OPINION OP THE COURT BY
(Galbraith, J., dissenting.)
The question involved in these cases is that of ,the validity or invalidity of the income tax law of the present year. The facts., most of the statute and the points raised are set forth in the dissenting opinion of Mr. Justice Galbraith.
The statute was taken largely from that of 1896, which was taken largely from that passed by Congress ¡in 1894, which in turn was taken largely from those passed by Congress during the years 1861-1870.
The Federal income tax laws of 1861-1870, -although some of them came before the courts on minor questions of construction or constitutionality, were never declared unconstitutional as a whole, although they undoubtedly were unconstitutional in view of the decisions about to be referred -to in connection with the Federal income tax law of 1894.'
The Federal income tax law of 1894 was held unconstitutional on the grounds that a tax on real or personal property was a direct tax, and that a tax upon the . income derived from such *592property was in reality a tax upon the property itself and therefore a direct tax, — from which it followed as a matter of course that the law was unconstitutional as to such taxes for the reason that they were not apportioned among the states according to their respective populations; and the tax upon income from real and personal property was so important a feature of the law that, the invalidity of that tax having been established, the remaining portions of the law also became invalid. Pollock v. Farmer’s Loan & Trust Co., 157 U. S. 429; 158 Ib. 601. As the constitutional provision which requires that direct taxes when laid by Congress shall be apportioned among the States according to their respective numbers has no application to a direct tax laid by a territorial legislature, the decision in the case just cited does not affect the present case.
The Hawaiian income tax law of 1896 was declared unconstitutional on the ground that there was an unjust discrimination between incomes over and incomes under $4000, inasmuch as the latter were exempt up to $2000, and the former not exempt as to any amount. Campbell v. Shaw, 11 Haw. 112. As the feature upon which that law was held unconstitutional in that case does not appear in the present law, that decision cannot affect the present case.
Let us then consider the present law on its own merits. The grounds upon which it is contended that the law is void are grouped by counsel as follows: (1) Discrimination between corporations and individuals; (2) Unwarranted exemptions; (3) Self-incrimination of the taxpayer; (4) Penalties unlawfully imposed; (5) Taxation of Salaries of Supreme and Oircuit Court Justices and Judges; (6) Taxation of United States bonds; and (7) Invalidity of the Act as a whole because of invalidity of essential parts.
Points (3) and (4) will be disposed of first. Section 6 of the Act, after providing for lists or returns by taxpayers under ©ath, provides in substance that if a person or corporation refuses or neglects to render such return or renders a return which in the opinion of the assessor is false and fraudulent, or *593contains any understatement, the assessor may summon such person or any of the officers of the corporation, &c., to appear before him and produce the books in relation to the business of such person or corporation and give testimony under oath respecting any income liable to tax or the returns thereof. Section 8, after providing that when a person or corporation having a taxable income refuses or neglects to render a return the assessor may make such assessments as he may consider just which shall not be subject to appeal, provides that in case of a false or fraudulent return or valuation by the taxpayer the assessor shall add 200 per cent, to a just valuation of the income of such taxpayers. It is contended that the last provisions in these two sections are in conflict with the provisions of the constitution which are designed to protect persons from unreasonabls searches and seizures, from giving testimony against themselves, from excessive fines and cruel and unusual punishments and from deprivation of property without due process of law. No action has been taken in these cases under these sections of the law and hence it is unnecessary for us to pass upon their validity or invalidity except in so far as the other portions of the Act which are now in question might be affected thereby. In our opinion if these provisions are void they do not affect the validity of the remainder of the Act, for they are separable. We cannot say that they are such essential parts of the Act that the legislature would not have passed the remainder if it had known that these could not stand.
Next, points (5) and (6). Section 1 of the Act provides for a tax of two per cent, upon incomes over and above one thousand dollars derived by persons residing in the Territory from property owned, and business, trade, &c., earned on in the Territory, and by persons residing without the Territory, from property owned, and business, trade, &c., carried on in the Territory, and by servants and officers of the Territory wherever residing. Section 3, prescribing how the income shall be estimated, provides that there shall be included among other things all income derived from interest upon notes, bonds, &c., except *594such bonds of the Territory and its municipalities as shall by the law of their issuance be exempt from taxation. Section 4 prescribes what shall be deducted, but does not mention interest on United States bonds or the salaries of the Justices of the Supreme Court or Judges of the Circuit Courts.
It is apparent therefore that such interest and salaries are within the letter of the Act. We may assume also that the legislature was without power to tax such interest because that would be a tax on the borrowing power of the Federal government (see Pollock v. Farmers’ Loan & Trust Co., supra), or such salaries because of the provision in Section 80 of the Organic Act that, “The salaries of * * * the chief justice and the justices of the supreme court and judges of the circuit courts shall not be diminished during their temn of office.” See opinion of Mr. Justice Field in the same case at page 604 of Yol. 157.
