cent. of these duties, and in addition an internal revenue tax equal to that imposed in Porto Rico on like articles of local manufacture; upon all imported coffee a duty of five cents per pound. 3. The collection at the ports of our mainland upon all imports from Porto Rico of fifteen per cent. of the federal tariff rates, and in addition an internal revenue tax on articles withdrawn for consumption equal to the federal tax imposed upon similar articles of local manufacture. The net revenue thus collected in the island, and the gross revenue thus collected in the mainland are segregated from the general fund of the federal treasury, and are designated as a special fund at the President's disposal to be expended for the government and benefit of Porto Rico.

The first question is whether Congress may exempt any territory within its jurisdiction from the operation of existing federal tax laws. The Constitution prescribes that direct taxes, which include taxes on land1 and incomes,2 "shall be apportioned among the several States which may be included. "within this Union according to their respective "numbers," that is to say, according to their population. But when Congress levies a direct tax in the States it is not obliged to extend it to outlying territory, though it may do so in any division in which a census has been taken.3

Direct federal taxes are only of theoretical interest. Practically, they are excluded from the federal bud

1 See Hylton v. U. S., 3 Dallas 171.

2 Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429; 158 U. S. 601.

3 Loughborough v. Blake, 4 Wheaton 317.

get because the rule of apportionment precludes their being levied with substantial justice.

Regarding indirect taxes, which are the main sources of federal revenue, we are bound by the constitutional mandate that all "duties, imposts, or ex"cises shall be uniform throughout the United States," and, as I have shown that this means uniform throughout the territory within the jurisdiction of Congress, the only question of present interest is whether exemption of a section of this territory from an indirect tax would render unlawful its collection elsewhere. Certainly not where territory acquired after the passage of a tax law is exempt from its operation simply because no provision for collection has been made. Doubtless, there is a moral obligation to collect current duties, imposts, and excises in annexed territory as soon as possible, but it would be absurd to hold that a refusal by a President to collect according to the California precedent, or a delay on the part of Congress, perhaps unavoidable, or even a deliberate abstention as in the present case, would invalidate tax laws which, when enacted, operated uniformly throughout the United States. No one has had the temerity to suggest that an importer in New York may recover duties paid, because like duties are not collected in Manila, or that an estate in New York may escape the inheritance tax, because it is not collected in Porto Rico.

Should Congress levy a new federal duty, impost, or excise, and exempt property in our new possessions from its incidence, the question would be presented squarely whether the rule of uniformity is

satisfied by a law prescribing a tax uniform wherever imposed, or whether it exacts imposition everywhere in order to warrant collection anywhere. Lately, the Supreme Court was urged to declare the federal inheritance tax invalid on the ground that Congress had not provided for its collection in the District of Columbia, but the Court, "without attempting to determine whether the necessary construction of the "statute would require the inclusion of the District "of Columbia within its terms, aside from any special "provision bearing on the question," found that a section of the act covered the District by necessary implication.1 Note that the Court did not contemplate the possibility of a deliberate exemption, but suggested the very different question whether an indirect tax law must be construed so as to embrace all territory, and only refused to discuss it because a specific provision of the act sufficiently designated the District of Columbia. I am satisfied that should the Court deal with a tax law purporting to exempt territory it must either ignore the incidental purpose of Congress by declaring the exemption to be ineffective, or defeat the main purpose by annulling the law because of its lack of uniformity; "be"cause," says Chief Justice Marshall, "it is admitted "that the Constitution not only allows, but enjoins, "the government to extend the ordinary revenue system to this District "2- that is, the District of Columbia; and this injunction applies as well to all United States territory.

1 Knowlton v. Moore, 178 U. S. 41, 106.

2 Loughborough v. Blake, 5 Wheaton 317, 325.

Having found that the failure to provide for the collection of certain current federal taxes does not vitiate the Porto Rico system itself, or react destructively upon federal tax laws, we will examine its pretensions as a law framed for the purpose of raising local revenue.

The United States having the power to acquire and govern territory, Congress must be competent to provide means for administering it, and to this end it may impose local taxes, either directly or through local authorities acting under its supervision. The result is that political districts beyond the States are, like the States, subject to a double system of taxation, federal and local, the difference being that in the latter case the separate taxes are imposed by two governments, Federal and State, while in the former they are imposed by the Federal Government acting in two capacities.

In imposing these local taxes, whether directly, as in Alaska, or through the agency of a local government, as in New Mexico, Congress is free from certain constitutional restraints which affect it in levying federal taxes.1 Direct taxes are, as we have seen, practically excluded from the federal budget, but they appear in the budgets of outlying districts, where the rule of apportionment does not apply: Lands in the city of Washington and in New Mexico are taxed for local purposes on independent lines. Excises imposed for the common defense and general welfare of the United States must be uniform, but they may vary widely when levied for local purposes: A wholesale liquor dealer pays a license tax

1 See Gibbons v. District of Columbia, 116 U. S. 404.

2

of $100 in New Mexico,1 and $250 in the city of Washington. But a tax proposed for territorial purposes may suggest constitutional restrictions which cannot be dismissed by calling the tax a local one, especially when it is to be levied upon commerce beginning or ending beyond the boundaries of the Territory; and some of the duties of the Porto Rico Act fall within this category.

The duties of the general tariff law which are levied on foreign imports into Porto Rico, and applied to local uses, are not objectionable: For here the act really extends the general law to the island, and, at the same time, appropriates specifically the revenue collected therein.

The duties collected in Porto Rico on imports from our mainland are local in purpose, and they are levied by Congress acting as a local legislature; but because their imposition does, in fact, create within the United States a peculiar customs district in respect of internal commerce, it contravenes a purpose of the uniformity clause of the Constitution.

The duties collected on our mainland on imports from Porto Rico are not local taxes. They are not imposed or collected in the island: Nor could Congress authorize a local government to impose or collect them here. Their appropriation to the use of Porto Rico does not make them local taxes. The imposition and the appropriation of taxes are distinct acts, however closely they may be joined in a single statute, and the quality of a federal tax is as plainly impressed upon these duties as though they 1 Compiled Laws, 1897, Sec. 4122. 22 Supp. R. S., p. 115.