had been paid from his compensation as judge would not exempt the house. So if he bought bonds. Yet in such cases the advantages of his salary would be diminished. Even if the house or bonds were bought with other money the same would be true, since the money would not have been free for such an application if he had not used his salary to satisfy other more peremptory needs. At some point, I repeat, money received as salary loses its specific character as such. Money held in trust loses its identity by being mingled with the general funds of the owner. I see no reason why the same should not be true of a salary. But I do not think that the result could be avoided by keeping the salary distinct. I think that the moment the salary is received, whether kept distinct or not, it becomes part of the general income of the owner, and is mingled with the rest, in theory of law, as an item in the mutual account with the United States. I see no greater reason for exempting the recipients while they still have income as income than when they have invested it in a house or bond.

The decisions heretofore reached by this Court seem to me to justify my conclusion. In Peck & Co. v. Lowe, 247 U. S. 165, 38 Sup. Ct. 432, 62 L. ed. 1049, a tax was levied by Congress upon the income of the plaintiff corporation. More than two-thirds of the income was derived from exports and the Constitution in terms prohibits any tax on articles exported from any state. By construction it had been held to create "a freedom from any tax which directly burdens the exportation." Fairbanks v. United States, 181 U. S. 283, 293, 21 Sup. Ct. 648, 652, 45 L. ed. 862. The prohibition was unequivocal and express, not merely an inference as in the present case. Yet it was held unanimously that the tax was valid. "It is not laid on income from exportation . . in a discriminative way, but just as it is laid on other income. . . . There is no discrimination. At most, exportation is affected only indirectly and remotely. The tax is levied . . . after the recipient of the income is free to use it as he chooses. Thus what is taxed-the net income is as far removed from exportation as are articles intended for export before the exportation begins." 247 U. S. 174, 175, 38 Sup. Ct. 434, 62 L. ed. 1049. All this applies with even greater force when, as I have observed, the Constitution has no words that forbid a tax. In United States Glue Co. v. Oak Creek, 247 U. S. 321, 329, 38 Sup. Ct. 499, 62 L. ed.

1135, Ann. Cas. 1918E, 748, the same principle was affirmed as to interstate commerce and it was said that if there was no discrimination against such commerce the tax constituted one of the ordinary burdens of government from which parties were not exempted because they happened to be engaged in commerce among the States.

A second and independent reason why this tax appears to me valid is that, even if I am wrong as to the scope of the original document, the Sixteenth Amendment justifies the tax, whatever would have been the law before it was applied. By that amendment Congress is given power to "collect taxes on incomes from whatever source derived." It is true that it goes on "without apportionment among the several States, and without regard to any census or enumeration," and this shows the particular difficulty that led to it. But the only cause of that difficulty was an attempt to trace income to its source, and it seems to me that the Amendment was intended to put an end to the cause and not merely to obviate a single result. I do not see how judges can claim an abatement of their income tax on the ground that an item in their gross income is salary, when the power is given expressly to tax incomes from whatever source derived. Mr. Justice BRANDEIS concurs in this opinion.

MILES v. GRAHAM

8

(Supreme Court of the United States, 1925. U. S. - 45 Sup. Ct. 601, , 5 Am. Fed. Tax R. 5396.)

69 L. ed.

Mr. Justice MCREYNOLDS delivered the opinion of the Court.

The defendant in error is a judge of the Court of Claims. He assumed the duties of that office September 1, 1919, when the statute (Act Feb. 25, 1919, c. 29, 40 Stat. 1156, 1157) declared that judges of that court should be entitled to receive

8 See comments in notes, 34 Harvard L. Rev. 70, and 30 Yale L. Jour. 75. See also Tax-Exempt Securities, printed for use of the Committee on Finance, United States Senate, March 26, 1924, containing articles and opinions in respect of the power of Congress to tax income from State and municipal bonds. Representative articles on the same subject are Edward S. Corwin, The Power of Congress to Tax Income from State and Municipal Bonds, 1924 Supplement to National Municipal Review, vol. XIII, No. 1; Harry Hubbard, The Sixteenth Amendment, (1920) 33 Harvard L. Rev. 794; T. R. Powell, The Sixteenth Amendment and Income from State Securities, National Income Tax Magazine, June, 1923; William Anderson, The Problem of Tax-Exempt Securities, (1924) 8 Minnesota L. Rev. 273; Albert C. Ritchie, Power of Congress to Tax State Securities, (1919) 5 Am. Bar Assn. Jour. 602.