These are matters of comparatively little importance. The total tax on all such salaries would amount to only $670 a year, and it does not appear that any United States bonds are in this Territory or owned by residents of this Territory. Nor does it appear that the plaintiff in either of these cases has any interest in either of these questions except in so far as they affect the question of the validity of the Act as a whole. If the tax on such salaries and interest was provided for in a separate clause it is obvious that that clause would be separable and could be held invalid without affecting the remainder of the Act. But cannot one clause be held valid as to the bulk of the subjects to which it applies, and invalid or at least inoperative as to some subjects to which it would apply if taken literally? AVe think it can.
As the Supreme Court of the United States said in Railroad Companies v. Schute, 103 U. S. 118, 142, “The striking out is not necessarily by erasing words.” The question is one of the intention of the legislature. If the statute, when held inapplicable to subjects which it is beyond the power of the legislature te tax, may still operate so' as to give effect to the main purpose. *595of thé legislature, it may stand as to matters properly within its scope. No doubt a stricter rule applies to criminal statutes. But this is a civil statute. Nor is the striking out of a part of what is within the terms of a statute the same as striking out an invalid exemption or exception named in the statute, for in the former ease the legislative will would merely be given effect, while in the latter case to strike out an exception would be to extend the operation of the statute to what the legislature had expressly excluded. The court cannot legislate.
In Supervisors v. Stanley, 105 U. S. 305, one tax act of the State of New York permitted debts to be deducted as to all personal property; another act provided for a tax upon the shares of banks, whether state or national, but contained no provision for similar deductions. The Supreme Court of the United States held that the latter was invalid as to holders of shares in national banks in cases where such deductions could be madq, but that that did not render the statute invalid as to' holders of shares in other banks at all or even as to holders of shares in national banks where such deductions could not be made. The court,, per Mr. Justice Miller, said: “Is it (the statute) for that reasom. absolutely void? This cannot be true in its full sense, for there-is no reason why it should not remain the law as to banks or-banking associations organized under the laws of the State, or-as to private bankers, of which there no doubt exists a larger number of both classes.
“What is there to render it void as to a shareholder in a na- - tional bank, who owes no debts which he can deduct from the assessed value of his shares? The denial of this right does not-. affect him. He pays the same amount of tax that he would if the law gave him the right of deduction. He would be in no . better condition if the law expressly authorized him to make the deduction. What legal interest has he in a question which only affects others? Why should he invoke the protection of' the act of Congress in a case where he has no rights to protect?' Is a court to sit and decide abstract questions of law in which the parties before it show no interest, and which, if decided either way, affect no light of theirs?
*596“It would seem that if the act remains a valid rule of assessment for shares of State banks, and for individual bankers, it should also remain the rule for shareholders of national banks who have no debts to deduct, and who could not, therefore, deduct anything* if the statute conformed to the requirements of the act of Congress.” See also Packet Co. v. Keokuk, 95 U. S. 80; Austin v. The Aldermen, 7 Wall. 694; McCready v. Sexton, 29 Ia. 356.
In The Collector v. Day, 11 Wall. 113, the Supreme Court of the United States, in construing the income tax acts of 1864, ’5, ’6 and’7, which were in substantially the same language as ours, held that Congress could not constitutionally impose a tax upon the salary of a judicial officer of a State, and, although the statute was, like ours, general in its terms and contained no exception as to such salaries, yet no one seems to have thought that the statute would be affected as to other incomes. See also Cooley, Taxation, 130.
In Pollock v. Farmers’ Loan & Trust Co., supra, the court was at the first hearing (one member being absent) evenly divided upon the question whether the invalidity of the law so far as it affected income from real property, even though the tax on such income was a very large proportion of the whole tax, would render those sections of the law invalid altogether; but on the second hearing, all the members being present, the court decided that the law was invalid as to incomes from personal property also and then a majority held that the invalidity as to incomes from both real and personal property was sufficient to render those sections invalid altogether.
Point (1), discrimination between corporations and individuals. Section 1 of the Act provides for a tax on the income of individuals over and above one thousand dollars. Section 2 provides for a tax upon the net income of corporations without authorizing a deduction of one thousand dollars. This raises the question whether our legislature may classify objects for the purposes of taxation, and, if so, whether it has done so properly in this instance.
*597Tbe Constitution of tbe United States contains no provision that in terms limits the power of Territorial legislatures in matters of taxation. Hence it is contended that the limitations or some of them placed by that instrument upon the Federal or State governments apply to- the Territories.
