H. 104. An act to prevent taking shad or white-fish in Lake Champlain or its tributaries; H. 117. An act authorizing the St. Albans Hotel Company to issue bonds; Reported in favor of their passage; and thereupon said bills were severally Ordered to be engrossed and read the third time. Mr. Mason, of Readsboro, from the same committee to whom was referred House bill entitled H. 83. An act to authorize the discount of twenty per cent. in the payment of highway taxes in certain cases; Reported adversely to its passage; and the question being, Shall the bill be engrossed and read the third time? tion of Mr. Rounds, of Chester, it was Ordered to lie. on mo Mr. Henry, from the Committee on Manufactures to whom was referred Senate bill entitled S. 10. An act to incorporate the Caledonia Manufacturing Company; Reported in favor of its passage; whereupon said bill was read the third time and passed in concurrence. A message from the Senate, by Mr. Lamson, their Assistant Secretary, as follows: MR. SPEAKER: I am directed to inform the House that the Senate have considered House bills of the following titles: H. 22. An act to protect cheese manufacturers ; H. 29. An act to incorporate the Winooski Aqueduct Company; H. 40. An act to incorporate the North Bennington Hotel Company; H. 60. pany; H. 69. H. 75. pany; An act to incorporate the Rochester Hotel Com An act to incorporate the Cabot Hotel Company; And have passed the same in concurrence. The Senate have considered joint resolutions from the House, providing for Legislative Directory; also, Joint resolution from the House relating to final adjournment; And have not passed the same in concurrence. The Committee of Ways and Means submitted the following report: To the House of Representatives: The Committtee of Ways and Means, to whom was referred House bill No. 5, entitled "An act to amend section six of chapter eighty-three of the General Statutes, and to tax the income of United States bonds," respectfully report, that they have considered the important question presented in the bill, and submit the following-as the result of their examination : The power of taxation exists both in the states and in the Government of the Union, and may be exercised concurrently, by the two governments. This power is essential to their existence. But the power of taxation in the state is subordinate to the Constitution of the Union, and the laws made in pursuance thereof, which are supreme. Such laws control the constitution and laws of the respective states, and cannot be controlled by them; were it otherwise, the power of taxing by the states might be exercised in such manner as to defeat the legitimate operations of government. The principles stated are embodied in the unanimous opinion of the United States Court, delivered by Chief Justice Marshall in 1819, and have not since been controverted. This bill provides that the income of bonds, stock, and other securities of the United States shall be taxable, and shall be set in the grand list; and the inquiry arises, is this provision in conflict with measures adopted by the United States Government, or is it calculated to impede or obstruct those measures? If so, it is obviously wrong, and will have no legal force. The power of the Federal Government to borrow money and issue bonds and stocks is a sovereign power, and. no state has the right to impose a tax on such bonds or stocks which shall in any way qualify or impair them as a means to promote the objects of Government. This principle was settled by a decision of the Supreme Court in 1829, in the case of Weston against the City of Charleston, and has never been overruled. Such is the law in the absence of special legal exemption. But if doubt exists in the premises, the act of Congress of February 25, 1862, fully settles the question, for it expressly provides, that "all stocks, bonds, and other securities of the United States, held by individuals, corporations, or associations, within the United States, shall be exempt from taxation by or under state authority." Such provision of law existing, taxation of the means employed by Government for beneficial purposes would be an abuse or usurpation of power. It may be claimed that taxing income, is not taxing bonds, and that the authorities stated have no application to the question presented. The income of bonds, or the interest becoming periodically due, is part of the original contract, and is identical with it. The taxing of the one is evidently as much of an interference with the operations of the Government as the taxing of the other; no matter whether such interference be direct or indirect. The tax on the income of a bond, to use the language of the authority already quoted, is a tax on the operation of an instrument employed by the Government of the Union to carry its powers into execution. Such a tax must be unconstitutional." United States bonds or stocks are similar in their provisions to a promissory note, payable in installments. Coupons or interest warrants are usually attached. These warrants are a part of the original obligation, and as a security, are identical with it. At intervals of six months the interest becomes due; the warrants are detached-presented to the treasury for payment, and their identity as a Government. security ceases. Other bonds are registered, or are payable at maturity, with the accrued interest; but all possessing the same general character. The money received for such warrants or interest, in the hands of the owner, like other personal property, is subject to taxation, under the provisions of the statute now in force. If this view of the committee be correct, the