deed it is distinct from the subjects considered in the Brushaber case to the extent that the particular tax which the statute levies on mining corporations here under consideration is distinct from the tax on corporations other than mining and on individuals, which was disposed of in the Brushaber case, a brief analysis will serve to demonstrate that the distinction is one without a difference, and therefore that the proposition. is also foreclosed by the previous ruling. The contention is that as the tax here imposed is not on the net product, but in a sense somewhat equivalent to a tax on the gross product of the working of the mine by the corporation, therefore the tax is not within the purview of the Sixteenth Amendment, and consequently it must be treated as a direct tax on property because of its ownership, and as such void for want of apportionment. But, aside from the obvious error of the proposition, intrinsically considered, it manifestly disregards the fact that by the previous ruling it was settled that the provisions of the Sixteenth Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment by a consideration of the sources from which the income was derived —that is, by testing the tax not by what it was, a tax on income, but by a mistaken theory deduced from the origin or source of the income taxed. Mark, of course, in saying this we are not here considering a tax not within the provisions. of the Sixteenth Amendment, that is, one in which the regulation of apportionment or the rule of uniformity is wholly negligible because the tax is one entirely beyond the scope of the taxing power of Congress, and where consequently no authority to impose a burden, either direct or indirect, exists. In other words, we are here dealing solely with the restriction. imposed by the Sixteenth Amendment on the right to resort to the source whence an income is derived in a case where there is power to tax for the purpose of taking the income tax out of the class of indirect, to which it generically belongs, and putting it in the class of direct, to which it would not otherwise belong, in order to subject it to the regulation of

apportionment. But it is said that, although this be undoubtedly true as a general rule, the peculiarity of mining property and the exhaustion of the ore body which must result from working the mine cause the tax in a case like this, where an inadequate allowance by way of deduction is made for the exhaustion of the ore body, to be in the nature of things a tax on property because of its ownership, and therefore subject to apportionment. Not to so hold, it is urged, is as to mining property but to say that mere form controls, thus rendering in substance the command of the Constitution that taxation directly on property because of its ownership be apportioned, wholly illusory or futile. But this merely asserts a right to take the taxation of mining corporations out of the rule established by the Sixteenth Amendment when there is no authority for so doing. It moreover rests upon the wholly fallacious assumption that looked at from the point of view of substance, a tax on the product of a mine is necessarily in its essence and nature in every case a direct tax on property because of its ownership, unless adequate allowance be made for the exhaustion of the ore body to result from working the mine. We say wholly fallacious assumption because, independently of the effect of the operation of the Sixteenth Amendment, it was settled in Stratton's Independence v. Howbert, 231 U. S. 399, 58 L. ed. 285, 34 Sup. Ct. 136, that such tax is not a tax upon property as such because of its ownership, but a true excise levied on the results of the business of carrying on mining operations (pp. 413 et seq.).

As it follows from what we have said that the contentions are in substance and effect controlled by the Brushaber case, and, in so far as this may not be the case, are without merit, it results that, for the reasons stated in the opinion in that case and those expressed in this, the judgment must be and it is affirmed.

Mr. Justice McREYNOLDS took no part in the consideration and decision of this case.1 4

4 As to the allowance for depletion in subsequent acts, see § 12 (b) second, Rev. Act of 1916; § 234 (a) (9) of Rev. Acts of 1918 and 1921; and § 204 (c) and 234 (a) (8) of Rev. Act. of 1924.

PECK & CO., Inc. v. LOWE

(Supreme Court of the United States, 1918. 247 U. S. 165, 38 Sup. Ct. 432, 62 L. ed. 1049, 3 Am. Fed. Tax R. 2971.)

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

This was an action to recover a tax paid under protest and alleged to have been imposed contrary to the constitutional provision (art. 1, § 9, cl. 5) that "no tax or duty shall be laid on articles exported from any state." The judgment below Iwas for the defendant. 234 Fed. 125.

The plaintiff is a domestic corporation chiefly engaged in buying goods in the several states, shipping them to foreign countries and there selling them. In 1914 its net income from this business was $30,173.66, and from other sources $12,436.24. An income tax for that year, computed on the aggregate of these sums, was assessed against it and paid under compulsion. It is conceded that so much of the tax as was based on the income from other sources was valid, and the controversy is over so much of it as was attributable to the income from shipping goods to foreign countries and there selling them.

The tax was levied under the Act of October 3, 1913, c. 16, § 11, 38 Stat. 166, 172, which provided for annually subjecting every domestic corporation to the payment of a tax of a specified per cent of its "entire net income arising or accruing from all sources during the preceding calendar year." Certain fraternal and other corporations, as also income from certain enumerated sources, were specifically excepted, but none of the exceptions included the plaintiff or any part of its income. So, tested merely by the terms of the act, the tax collected from the plaintiff was rightly computed on its total net income. But as the act obviously could not impose a tax forbidden by the Constitution, we proceed to consider whether the tax, or rather the part in question, was forbidden by the constitutional provision on which the plaintiff relies.