As to the limitations upon the Federal government, the argument is that the creature, the Territory, cannot do what the creator, Congress, cannot do. The power of Congress to tax is given in the Constitution with only one exception and only two qualifications. Fairbank v. United States, 21 Sup. Ct. Rep. 648, 653. The exception is that it cannot tax exports. This of course has no application to the present ease. One qualification is that it cannot lay direct taxes except by the rule of apportionment. This, also, as we have seen, has no application to this case. The other qualification is that it cannot lay indirect taxes except by the rule of uniformity. Such taxes must be “uniform throughout the United States.” It is equally clear that this clause also has no application to taxes imposed by Territorial legislatures. If a Territorial legislature could not impose any direct tax unless it apportioned it among the States and could not impose any indirect tax unless it made it uniform throughout the United States, it could not impose any tax at all. We may add that the uniformity required by this clause of the Constitution is only a geographical uniformity and that it does not prohibit classification for purposes of taxation. Knowlton v. Moore, 178 U. S. 41, in which an Act of Congress which provided for inheritance taxes was held constitutional, though all amounts under $10,000 were exempt and amounts above that were divided into five classes according to the nearness or remoteness of relationship of the taker to the décedent and each of these five classes were subdivided into five other classes according to the amount received, the tax being graduated, increasing with the remoteness of the relationship and the amount received.
*598The constitutional prohibitions against the laying of duties on imports and exports and duties of tonnage by the States of course do not apply to this case. But it is contended that the provision of the 14th Amendment that, “No State shall * * * deprive any person of life, liberty or property, without due process of law; nor deny t® any person within its jurisdiction the equal protection of the laws,” is applicable. This provision applies to corporations as well as to natural persons. Covington, &c., Turnpike Co. v. Sanford, 164 U. S. 578, 592. Whether it' applies to Territories as well as to States proper we need not say. It would seem to apply to the States only. If it •applies to the Territories, still it does not prevent classification Tor the purpose of taxation. Cargill Co. v. Minnesota, 180 U. S. 452. In that case, the State of Minnesota imposed a license fee upon receiving, shipping, storing or handling grain at elevators along railways, except at terminal points. It did not cover elevators at terminal points on railways or elevators not along railways and made no distinction between those in which tire grain of the owner only was handled and those in which the grain of others was handled. The court held under The circumstances not only that there might be classification notwithstanding the 14th Amendment, but that the classification in that instance should be sustained. It said, per Mr. Justice Harlan (at page 469) :
“Assuming that the defendant is entitled, upon this record, 'to invoke -the benefit' of the clause of the Fourteenth Amendment forbidding a State from denying to any person within its .jurisdiction the equal protection of the laws, we adjudge that as the statute applies to all of the class defined in its first section, fit is not invalid by reason of its non-application to those who own or operate elevators not situate on the right of way of a railroad. The railroad, as this court has often said, is a public highway established primarily for the convenience of the public, und — subject always to any right acquired by the railroad company under an inviolable contract with the State — the use of such a highway may be so regulated as to promote the public •convenience, provided such a regulation be not arbitrary in its character and does not materially interfere with the enjoyment *599by tlie railroad company of its property. Tbe right of way is so closely connected with the operations of tbe railroad company that its nse may be so regulated by tbe State as to promote tbe ends for wbicb tbe corporation was created, and thus subserve tbe interests of tbe general public without interfering unreasonably with the company’s management of its property. If in the judgment of tbe State it was necessary for tbe public interests, or beneficial to tbe public, that elevators and warehouses of tbe kinds described should be operated only under a license and under such regulations as may be rightfully prescribed, it would be going very far to bold that such a classification was so unreasonable as to justify us in adjudging that tbe requirement of a license was void as denying tbe equal protection of tbe laws. No such judgment could be properly rendered unless the classification was merely arbitrary or was devoid of those elements that are inherent in tbe distinction implied in classification. We cannot perceive that tbe requirement of a license is not based upon some reasonable ground — some difference that bears a proper relation to tbe classification made by tbe statute. Gulf, Col. & Santa Fe Ry. v. Ellis, 165 U. S. 150, 165. It is worthy of observation in this connection that i't was neither alleged nor proved that there were in tbe State any elevators or warehouses that were not situated on tbe right of way of a railroad company.”
In Giozza v. Tiernan, 148 U. S. 657, tbe court, per Chief Justice Fuller, said:
“Nor, in respect of taxation was the amendment intended to compel tbe State to adopt an iron rule of equality; to prevent tbe classification of property for taxation at different rates; or to prohibit legislation in that regard, special either in tbe extent to wbicb it operates or tbe objects sought to be obtained by it. It is enough that there is no discrimination in favor of one as against another of the same class. Bell’s Gap Railroad v. Pennsylvania, 134 U. S. 594; Pacific Express Co. v. Seibert, 142 U. S. 339. And due process of law within tbe meaning of tbe amendment is secured if the laws operate on all alike, and do not subject the individual to an arbitrary exercise of tbe powers of government. Leeper v. Texas, 139 U. S. 462.”
