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to dispose of some by-product of the public works or some property no longer needed by it for the public use. Although payments to a municipal corporation for services rendered or property sold are sometimes spoken of as taxes, as for example, even in carefully drawn leases, charges for water furnished by a municipal water supply are frequently referred to as "water taxes," this use of language is inaccurate. The raising of funds in this manner is not taxation, and is not subject to the constitutional limitations upon the power of taxation. The distinction between a tax and the sale of a commodity is usually not difficult to draw, although the state in taxing an occupation which it has the power to regulate or prohibit in a certain sense

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1 Thus a city or town acts in a purely commercial capacity in supplying water to its inhabitants, Hand v. Brookline, 126 Mass. 324 (1879); Merrimack River Savings Bank v. Lowell, 152 Mass. 556 (1891); D'Amico v. Boston, 176 Mass. 599 (1900); or in maintaining a ferry upon which tolls are charged, Davies v. Boston, 190 Mass. 194 (1906); or in letting its public buildings to private parties, Worden v. New Bedford, 131 Mass. 23 (1881); Little v. Holyoke, 177 Mass. 114 (1900); or in taking boarders at its poor farm, Neff v. Wellesley, 148 Mass. 487 (1889); or in selling a building no longer needed by it, Neuert v. Boston, 120 Mass. 338 (1876); or in selling crushed stone, Collins v. Greenfield, 172 Mass. 78 (1898); Duggan v. Peabody, 187 Mass. 349 (1905).

2 Water rates are not taxes, Sinclair v. Mayor of Fall River, 198 Mass. 248 (1908).

3 A town may require a telegraph company to pay a certain sum annually for every pole it maintains in the public street, although it has been authorized by Congress to maintain its lines along all post roads in the United States. The charge is not a license tax but a rental for the use of the streets. St. Louis v. Western Union Telegraph Co., 148 U. S. 92 (1893). The legislature may require the payment of rent for the maintenance of structures in public streets. Opinion of the Justices, 208 Mass. 603, 606 (1911). A state may impose a toll, based on tonnage, on vessels passing through an improved waterway, although a state tax on tonnage is expressly prohibited by the constitution of the United States. Huse v. Glover, 119 U. S. 547 (1886). See also Keokuk etc. Packet Co. v. Keokuk, 95 U. S. 80 (1877); Sands v. Manistee River Imp. Co. 123 U. S. 288 (1887). A license fee for the use of automobiles may be sustained as a toll for the use of the roads, Hendrick v. Maryland, 235 U. S. 610 (1915); Kane v. New Jersey, 242 U. S. 160 (1916). A charge for the use of municipal sewers is not a tax. Carson v. Brockton, 182 U. S. 398 (1901) affirming 175 Mass. 242 (1900). So also a charge for the use of municipal wharves, Parkersburg etc. Transportation Co. v. Parkersburg, 107 U. S. (1882), or for the use of log booms erected and maintained by the public authorities, Lindsay etc Co. v. Mullen, 176 U. S. 126 (1900), is not a tax.

The line between a commercial undertaking and taxation was nearly obliterated when the first sewer assessments were laid in Massachusetts (infra 64). Sewers had previously been built by private parties and any person who subsequently entered his drain into the sewer was obliged to pay the persons who built the sewer for the privilege; and when the cities and towns took over the sewers they collected payment in much the same way, so that the sewers were held to be a commercial undertaking. Boston v. Shaw. 1 Met. 130 (1840); Child v. Boston, 4 Allen 41 (1862); Smith v. Gloucester, 201 Mass. 329 (1909).

sells the privilege of engaging in that occupation, such a transaction depends for its effectiveness entirely upon an exercise of governmental power and is subject to all the constitutional limitations upon the exercise of such power," while the sale of a commodity by the state to members of the public is an assumption by the state, for the public convenience, of commercial functions, and voluntary payment for the commodity is no more a tax when it is paid to the state than when it is paid to the individual vendor.