"an annual salary of $7,500, payable monthly from the Treasury." He was required to pay to plaintiff in error, Collector of Internal Revenue, the income taxes for 1919 and 1920 prescribed by "an Act to provide revenue, and for other purposes,' approved February 24, 1919 (the Revenue Act of 1918), c. 18, 40 Stat. 1057. In computing these his judicial salary was treated as part of his "gross income."

"Sec. 213. That for the purposes of this title (except as otherwise provided in section 233) the term 'gross income'—

“(a) Includes gains, profits, and income derived from salaries, wages, or compensation for personal service (including in the case of the President of the United States, the judges of the Supreme and inferior courts of the United States, and all other officers and employees, whether elected or appointed, of the United States, Alaska, Hawaii, or any political subdivision thereof, or the District of Columbia, the compensation received as such), of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. .

After payment and the necessary preliminary steps he instituted this proceeding to recover, upon the ground that the exactions on account of his salary were without authority of law. Judgment went for him in the trial court. It was there said:

"Unless he was taxable under the (Revenue) Act of 1918 (approved Feb. 24, 1919) he was not taxable at all. If he is taxable under that statute, he is so by virtue of a clause which applies to all the federal judges, irrespective of the time they came upon the bench. That clause as written has been held invalid. . . . When the clause which has been declared invalid is out of the Act, no other imposes the tax. What the court here is asked to do is to rewrite the pertinent portion of the statute in question so that it will read as did the provisions of the Acts of 1913 and 1916 relative to this general subject. But that would be for the court to do what Congress expressly de

cided not to do. With its eyes wide open to the possible consequences, it made up its mind to seek uniformity by imposing the tax upon all judges. Whether it would or would not have been willing to tax the minority, if the majority were immune, nobody knows, perhaps not even the members of that Congress itself, for upon that question they never were called upon to make up their minds."

Plaintiff in error now insists that, although the challenged provision of the Act of February 24, 1919, has been adjudged invalid as to all judges who took office prior to that date, it is obligatory upon those thereafter appointed.

Sec. 1, Art. III of the Constitution provides:

"The judicial power of the United States shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish. The judges, both of the supreme and inferior courts, shall hold their offices during good behavior, and shall, at stated times, receive for their services a compensation, which shall not be diminished during their continuance in office."

Evans v. Gore, 253 U. S. 245, arose out of the claim that Judge Evans was liable for the tax upon his salary as prescribed by the Act now under consideration, although appointed before its enactment. We there gave much consideration to the purpose, history, and meaning of the above-quoted section of the Constitution and, among other things, said:

"These considerations make it very plain, as we think, that the primary purpose of the prohibition against diminution was not to benefit the judges, but, like the clause in respect of tenure, to attract good and competent men to the bench and to promote that independence of action and judgment which is essential to the maintenance of the guarantees, limitations and pervading principles of the Constitution and to the administration of justice without respect to persons and with equal concern for the poor and the rich. Such being its purpose, it is to be construed, not as a private grant, but as a limitation imposed in the public interest; in other words, not restrictively, but in accord with its spirit and the principle on which it proceeds.

"Obviously, diminution may be effected in more ways than one. Some may be direct and others indirect, or even evasive as Mr. Hamilton suggested. But all which by their necessary operation and effect withhold or take from the judge a part of that which has been promised by law for his services must be regarded as within the prohibition.

"The prohibition is general, contains no excepting words and appears to be directed against all diminution, whether for one purpose or another; and the reasons for its adoption, as publicly assigned at the time and commonly accepted ever since, make with impelling force for the conclusion that the fathers of the Constitution intended to prohibit diminution by taxation as well as otherwise that they regarded the independence of the judges as of far greater importance than any revenue that could come from taxing their salaries.

"For the common good-to render him (the judge), in the words of John Marshall, 'perfectly and completely independent, with nothing to influence or control him but God and his conscience' his compensation is protected from diminution in any form, whether by a tax otherwise, and is assured to him in its entirety for his support. . . .

"Here the Constitution expressly forbids diminution of the judge's compensation, meaning, as we have shown, diminution by taxation as well as otherwise. The taxing Act directs that the compensation—the full sum, with no deduction for expenses -be included in computing the net income, on which the tax is laid. If the compensation be the only income, the tax falls on it alone; and, if there be other income, the inclusion of the compensation augments the tax accordingly. In either event the compensation suffers a diminution to the extent that it is taxed.

"We conclude that the tax was imposed contrary to the constitutional prohibition and so must be adjudged invalid."

Does the circumstance that defendant in error's appointment came after the taxing Act require a different view concerning his right to exemption? The answer depends upon the import of the word "compensation" in the constitutional provision.

The words and history of the clause indicate that the purpose was to impose upon Congress the duty definitely to declare what sum shall be received by each judge out of the public funds and