Tbe 5th Amendment, however, wbicb provides that, “No person shall be * * * deprived of life, liberty or property without due process of law,” undoubtedly applies to tbe Terri*600tories, and while this might prevent arbitrary discriminations, it would not prevent classifications for the purpose of taxation. See Giozza v. Tiernan, supra.
The Organic Act provides in Section 55 that, “The legislature shall not grant to any corporation, association, or individual any special or exclusive privilege, immunity, or franchise without the approval of Congress.” This also would not exclude selections or classifications for the purposes of taxation, though it might require all within the same class to be treated alike. Even the provision found in many of the State Constitutions, that taxes “shall be equal and uniform,” does not prevent classification of the objects of taxation.
There is perhaps no necessity of relying on either the 5th Amendment or Section 55 of the Organic Act to show that, while the legislature may classify, it cannot arbitrarily discriminate in matters of taxation. The restrictions inherent in the nature of free government and American institutions as well as in the very definition of a tax may be sufficient to prevent unjust discrimination. As was said in the dissenting opinion of Campbell v. Shaw, supra, that opinion in this respect arriving on general principles at the conclusion that the majority of the court drew from certain provisions in the constitution of the Republic of Hawaii, since abrogated: “The attributes of equality and uniformity inhere, however, to some extent in the very idea of a tax,” and, referring to the 14th Amendment and to State constitutional provisions requiring equality and uniformity, “It is everywhere conceded that these provisions do not take from the legislature the power to select or classify the subjects of taxation, whether persons or things. The rule of uniformity is complied with if all persons or things in the same class are treated alike, and the rule of equality requires the existence of the power of classification. Eor if but one kind of tax could be laid and that by an iron rule of uniformity, taxation would fall unequally on different persons. Where natural distinctions require discrimination, not to discriminate works injustice. Our constitution requires approximate real *601equality of result in the aggregate, not mere equality in form in the ease of each particular tax. But when there is selection or classification it must be real classification; it must be based on reasonable grounds; otherwise it would not be classification. To arbitrarily discriminate would be exaction, extortion, confiscation; not taxation. And this is the distinction everywhere taken. If there is real classification, the court cannot interfere.; if there is arbitrary, capricious or unreasonable discrimination, the court may interfere. There is always, however, a very strong presumption not only that the legislature intended to act constitutionally, but that it succeeded in doing so, and that the court should not declare an act of the legislature unconstitutional except in a very clear case. A few references will make clearer the foregoing propositions and at the same time illustrate their practical application.
“In Pacific Express Co. v. Seibert, 142 U. S. 339, a special tax was laid upon express companies which did not own their own means of transportation and not upon other express companies, and the contention was that the rule of uniformity and equality was destroyed by arbitrary discrimination, but the court held that there was an essential difference between companies that owned their own means of transportation and those that did not, inasmuch as the former possessed property which was subject to other taxes and the latter .would escape taxation unless taxed specially, and hence the classification was justified.
‘‘Referring to a State constitutional provision requiring uniformity and equality of taxation and the 14th Amendment to the Federal Constitution, the court said:
“ ‘This court has repeatedly laid down the doctrine that diversity of taxation, both with respect to the amount imposed and the various species of property selected either for bearing its burdens or for being exempt from them, is not inconsistent with a perfect uniformity and equality of taxation in the proper sense of those terms; and that a system which imposes the same tax upon every species of property, irrespective of its nature ox-condition of class, will be destructive of the principle of uniformity and equality in taxation and of a just adaptation of property to its bux-dens.’ See also West. Un. Tel. Co. v. Indiana, 165 U. S. 304, 309.
*602“In Com. v. Div. Canal Co., 123 Pa. 594, corporate obligations were taken out of the general designation of subjects and taxed upon a different standard of valuation and with a different method of collection. The court found several reasons why corporate and individual obligations might be distinguished in classification, among which were the fact that the former as a class were more capable of concealment and the fact that they had more of a commercial quality and were more subject to fluctuations in value, and in sustaining the constitutionality of the tax, said:
“ ‘Absolute equality is of course unattainable; a mere approximate equality is all that can reasonably be expected. A mere diversity in the methods of assessment and collection, however, if these methods are provided by general laws, violates no rule of right, if when these methods are applied the results are practically uniform. If there is a substantial uniformity, however different the procedure, there is a compliance with the constitutional provisions; even when there may be some disparity of results, if uniformity is the purpose of the legislature, there-is a substantial compliance. Nor is classification necessarily based upon any essential differences in the nature or, indeed, the condition of the various subjects; it may be based as well upon the want of adaptability to the same methods of taxation, or upon the impracticability of applying to the various subjects the same methods, so as to produce just and reasonably uniform results, or it may be based upon well-grounded considerations of public policy.
“ ‘Hence it is that some classes of corporations are taxed upon net earnings, or income; others upon capital stock, the value thereof to be ascertained by their annual dividends, or in a certain event upon the actual value of the shares; others upon their gross receipts; insurance companies upon the gross amount of their premiums; coal and mining companies at a specific sum for every ton of coal mined, etc.