proposed amendment would be merely cumulative, giving no additional force to existing law. The effect of the proposed measure is not, at once, apparent. If adopted by all the states, it will impair our public securities, and render their negotiation difficult, if not impossible. It would be a virtual repudiation. What, then, should be our state action in reference to a measure connected so intimately with our national character, independent of our interest as one of the states of the Union? The national debt was contracted at a period when the existence of our Government was threatened, and under a solemn pledge of the nation's faith to pay it. If you could pass this amendment and tax the stocks and bonds, the tax could not be collected. All the judicial tribunals of the nation, which have passed upon the question, without exception, having declared such taxation unconstitutional and void. The stocks, bonds and other securities of the United States which would be embraced in the provisions of this bill, would exceed the sum of two thousand and two hundred million of dollars. Estimating from the grand list and other sources, the amount held by the people of this State is twenty millions of dollars. This sum equals one-sixth in value of the entire property of the State, as determined by the census of 1860. From this comparison it is apparent our taxation is unequal. One-sixth part of the property pays no tax. Bondholders are exempt, while those whose property is invested in other securities, are compelled to sustain the expenses of the State Government, pay the interest on our State debt, build school houses, support schools, repair highways and bridges, and provide for other incidental expenses. Such are the relations existing between these classes; but a law, parámount to any authority possessed by the State makes the distinction. The law is inflexible the effect unavoidable -submission a necessity. The Comptroller of the Currency, in a late communication on this subject, addressed to the state of Connecticut, holds the following language: "The law exempting from taxation government securities is so specific and clear, that it cannot be questioned. The bonds were disposed of and purchased with the provision of law as a part of the contract, that they were to be exempt from taxation, and the country has received an equivalent for such exemption, in the additional price received for the bonds. Can any one believe that the obligations of the Government would have sold for anything like the price realized, if it had been supposed posible that they could have been taxed by state laws directly or indirectly? If your Legislature can impose a tax of fifteen per cent. on the income derived from government securities, it is just as competent for it to impose a tax of fifty, or one hundred per cent." There is one other view, to which the committee would call your attention. By the 9th Article of the Declaration of Rights in the Constitution of this State, it is provided, "That every member of society hath a right to be protected in the enjoyment of life, liberty and property, and therefore is bound to contribute his proportion towards the expense of that protection, &c.," implying a uniform or proportionate rule of taxation and assessment. This principle of uniformity or equality, it is believed, is provided for in the constitu tion of all the states. The provision of the bill discriminates against incomes derived from stocks, bonds and other securities, and in favor of another class of income derived from other sources. In the case of Knowlton against the supervisors of Rock County, Wisconsin, the Supreme Court of that state holds the following language: "The constitution of the state requires, as a rule in levying taxes, that the valuation must be uniform and in all cases alike or equal operating alike upon all the taxable property throughout the territorial limits of the state or municipality-within which the tax is to be raised-and when the legislature prescribe a different rule, the act is a departure from the constitution, and, therefore, void.', That court further says, "All kinds of property must be taxed uniformly, or be absolutely exempt. In the Ohio State Reports-Exchange Bank of Columbus against Hines-the court says, under the constitution of that state, "Taxing is required to be by a uniform rule. Uniformity in taxing implies equality in the burden of taxation, and must extend to all property subject to taxation, so that all property may be taxed alike-equally-which is taxing by a uniform rule. These principles are affirmed by Mr. Justice Swayne of the Supreme Court of the United States, in the case of Gilman against the City of Sheboygan—and are applicable, in the opinion of your committee, to the provisions of the Constitution of this State already referred to. It is not regarded as the province of this committee, to determine whether the exemption of United States securities is just or politic-or whether a more equitable method might have been devised to equalize the public burden. They have confined their attention to an examination of the proposed amendment of the Statutes, and have presented their views, aided by published authorities, and after mature deliberation. The committee therefore report, as the opinion of a majority, that the proposed amendment, taxing the income of United States bonds, if adopted, would be unconstitutional and void. MERRITT CLARK, Committee. The question being, Shall the bill reported from the committee and entitled H. 5. An act in amendment of section six of chapter eighty-three of the General Statutes, taxing the income of United States bonds, &c., |