Evening star. [volume] (Washington, D.C.) 1854-1972, 1894-06-26
THE INCOME TAX
Mr.. Hill Offers Some Amendments
to tho Tariff Bill.
WANTS TO EXEMPT STATE BONDS
Quite a Discussion Over a Consti
tutionaI Question.
THE EFICIEN Bill L

| With the thermometer standing at So de-
grees in the Senate chamber at 10 o'clock
| today the Senate entered upon the thir-
teenth week of the tariff debate. At the
opening of the session Mr.. Allen Of Nebras-
ka made another Intellectual attempt 10 Sc
cure consideration for his resolution direct
ing the Secretary of the Treasury to in
form the Senate of the total number of per-
sons engaged in protected industries whose
wages might be affected by tariff legisla-
| tion. Mr.. Gallinger of New Hampshire OBJ
jected and Mr. Morrill, of Vermont moved to
refer it to the finance committee MIR. AL
len gave notice that long the resolu-
tion remained unacted upon he would OBJ
ject to all legislation by unanimous consent.
Mr. Morrill's motion was defeated by
vote of IL to -. At 1U:;;0 the Senate re-
sumed the consideration of the income tax
provisions of the tariff bill
MIR. Htlrs Amendment.
| Mr.. Hill withdrew the amendment he Of
fered on Saturday to strike out the provi-
sion excmpting the interest on United
States bonds from the operation of the tax
Mr. Hill said his object in Offering the
amendment was 20 call the attention of the
country to the fact that $,rS. 10000 of prop
erty in government bonds were necessarily
! exempt from the operation of the income
tax under the law. Although the ostensible
purpose of the income tax was to reach
| wealth and equalize taxation there was an
enormous investment OF capital which the
income tax could not reach. MIR. Hill then
moved TO exempt state, county and munich
pal bonds. He argued that taxation OF
state bonds by the federal government
would be a direct attack upon the admins
tration of the states. If the federal gov
ernment had the right to diminish the value
OF state bonds and securities IL had the
right to destroy them. Aside from the
question OF the exercise of a doubtful power
in justice to the states which Senators rep
resented on this floor and upon which this
tax bore harshly, Mr.. Hill thought the
states should have the right to issue bonds
without being subject to federal taxation.
Mr.. Vest thought the exemption proposed
presented a very different question from
tnat v ith reference to United States bonds
1t was no benefit to the states or municipal
tiles to exempt their bonds The bonds
were sold in the open markets. They went
1lto the hands of private holders, and should
De subject to taxation.
Injustice to the states.
Mr.. Hill contended that Mr. Vest begged
the question. The exemption proposed
would add nothing 10 the constitutional
rights OF the states, and would take nothing
away. Ii 1t fair and right TO exempt
govern ment bonds, il was equally fair and
right TO exempt state and municipal bonds
II would In no wise affect the holders III
state bonds were to be subjected TO federal
taNatiCn they would bring less in the mar
ket. ana probably have to bear higher
rates Of interest. He maintained that unless
the states were placed on equality with
the federal government with regard 10 the
! taxation ot their securities a great injustice
"r I'M states. by law. specifically ex-
empttI fheir bonds could the United States
tax then?' asked Mr.. Platt tConnD
! Cnquestlonably not" replied Mr. Hill
That would be beyond the constitutional
power of Congress
Mr.. Chandler h said although he had
no particular interest in making this bad
bill any better. he hoped, upon reflection,
that the democratic majority would not
place states ana municipalities when they
were forced to borrow money in a worse
position than the United States The Unit
ed States could now borrow money cheaper
than any county, state. CORPORATION or IN
diVidual. But because IL occupied this coign
OF vantage the government should not bear
the credit Of states and cities by raiding
their securities.
| OF Doubtful ConstitutionnIfty.
Mr.. Mitchell COreD agreed with Mr.. Hill
that the taxation of state and county bonds
was OF doubtful constitutionality. He cited
case which grew out of tax of per cent
levied Upon the railroad corporations dur
ing the war The state of kentucky, sew
eral counties in Kentucky and Tennessee
ana the city of Louisville had subscribed
FOR the bonds of the Louisville and Nash
vile railroad. The railroad refused to pay
the tax. on the ground that the tax was in
fact levied against the holders of these
bonds, which We're conStitutionally exempt
from federal taxation. The Supreme Court.
Mr.. Mitchell said sustained the content ton
OF the railroad. holding that the United
states could not tax the revenues of a
sovereign state.
| Mr.. Hill said that there could be no an
swer TO the argument In favor of exempting
state, county and municipal securities He
expressed the hope that the finance com
mittee would accept his amendment
Ar. Sherman also took this view of the
proposition.
The more he thought of it, he said the
more satisfied he became that the United
States should not interfere by this species
OF taxation with the power of the states
to borrow money.
| Mr.. Allison 0owa) maintained that III .he
matter of borrowing money the states were
as supreme as the federal government and
the power OF the states could not be as
serted as against the United States nor
In turn could the power of the United
States be exercised against the states.
Mr.. Vests Reply.
| Mr. Vest in reply to the arguments ad-
vanced, said of course the United States
could not destroy the official functions of
| the states by taxing the salaries of state
officers, out of existence or in any other
way, because that would mean a revolution
in our government. of which the states
tors reduced that argument to an absurd
ity when they held that the United States
could not indirectly diminish the Resources
of the states. The supreme power of the
government TO raise the money necessary
to carry on the government was undis-
puted. 1t could all the property of all
the citizens of all the states for that pur-
pose.
| IL the United States could not tax the
| property OF the state, ii could not touch the
property OF individuals in the state The
states sold their bonds ana placed the mon
! ey In the treasury, and the question present
! ed was, should the holders of those bonds
bear their proportion OF the taxation nee
essary to support the government? The
! supreme Court had held in affirming the
! CnstitutiUnality of the state bank tax that
the United States In the exercise of its
! function and right to strengthen its financial
| system, was supreme.
| The Amendment Lost.
The vote was then taken and the amend
ment lost. 80. Messrs. Gray Hill
and Pugh. democrats. voted for the amend
menf. and MIR. Hettigrew, republican and
! the populists against ii. Otherwise it was
I a strict party vote, the republicans for the