“ ‘Heal estate, for taxation, has been classified as seated and unseated, and for municipal purposes may, perhaps, admit of further classification. Collateral inheritances are distinguished from those that are direct-, the former being subject to taxation, the latter not. Foreign insurance companies have been distinguished from domestic companies, and taxed independently and differently. So, trades, professions, callings, and even single men have been taxed by classification, and it has been said that *603professional men may be classified as physicians, lawyers, clergymen, etc.; tradesmen as merchants, mechanics, etc.; and other persons as bankers, manufacturers, etc., and a uniform tax assessed upon each class. Not only have taxes been laid in all these various forms, rated on values, on dividends or profits, on premiums, on net earnings, and on gross receipts, but also by specific sums on specific articles. The road bed, station houses, rolling stock and equipments of a railroad company; the canal bed, and berm banks, the locks, lock houses, etc., of a canal company; the banking house or place of business of a banking company, etc., are withdrawn from the -ordinary processes of general taxation and are reached in a tax upon capital stock, which has always been regarded as a tax upon the property and assets. These several classifications and departures from uniformity in methods were intended simply to bring about a just uniformity in results.’ ***** *
“These principles have been repeatedly applied under our various (Hawaiian) constitutions. To notice only some of our more general statutes — one imposes different import duties upon different commodities, another different occupation or license taxes upon different businesses, another different stamp duties upon different documents, and even our general internal tax law is full of classifications. It imposes different specific taxes on dogs, drays and carriages, and not on most other kinds of personal property, and without regard to their different values, and although these classes of property are owned by some persons and not by others; it imposes poll, school and road taxes upon males between certain ages and not upon females or other males, or certain clergymen, firemen and soldiers; in its definition of personal property for purposes of taxation ad valorem it enumerates certain classes and omits other classes of personal property; it imposes a special income tax upon insurance companies; it wholly exempts certain classes of property devoted to educational, religious and charitable purposes, and property to the extent of $300 by whomsoever owned whether it be the whole or a part of the property of the individual. No one has ever questioned * * * the constitutionality of these various discriminations. When an innovation is made it is apt to be looked upon with suspicion and there is a tendency to regard it as involving a new principle or no principle from the mere fact that we are not accustomed to it. The points now in question * * * involve merely new applications of old princi*604pies and may all be sustained by an application of those principles.”
In the light of the principles above set forth and the cases referred to, it would seem hardly necessary to say more to show, not only that the legislature might classify but that it did properly classify as between individuals and corporations in this instance. Reference may, however, be made to passages found in regard to a similar provision in the Federal law of 1894, in Pollock v. Farmers’ Loan & Trust Co., supra. Mr. Assistant Attorney General "Whitney said in his .argument (157 U. S. 477):
“It is further said that a corporation is not allowed to deduct. $4000 from its income before paying the tax, as is the case with an individual. The reason is plain. This is not a tax upon gross income, but a tax upon net income. The net income of a corporation is radically different in character from that of an individual. Among the elements which go to make up the so-called net profits or income of an individual is that known to. economists as ‘wages of superintendence’ or the value of the labor of the individual himself. See Muser v. Magone, 155 U. S. 240. The individual business man does not pay himself wages or keep any account representing his estimate of the value of his own services. Everything that he makes over and above what he pays out to somebody else must be returned as net income. The net income of a corporation, on the other hand, contains no such element. The ‘wages of superintendence’ consist of the salaries of its managers and is counted as an expense. When the individual owner of the business incorporates it, heat once begins to pay himself a salary from the funds of the corporation. If, therefore, the corporation were- allowed the-same minimum as an individual, there would be a lack of uniformity prejudicial to the individual.”
We believe only two of the Justices referred to this provision in their opinions, both justifying it. Mr. Justice Harlan, after speaking of the exemption of incomes of individuals up to. $4000, said (158 U. S. 676): “The statute allows corporations, when making returns of their net profits or income, to deduct, actual operating and business expenses. Upon like grounds, as I suppose, Congress exempted incomes under $4000.” Mr. *605Justice Brown said (lb. 694): “The exemption of $4000 is designed, undoubtedly, to cover the actual living expenses of the large majority of families, and the fact that it is not applied to corporations is explained by the fact that corporations have no corresponding expenses. The expenses of earning their profits are, of course, deducted in the same manner as the corresponding expenses of a private individual are deductible from the earnings of his business. The moment the profits of a corporation are paid over to the stockholders, the exemption of $4000 attaches to them in the hands of each stockholder.”