4. Taxation Distinguished from Regulation

A substantial part of the public revenue is frequently derived from an exercise of the power of regulation, but since the primary purpose of a tax must be the defraying of public expenses, a charge primarily imposed for purposes of regulation is not a tax1 but an exercise of the police power - that is, the power of a sovereign state to prevent persons within its jurisdiction from conducting themselves or from using their property to the detriment of the general welfare. It is often found desirable to restrict the performance of an act harmless in itself but which if done too frequently will be injurious to the public welfare, and instead of devising an arbitrary limit to the number of persons who may perform the act or to the number of times it may be performed the legislature frequently imposes a fee or charge upon the performance of the act which indirectly effects the desired result. If the legislative body which establishes the imposition has both the power to tax and the power to regulate the subject-matter and the enactment does not violate the constitutional limitations upon either power, it is of no importance whether the power of taxation or the police power was intended to be invoked, and the imposition may well be intended to provide both revenue and regulation. For example, Congress, having both power to levy taxes generally and to regulate foreign commerce, may impose a tariff on imports as a means of raising revenue or for the protection of local industries, or for both purposes, and the primary motive is immaterial. State legis

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5 New Jersey v. Anderson, 203 U. S. 483 (1906).

1 Royall v. Virginia, 116 U. S. 572 (1886).

2 Gundling v. Chicago, 177 U. S. 183 (1900); Hodge v. Muscatine County, 196 U. S. 276 (1905); Kentucky Union Co. v. Kentucky, 219 U. S. 140 (1911); Bradley v. Richmond, 227 U. S. 477 (1913).

latures having both power to levy taxes generally and the police power frequently before the adoption of the Eighteenth Amendment imposed an excise on the sale of intoxicating liquors both as a means of raising revenue and for the purpose of regulating a traffic injurious to public morals or for both purposes. If the primary purpose in such a case is to raise revenue, the imposition is a tax; if the primary purpose is to regulate, the imposition is an exercise of the police power. To ascertain the real purpose of such legislation is of interest from the point of view of the economist or the statesman, but it can have no bearing upon the constitutionality of the enactment. When however the legislative body has the power to tax and has not the power to regulate the subject-matter, or has the power to regulate and has not the power to tax it, or the enactment in controversy violates the constitutional restrictions upon the power of taxation but not those upon the police power, it may be of great importance in deciding whether the enactment is constitutional to determine in the first place under which power it falls. In such a case the courts in deciding whether the real object of the act is revenue or regulation will not be bound by a legislative declaration of intent, but will examine the act itself and its probable effect, giving weight to the usual presumption in favor of constitutionality, so that the act will be construed to be an exercise of the power of which it would be a valid exercise if such construction is reasonably possible."

If the legislature has power to prohibit a certain act altogether it may establish a pecuniary imposition upon its performance intended as a substantial prohibition or as a drastic limitation of the number of persons who will perform the act;* if however the legislature has no power to prohibit the act it cannot establish a pecuniary imposition really intended as a prohibition. A tax upon the performance of an act which the legislature could not constitutionally prohibit must be reasonable in amount, and must not be so excessive as to bring about the suppression of any useful or legitimate occupation or the deprivation of any natural and inalienable right. For example, a

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3 Commonwealth v. People's Savings Bank, 5 Allen 428, 432 (1862).

4 Gundling v. Chicago, 177 U.S. 183 (1900); Hodge v. Muscatine County, 196 U. S. 276 (1905); Bradley v. Richmond, 227 U. S. 477 (1913); Alaska Fish etc. Co. v. Smith, 255 U. S. 44 (1921).

5 Ohio Tax Cases, 232 U. S. 576 (1914).

state may constitutionally impose an excessive fee upon the setting up of a lottery, because it may prohibit lotteries altogether as injurious to public morals, and what it may do directly it may do indirectly; but the inheritance of the goods of a deceased person is the exercise of a privilege which the state may tax but which it may not prohibit, because it is not injurious to the public welfare. Accordingly a pecuniary imposition upon inheritance is subject to the limitations of the taxing power and must be reasonable."

When the legislature has power to tax but not to regulate the subject-matter and establishes a pecuniary imposition, the payment of the imposition is not a license to perform the act, and the act may be prohibited by the body which has power to regulate it, notwithstanding the payment of the tax.'

5. Tax Distinguished from Inspection Fee

There is a very common form of pecuniary imposition which is enforced as an incident of the exercise of the police power although sometimes imposed with respect to an act which the legislature has no power to prohibit or to tax or indeed to burden with any form of pecuniary imposition of a revenue producing character. Under such circumstances, if an occupation or act is of such a character that a reasonable amount of inspection or

