igations of a state, or the emoluments of a
state official, or anything connected with the exercise by a state of
one of its governmental functions. In other words, while the National
Government may tax income from bonds issued by England or France or
their cities, it is powerless to tax the income from bonds of Rhode
Island or the smallest of its towns.

This implied limitation, nowhere categorically expressed but enunciated
in a series of decisions of the Supreme Court, has not always met with
acquiescence from the executive and legislative branches of the
Government. In fact, Congress is now engaged in an effort to do away
with it, at least in so far as concerns the right to tax the income from
state and municipal bonds. To-day, however, it still stands as one of
the most striking and unique characteristics of our governmental system.
It will be discussed more at length in the next chapter.

IX

CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS?

That is a question which is agitating a good many people just now.
Congress from time to time has seemed disposed to try it, in spite of
misgivings as to the constitutionality of such legislation.[1] A recent
Revenue Bill contained provisions taxing the income of future issues of
such obligations, and a motion for the elimination of those provisions
was defeated in the House 132 to 61. Meanwhile, protests were pouring in
from state and municipal officers assailing the justice and expediency
of such a tax.

[Footnote 1: See, e.g., H. Report No. 767, 65th Cong., 2d Sess.,
accompanying House Revenue Bill of 1918 as reported by Mr. Kitchin from
the Committee on Ways and Means, page 89.]

It is not the purpose of this chapter to discuss the questions of
justice and expediency (as to which there is much to be said on both
sides) but rather to deal with the strictly legal aspects of the matter
and indicate briefly why such a tax cannot be laid without a change in
our fundamental law.

Let it be said at the outset that no express provision of the United
States Constitution forbids. On the contrary, that instrument confers on
Congress the power to lay taxes without any restriction or limitation
save that exports shall not be taxed, that duties, imposts, and excises
shall be uniform throughout the United States, and that direct taxes
must be apportioned among the states in proportion to population. The
obstacle lies rather in an implied limitation inherent in