 449.
him more would be unjust to the public. Consequently, when part only of a parcel of land is taken for a highway, the value of that part is not the sole measure of the compensation or damages to be paid to the owner; but the incidental injury or benefit to the part not taken is also to be considered.”
$ 523. Taxes and Special Assessments Distinguished.
Special assessments are, properly speaking, taxes, and yet they are of so peculiar a character that the courts have not infrequently refused to bring them within the meaning of the term “tax.” Thus where certain corporations or pieces of property have been by law exempted from taxation, they have, nevertheless, been held subject to special assessments. Again, where state Constitutions have provided that taxation shall be equal and uniform, or that all property shall be taxed according to its value, the courts have nevertheless held that special assessments for local improvements may be levied and assessed according to the front-foot rule or by a standard other than that of value.
Judge Cooley quotes the following from the decision of a Vississippi court in illustration of the distinction between a tax and a special assessment:
“A local assessment can only be levied on land, it cannot, as a tax can, be made a personal liability of the taxpayer; it is an assessment on the thing supposed to be benefited. A tax is levied upon the whole state or a known political subdivision as a county or town. A local assessment is levied upon property situated in a district created for the express purpose of the levy and possessing no other function or even existence than to be the thing upon which the levy is made. A tax is a continuing burden and must be collected at short intervals for all time and without it government cannot exist; a local assessment is exceptional both as to time and locality, it is brought into being for a particular occasion and to accomplish a particular purpose and dies with the passing of the occasion and the accomplishment of the purpose. A tax is levied, collected, and administered by a public agency, elected by and responsibile to the community upon which it is imposed; a local assessment is made by an authority ab extra. Yet it is like a tax in that it is imposed under an authority derived from the legislature, and is an enforced contribution to the public welfare, and its payment may be enforced by the suninary method allowed for the collection of taxes. It is like a tax in that it must be levied for a public purpose and must be apportioned by some reasonable rule among those upon whose property it is levied. It is unlike a tax in that the proceeds of the assessment must be expended in an improvement from which a benefit clearly exceptive and plainly perceived must inure to the property upon which it is imposed.”
6 Lefevre v. Detroit, 2 Mich. 586; Ill. Cent. R. Co. v. Decatur, 126 Ill. 92. See Mich. Law Review, II, 455.
$ 524. Constitutional Requirements of Special Assessments.
The power of the legislature to establish spe:ial taxing districts upon the lands within which a speưial tax is to be levied, assessed, and collected is limited by the following rules: (1) There must be some reasonable ground for grouping into a single district the lands composing it, and this reasonable ground must, as has been seen, be that the lands in question will derive special benefit from the public improvement to meet the expenses of which the tax is levied. It follows, therefore, as of course, that the proceeds of the tax may not be used for any other purpose. (2) The tax so levied must be assessed according to a rule uniformly applied throughout the district, which, in its actual operation, will fairly distribute the tax among the several pieces of property affected according to the benefits received or to be received from the public improvement which is undertaken. Whether or not the assessments may be in excess of the benefits is a question to be presently considered, but in any case they must be apportioned generally according to the benefits. By this is not meant that this apportionment must be absolutely exact. This, in most cases, is an impossibility. But, generally speaking, the part of the entire tax borne by each piece of land must agree with the part of the entire benefit received."
7 George, ('. J., in Macon v. Patty, 57 Jiss. 378.
8 In Union Refrigerator Transit Co. v. Kentucky (199 U. S. 194; 26 Sup. Ct. Rep. 36; 50 L. ed. 150) the court say:
8 525. Resort to Special Assessments Discretionary with the
Legislature. When a public improvement is to be undertaken which will result in special benefit to a particular district, it is not obligatory upon the legislature to levy a special assessment upon that district for the purpose. Whether or not it will do so lies within its free discretion. Also the fact that the proposed improvement will be, to a certain extent, of general benefit to the whole community, does not render invalid a special assessment upon the district specially benefited.
In Bauman v. Ross, with reference to an act of Congress relating to the District of Columbia, it was contended by some of the owners of lands that the public improvement proposed was not of a local character, but was for the advantage of the whole country, and should be paid for by the United States, and not by the District of Columbia, or by the owners of the lands affected by the improvement. The court, however, said: “It is for the legislature, and not the judiciary, to determine whether the expense of a public improvement should be borne by the whole State, or by the district or neighborhood immediately benefited. The case,
“ But notwithstanding the rule of uniformity lying at the basis of every just system of taxation, there are doubtless many individual cases where the weight of a tax falls unequally upon the owners of the property taxed. This is almost unavoidable under every system of direct taxation. But the tax is not rendered illegal by such discrimination. Thus, every citizen is bound to pay his proportion of a school tax, though he have no children; of a police tax, though he have no buildings or personal property to be guarded; or of a road tax, though he never use the road. In other words, a general tax cannot be dissected to show that, as to certain constituent parts, the taxpayer receives no benefit. Even in case of special assessments imposed for the improvement of property within certain limits, the fact that it is extremely doubtful whether a particular lot can receive any benefit from the improvement does not invalidate the tax with respect to such lot. Kelly v. Pittsburgh, 104 U. S. 78; 26 L. ed. 658; Amesbury Nail Factory Co. v. Weed, 17 Mass. 53; Thomas v. Gay, 169 U. S. 264; 18 Sup. Ct. Rep. 340; 42 L. ed. 740; Louisville & N. R. Co. v. Barber Asphalt Paving Co., 197 U. S. 430; 25 Sup. ('t. Rep. 466; 49 L. ed. 819. Subject to these individual exceptions the rule is that in classifying property for taxation some benefit to the property taxed is a controlling consideration, and a plain abuse of this power will sometimes justify a judicial interference. Norwood v. Baker, 172 U. S. 269; 19 Sur. (t. Rep. 187; 43 L. ed. 443.”
9 167 U. S. 548; 17 Sup. Ct. Rep. 966; 42 L. ed. 270.