That the reason assigned for this distinction by Mr. Justice Brown, namely, that the exemption of $4000 was for personal arid family expenses and “that corporations have no corresponding expenses,” was one that the legislature had in mind, is shown by the proviso contained in Section 4 of the Act (which provides for deductions of necessary expenses) “that no deduction shall be made for personal or family expenses, the exemption of one thousand dollars mentioned in Section 1 being in lieu of same.”
Not only have corporations no personal or family expenses, but in estimating their incomes for the purposes of the tax they are allowed to deduct the cost of all labor employed in earning the income, while’ individuals are allowed to deduct only the cost of hired labor without any allowance for them own time or labor.
Point (2), unwarranted exemptions.
(a) The Act, as we have seen, exempts incomes of individuals up to one thousand dollars, and, as we have also seen, this is intended to be in lieu of personal and family expenses. It is contended that this is an unreasonable and arbitrary exemption.
It seems to be conceded that an exemption of some amount could properly be made just as an exemption of $300 is allowed under our general property tax law. The question is whether the amount of one thousand dollars is excessive. It can hardly be contended that it is so large as to manifest a purpose on the part of the legislature to step from its proper sphere of action *606in providing for a tax and to use the form of a tax law merely for the purpose of arbitrary exaction or confiscation from the-few wealthy members of the community.
In England exemptions of $760 have been' allowed. In the-Federal income tax laws of 1861-70, the exemptions were air different times, $600, $800, $1000 and $2000. In Massachusetts an exemption of $2000 has been allowed under an income-tax law. In the Federal law of 1894 the exemption amounted to $4000. Three members of the court referred to this in their-opinions referred to. Mr. Justice Field thought the exemption, too large (157 U. S. 596). Mr. Justice Harlan said (158 U. S. 675):
“In this connection, and as a ground for annulling the provisions taxing incomes, counsel for the appellant refers to the-exemption of incomes that do not exceed $4000. It is said that, such an exemption is too large in amount. That may be conceded. But the court cannot for that reason alone declare the-exemption to be invalid. Every one, I take it, will concede that Congress, in taxing incomes, may rightfully allow an exemption-in some amount. That was done in the income tax laws of 1861 and in subsequent laws, and was never questioned. Such exemptions rest upon grounds of public policy, ,of which Congress. must judge; and that determination cannot be interfered with, by the judicial branch of the government, unless the exemption-, is of such a character and is so unreasonably large as to authorize the court to say that Congress, under the pretence merely of legislating for the general good, has put upon a few persons-burdens -that, by every principle of justice and under every sound view of taxation, ought to have been placed upon all or-upon the great mass of the people. If the exemption had. been-placed at $1,500 or even $2,000, few, I think, would have contended that Congress, in so doing, had exceeded its powers. In view of the increased cost of living at this day, as compared withi other times, the difference between either of those amounts and $4,000 is not so great as to justify the courts in striking down, all of the income tax provisions. The basis upon which such-exemptions rest is that the general welfare requires that in taxing incomes, such exemption should be made as will fairly cover - the annual expenses of the average family, and thus prevent: *607the members of such families becoming a charge upon the public.”
Mr. Justice Brown said (lb. 693):
“Irrespective, however, of the Constitution, a tax which i§ wanting in uniformity among members of the same class is, or may be, invalid. But this does not deprive the legislature of the power to make exemptions, provided such exemptions rest upon some principle, and are not purely arbitrary, or created solely for the purpose of favoring some person or body of persons. Thus in every civilized country there is an exemption of small incomes, which-it would be manifest cruelty to tax, and the power to make such exemptions once granted, the amount is within the discretion of the legislature, and so long as that power is not wantonly abused, the courts are bound to respect it. In this law there is an exemption of $4,000, which indicates a purpose of the part of Congress that the burden of this tax shall fall on the wealthy, or at least upon the well-to-do. If men who have the income or property beyond their pressing needs are not the ones to pay taxes, it is difficult to say who are; in other words, enlightened taxation is imposed upon property and not upon persons. Poll taxes, formerly a considerable source of revenue, are now practically obsolete. The exemption of $4,000 is designed, undoubtedly, to cover the actual living expenses of the large majority of families.”
In Minot v. Winthrop, 162 Mass. 113, the court held that the legislature acted within its discretion in making exemptions of $10,000 in an inheritance tax law, although the Constitution required the tax to be “reasonable”. No doubt an exemption in such a law might be larger than one in an income tax law under such a constitutional provision.
As shown by the above references, the amount of an exemption of this kind is largely within the discretion of the legislature and the court cannot say that it abused its discretion in this instance.
(b) The Act provides in Section 4 that “only one deduction of one thousand dollars shall be made from the aggregate annual income of all members of one family composed of one or both parents and one or more minor children, or husband and wife; that guardians shall be allowed to make a deduction in favor *608of each and every ward, except where two or more wards are comprised in one family, in which case the aggregate deduction in their favor shall not exceed one thousand dollars.”