6 Minot v. Winthrop, 162 Mass. 113 (1894). There seems however to be a possible distinction between an oppressive and confiscatory tax imposed by a state legislature as a means of indirectly prohibiting the exercise of a natural right which it would be beyond the power of a legislature to prohibit directly and a like tax imposed by Congress as a means of indirectly prohibiting the performance of an act which Congress had no power to prohibit directly, but which is not a right of such a character that the state in the exercise of its police power could not prohibit it. Thus in Veazie Bank v. Fenno, 8 Wall. 539 (1869) a tax on bank notes issued by state banks obviously intended by Congress to drive such notes out of circulation was sustained. In McCray v. United States, 195 U. S. 27 (1904) an oppressive federal tax on oleomargarine colored in imitation of butter was sustained. In 1918 a burdensome tax on goods manufactured by child labor was imposed, after an attempt to regulate child labor by the exclusion of the products of such labor from interstate commerce had been held unconstitutional. If such legislation is sustained it is apparent that Congress has concurrent power with the states over the whole field of police regulations by a colorable exercise of the taxing power.

7 Thus prior to the adoption of the Eighteenth Amendment it was held that Congress, having power to lay taxes anywhere within the United States, but not having the police power within the limits of a state, might tax the sale of liquors within the state, but might not regulate the sale, and consequently the payment of the internal revenue tax on the sale of liquor was not a license to sell. License Tax Cases. 5 Wall. 462 (1866); Commonwealth v. Thorniley, 8 Allen 445 (1863); Commonwealth v. Holbrook, 10 Allen 200 (1865).

supervision by public officials is necessary for the protection of the public health, morals, safety or welfare, the legislature may provide that such inspection or supervision shall be performed at the expense of the persons who wish to engage in the occupation or perform the act, and may facilitate the collection of the cost of such inspection or supervision by providing that no one shall engage in the occupation or perform the act until a fee sufficient to cover such cost has been paid.1 A statute imposing such a charge is not the levy of a tax, and the legislature, in imposing it, is not subject to the constitutional limitations applicable to the power of taxation. In such cases the fee may lawfully cover only the cost of inspection, and a charge imposed for the purpose of producing revenue which would be otherwise unconstitutional cannot be saved by designating it as an inspection fee. It is not however always practicable to determine the actual cost of inspection with absolute accuracy and while in some cases it is possible to divide up the actual cost of inspection on the parties inspected, a statute is not unconstitutional which provides for the establishment of an inspection fee in advance, even though it turns out afterwards that the amount collected exceeded the actual cost of inspection, unless it clearly appears that the legislature did not reasonably intend the fee as the approximate equivalent of the actual cost."

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When the legislature has power to tax an occupation or act, the tax is none the less constitutional because it is called an inspection fee; and if an act or occupation is subject to the

1 Head Money Cases, 112 U. S. 580 (1884); Morgan's Louisiana etc. R. R. etc. Co. v. Louisiana Board of Health, 118 U. S. 455 (1886); Western Union Tel. Co. v. New Hope, 187 U. S. 419 (1903); Atlantic etc. Tel. Co. v. Philadelphia, 190 U. S. 160 (1903); Norris v. Boston, 4 Met. 282 (1842); Postal Tel. Cable Co. v. Chicopee, 207 Mass, 341, 348 (1911).

2 Head Money Cases, 112 U. S. 580 (1884); Commonwealth v. Slocum, 230 Mass. 180 (1918); Lever Brothers Co. v. Commonwealth, 232 Mass. 22 (1919).

3 Smith v. Alabama, 124 U. S. 465 (1888); Atlantic etc. Tel. Co. v. Philadelphia, 190 U. S. 160 (1903); Postal Tel. Cable Co. v. Taylor, 192 U.S.64 (1904); Askren v. Continental Oil Co., 252 U. S. 444 (1920); Norris v. Boston, 4 Met. 282 (1842); Commonwealth v. Stodder, 2 Cush. 562 (1848); Perkins v. Westwood, 236 Mass. 268, 275 (1917).

As when the actual cost of supervising public service corporations through the appropriate commissions is assessed upon the corporations supervised. Nashville etc. R. R. Co. v. Alabama, 128 U. S. 96 (1888); Charlotte etc. R. R. Co. v. Gibbes, 142 U. S. 386 (1892); People v. Squire, 145 U. S. 175 (1892).

5 Atlantic etc. Tel. Co. v. Philadelphia, 190 U. S. 160 (1903); McLean v. Denver etc. R. R. Co. 203 U. S. 38 (1906); Red C. Oil Mfg. Co. v. North Carolina Board of Agriculture, 222 U. S. 380 (1912); Savage v. Jones, 225 U. S. 501 (1912); Commonwealth v. Slocum, 230 Mass. 180 (1918).

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