1. The Sixteenth Amendment, although referred to in argument, has no real bearing and may be put out of view. As pointed out in recent decisions, it does not extend the taxing power to new or excepted subjects, but merely removes all occasion, which otherwise might exist, for an apportionment among the states of taxes laid on income, whether it be derived

from one source or another. Brushaber v. Union Pacific R. R. Co., 240 U. S. 1, 17-19, 36 Sup. Ct. 236, 60 L. ed. 493, Ann. Cas. 1917B, 713, L. R. A. 1917D, 414; Stanton v. Baltic Mining Co., 240 U. S. 103, 112-113, 36 Sup. Ct. 278, 60 L. ed. 546.

2. The Constitution broadly empowers Congress not only "to lay and collect taxes, duties, imposts, and excises," but also "to regulate commerce with foreign nations." So, if the prohibitory clause invoked by the plaintiff be not in the way, Congress undoubtedly has power to lay and collect such a tax as is here in question. That clause says "no tax or duty shall be laid on articles exported from any state." Of course it qualifies and restricts the power to tax as broadly conferred. But to what extent? The decisions of this court answer that it excepts from the range of that power articles in course of exportation, Turpin v. Burgess, 117 U. S. 504, 507, 6 Sup. Ct. 835, 29 L. ed. 988; the act or occupation of exporting, Brown v. Maryland, 12 Wheat. 419, 445, 6 L. ed. 678; bills of lading for articles being exported, Fairbank v. United States, 181 U. S. 283, 21 Sup. Ct. 648, 45 L. ed. 862; charter parties for the carriage of cargoes from state to foreign ports, United States v. Hvoslef, 237 U. S. 1, 35 Sup. Ct. 459, 59 L. ed. 813, Ann. Cas. 1916A, 286; and policies of marine insurance on articles being exported-such insurance being uniformly regarded as "an integral part of the exportation" and the policy as “one of the ordinary shipping documents," Thames & Mersey Ins. Co. v. United States, 237 U. S. 19, 35 Sup. Ct. 496, 59 L. ed. 821, Ann. Cas. 1915D, 1087. In short, the court has interpreted the clause as meaning that exportation must be free from taxation, and therefore as requiring "not simply an omission of a tax upon the articles exported, but also a freedom from any tax which directly burdens the exportation." Fairbank v. United States, supra, 181 U. S. 292-293, 21 Sup. Ct. 648, 45 L. ed. 862. And the court has indicated that where the tax is not laid on the articles themselves while in course of exportation the true test of its validity is whether it "so directly and closely" bears on the "process of exporting" as to be in substance a tax on the exportation. Thames & Mersey Ins. Co. v. United States, supra, 237 U. S. 25, 35 Sup. Ct. 496, 59 L. ed. 821, Ann. Cas. 1915D, 1087. In this view it has been held that the clause does not condemn

or invalidate charges or taxes, not laid on property while being exported, merely because they affect exportation indirectly or remotely. Thus a charge for stamps which each package of manufactured tobacco intended for export was required to bear before removal from the factory was upheld in Pace v. Burgess, 92 U. S. 372, 23 L. ed. 657, and Turpin v. Burgess, 117 U. S. 504, 6 Sup. Ct. 835, 29 L. ed. 988; and the application of a manufacturing tax on all filled cheese to cheese manufactured under contract for export, and actually exported, was upheld in Cornell v. Coyne, 192 U. S. 418, 427, 24 Sup. Ct. 383, 384, 48 L. ed. 504. In that case it was said:

"The true construction of the constitutional provision is that no burden by way of tax or duty can be cast upon the exportation of articles, and does not mean that articles exported are relieved from the prior ordinary burdens of taxation which rest upon all property similarly situated. The exemption attaches to the export and not to the article before its exportation."

While fully assenting and adhering to the interpretation which has been put on the clause in giving effect to its spirit as well as its letter, we are of opinion that to broaden that interpretation would be to depart from both the spirit and letter.

The tax in question is unlike any of those heretofore condemned. It is not laid on articles in course of exportation or on anything which inherently or by the usages of commerce is embraced in exportation or any of its processes. On the contrary, it is an income tax laid generally on net incomes. And while it cannot be applied to any income which Congress has no power to tax (see Stanton v. Baltic Mining Co., supra, 240 U. S. p. 113, 36 Sup. Ct. 278, 60 L. ed. 546), it is both nominally and actually a general tax. It is not laid on income from exportation because of its source, or in a discriminative way, but just as it is laid on other income. The words of the act are "net income arising or accruing from all sources." There is no discrimination. At most, exportation is affected only indirectly and remotely. The tax is levied after exportation is completed, after all expenses are paid and losses adjusted, and after the recipient of the income is free to use it