It. is contended that this provision discriminates between large and small families, between married and unmarried persons especially if the wife as well as the husband is earning an income, and between two or more wards comprised in one family and wards not comprised in one family.
Similar provisions were made in the Federal income tax laws, but though the same arguments were urged against them in the cases above cited, we believe no member of the court alluded to them. Hr. Assistant Attorney-General Whitney referred to them in his argument as follows :
“Objection is further made that but one exemption is allowed to each family, whether its income belong to one member or is contributed by more than one — that is, when the family consists of husband and wife, or parents and minor children, so that the income is combined by the common law. This is a corollary to the reasoning upon which the law is based. Two families of equal size and pecuniary ability may be presumed to suffer to the same extent from taxes upon consumption, whether the income all belongs to one member of the family, or not.”
It is impossible to attain absolute equality or uniformity in taxation. Approximate equality and uniformity is all that is required. The legislature may classify objects and provide different methods of estimating amounts or values. So long as it acts in good faith and on general lines and makes distinctions on some reasonable basis, the courts cannot interfere. The provisions in question seem to be in harmony with the general theory of the Act. The Act seems to deal with units whether corporate or private. It treats as a unit all whether few or many, large or small, whose income or incomes on the one hand and expenses on the other hand are combined. Taxation laws must be practical. They cannot be utopian. Perhaps no two peisons-..would agree as to just what a perfect tax law should be. It is easy to raise objections, but the moment an attempt is made to obviate the objections by framing the law differently, new *609objections arise. If tbe thousand-dollar exemption were made to apply to each individual, there would' doubtless be much greater inequality in actual results than is the case under the law as it stands, as will appear by a little reflection.
(c) Section 3, which prescribes the method of estimating incomes, provides that they shall include, among other things, “the amount of sales of all movable property, less the amount expended in the purchase or production of the same, and in the case of a person not including any part thereof consumed directly by him or his family.”
It is contended that this is a discrimination in favor of farmers or agriculturists against other persons.
The provision is general. It is not confined to any particular class. It is not invalid because it operates differently on different members of the community. As well might it be argued that the carriage tax is invalid because it discriminates in favor of non-carriage owners against carriage owners. The provision in question acts uniformly upon all within its scope. Further, as we remarked above, tax laws must be practical. It would be next to impossible for every one to keep an account and estimate the value of everything he produced and consumed. Accordingly, the law makes sales and expenditures the basis of estimating income in the case of movable property, as it does in the case .of real property, when dealing with the property itself as distinguished from the income derived from it.
(d) Section 2, which imposes the tax on corporations, contains a proviso, “that nothing herein contained shall apply to corporations, companies or associations conducted solely for charitable, religious, educational or scientific purposes, including fraternal beneficial societies, nor to- insurance companies taxed on a percentage of the premiums under the authority of another Act.”
No question seems to be raised as to charitable, religious, educational, scientific or fraternal beneficial societies, corporations or companies, but it is contended that- there is no reasonable basis for exempting insurance companies; that, while there *610might be some basis for this distinction, because an income tax is laid on insurance companies under another Act, yet that basis is removed by the fact that that other Act expressly exempts such companies from other taxes under that Act, thus leading to the result that insurance companies are taxed only once while other companies are taxed twice.
It will be noticed that this Act exempts only such insurance companies as are taxed on a percentage of the premiums under the other Act, and that under the other Act only foreign insurance companies are so taxed. Thus domestic insurance companies (©f which there are none) are taxed under both Acts the same as other companies, and only foreign insurance companies are taxed one per cent, on their gross premiums while other companies are taxed one per cent, on their ret income. It does not appear that foreign companies own any property in these islands. They must be presumed to own some office furniture used by their agents which perhaps would not exceed three hundred dollars in value — the amount of the general exemption in the property tax Act, but it is doubtful if we can assume that they own more. As the court said in Cargill Co. v. Minnesota, supra: “It is worthy of observation in this connection that it was neither alleged nor proved that there were in the State any elevators or warehouses that were not situated on the right of way of a railroad-” The fact that the distinction is confined to> foreign insurance companies would seem to indicate that in the opinion of the legislature there was some ground upon which such companies should be taxed in a different manner from other companies, and we can readily 'assume that it was because such companies were doing much business and had little or no property here. In our opinion, there was sufficient ground upon which the legislature could classify in the present case. Similar classifications have been recognized as proper elsewhere. In Com. v. Del. Div. Canal Co., supra, the court said: “Nor is classification necessarily based upon any essential differences in the nature or, indeed, the condition of thei various subjects'; it may be based as *611well upon the want of adaptability to the same methods of taxation, or upon the impracticability of applying to the various subjects the same methods, so as to produce just and reasonably uniform results, or it may be based upon well-grounded considerations of public policy. Hence it is that some classes of corporations are taxed upon net earnings, or income; * " others upon their gross receipts; insurance companies upon the gross amount of their premiums. * * Foreign insurance companies have been distinguished from domestic companies, and taxed independently and differently.” In Pacific Express Co. v. Seibert, supra, the court upheld a discrimination in a-tax law based upon the same principle, non-ownership of property to any great extent, saying, amone: other things:
“The legislation in question cannot be consideren as invidiously discriminating against the express companies defined .by it and in favor of other companies or persons that may carry-express matter on certain other conditions or under different circumstances. There is an essential difference between express companies defined by this act and railroad or steamboat companies or other companies that own their own means of transportation. The vital distinction is this: Railroad companies, pay taxes on their road-beds, rolling stock and other tangible-property as well as, generally, upon their franchise; and steamboat companies likewise pay a tax upon their tangible property.. This tax is not necessarily an ad valorem tax at the same rate-as is paid on other private property in the State belonging to-individuals. Generally, indeed, it is not, but is often determined by other means and at different rates, according to the will of' the State legislature. Kentucky Railroad Tax Cases, 115 U. S. 321, 337. On the other hand, express companies, such as are-defined by this act, have no tangible property, of any consequence, subject to taxation under the general laws. There is,, therefore, no way by which they can be taxed at all unless by a tax upon their receipts for business transacted. This distinction, clearly places express companies defined by this act in a separate class from companies owning their own means of transportation. They do not do business under the same conditions, or-under similar circumstances. In the nature of things, and irrespective of the definite legislation in question, they belong to-*612different classes. There can be no objection, therefore, to the discrimination mad© as between express companies defined by this act and other companies or persons incidentally doing a similar business by different means and methods, in the manner in which they are taxed. Their different nature, character and •means of doing business justify the discrimination in this respect which the legislature has seen fit to impose. The legislation in question does not discriminate between companies ¡brought within the class defined in the first section; and such 'companies being so entirely dissimilar, in vital respects, as regards the purposes and policy of taxation, from railroad companies and the like owning a large amount of tangible and other property subject to taxation under other and different laws, and upon other and different ¡principles, we do not see how, under the principles of the'many decisions of this court upon the subject, it can be held violative either of the Fourteenth Amendment of the Oonstitution of the United States, or of the provision in the Oonstitution of Missouri relative to equality and uniformity of taxation.”
Duplicate taxation is not necessarily invalid. In construing a statute there is, no doubt, a presumption against an intention on the part of the legislature to produce such a result, and a tax that is duplicate may be invalid because it operates as an unjust discrimination. Cooley, Taxations, .158 et seq. But whether it is duplicate or not is not the test of its validity. Some individuals and corporations generally have to pay taxes that others do not. Some are taxed several times — once under each of several laws, while others are taxed only once under one law. That must necessarily be the case under any scheme that includes different methods of taxation. In the present instance, there is, as we have seen, a reasonable basis for classification. The two classes are taxed, as they properly might be, by different methods. One is taxed one per cent, on property value and two per cent, on net income; the other, one per cent, on gross income. The court cannot say that this produces inequality in results. There would be inequality, perhaps greater inequality, of result if both classes were taxed one per cent, on their property and two per cent, on their net income.
*613Point (7), invalidity of the Act as a whole because of invalidity of essential parts. As we have not found the Act invalid in essential parts, it follows that it is not invalid as a whole.
If this law is invalid by reason of its classification, it would seem that every tax law on the statute books is also invalid— whether the license Act, the stamp Act or the general property tax Act.
The Act is unquestionably an attempt made in good faith to provide in a just and reasonable way for an increase of revenue greatly needed because of the loss of all customs duties consequent upon the abrogation of Hawaiian customs laws and the extension of the customs laws of the United States to these islands. There is not upon its face any indication of a desire to unjustly discriminate. It is the duty of the court to uphold the acts of the legislative branch of the government unless they are clearly invalid. Whether the method pursued in this instance was the best that could be devised for increasing the revenues of the government, is a question of policy with which the court has nothing to do. It may not be out of place, however, to quote the following from the opinion of Mr. Justice Harlan in the case above cited (158 U. S. 676): “There is nothing in the nature of an income tax per se that justifies judicial opposition to it upon the ground that it illegally discriminates against the rich or imposes undue burdens upon that class. There is no tax which, in its essence, is more just and equitable than an income tax, if the statute imposing it allows only such' exemptions as are demanded by public considerations and are consistent with the recognized principles of the equality of all persons before the law, and, while providing for its collection in ways that do not unnecessarily irritate and annoy the taxpayer, reaches the earnings of the entire property of the country, except governmental property and agencies, and compels those, whether individuals or corporations, who receive such earnings,, to contribute therefrom a reasonable amount for the support, of the common government of all.”
*614A. S. Hart-well and Smith & Lewis for the plaintiffs.
Robertson & Wilder for the defendants.
Judgment is ordered for the defendant in each case.