39. The power of Congress to govern territory, implied in the right to acquire it, and given to Congress in the Constitution,[94] to whatever other limitation it may be subject, the extent of which must be decided as questions arise, does not require that body to enact for ceded territory, not made a part of the United States by Congressional action, a system of laws which shall include the right of trial by jury, and that the Constitution does not, without legislation, and of its own force, carry such right to territory so situated.[95]
The principle laid down by the Supreme Court recognizes two kinds or classes of ceded territory: one, “made a part of the United States by congressional action,” that is, incorporated into the United States; the other, unincorporated. While congressional authority over either class is supreme, when the Constitution and laws of the United States are extended by Congress over a territory, they cannot be withdrawn,[96] for if the Constitution could be withdrawn directly it could be nullified indirectly by acts passed inconsistent with it. The Constitution would thus cease to exist as such and would become of no greater authority than an ordinary act of Congress.[97] The decision of the Court as to the power of Congress over territory of the United States makes Congress absolute in the exercise of its power. The Court does enumerate the limitations on Congress, in such control, but leaves each limitation to be determined as the issue involving it shall arise.[98] The safeguard against congressional absolutism is thus expressed by the Court:
There are certain principles of natural justice inherent in the Anglo-Saxon character, which need no expression in constitutions or statutes to give them effect, or to secure dependencies against legislation manifestly hostile to their real interests.[99]
CHAPTER IV
THE LAW OF TAXATION
40. In our system of government [observes the Supreme Court], it is oftentimes difficult to fix the true boundary between the two systems, State and federal [and, adopting the words of Chief Justice Marshall, proceeds],—endeavoring to fix this boundary upon the subject of taxation, if we measure the power of taxation residing in a State by the extent of sovereignty which the people of a single State possess, and can confer on its government,—we have an intelligible standard applicable to every case to which the power may be applied. We have a principle which leaves the power of taxing the people and property unimpaired; which leaves to a State the command of all its resources, and which places beyond its reach all these powers which are conferred by the people of the United States on the government of the Union, and all these means which are given for the purpose of carrying these powers into execution. We have a principle which is safe for the States and safe for the Union.[100] We are relieved, as we ought to be, from clashing sovereignty.
It follows that the powers and functions of the two governments can be harmonized “only by a wise and forbearing application of this principle.”[101]
41. A tax is a burden or charge imposed by the legislature on property or persons to raise money for public purposes.[102] The two essentials of a good tax are that it is to be laid for a public purpose and by authority. The exercise of the taxing power not only distinguishes sovereignty but also the government which sovereignty creates by delegation of power. But the State cannot exercise taxing power beyond its jurisdiction,[103] a limitation parallel to the limitation of the sovereignty of the State, that is, a version (however unphilosophical) of the idea in the phrase “residuary sovereignty.”[104] But unless restrained by the federal Constitution the power of Congress as to mode, form, or extent of taxation is unlimited.
The test here is jurisdiction.[105] Taxation is the correlative of protection. As the State cannot protect so it cannot tax beyond its jurisdiction.[106] Thus the person or the property must be within the jurisdiction of the State to bring either within its taxing power. Tax laws can have no extra-territorial operation,[107] but there is no established limit of the taxing power or to the selection of objects to which it is applicable.[108]
42. A State Legislature may abuse this power, but the Constitution of the United States was not intended to furnish a corrective for every abuse of power committed by the State governments. Relief lies wholly with the electors within the State who, if the State constitution does not afford security against unjust taxation and unwise legislation, can both alter the State constitution and elect other legislators.