The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-05-25
MR.. ELDRIDGEs OPINION,
The Los Angeles Political
Economist Replies to
Colonel SmithSon.
ONE CLASS is INVALIDATED,
He Believes License Taxes on
LiQuor-Dealers Cannot Now
Be Imposed.

LOS ANGELES, CAL, May A.-The re-
cent decision of the United States Supreme
Court pronouncing the income-tax law I'M
constitutional, and the opinion in connec-
ton Herewith of Colonel Noble Smithson
of Knoxville, Tenn, that the decision has
invalidated the internal revenue laws, was
the subject of an interview with Charles
Wesley Eldridge, an attorney in this city,
to-day. Eldridge spent twenty-five years
in the internal revenue service, and is the
author of the work entitled 1.-THE United
States Internal Revenue Tax System"
which is to-day perhaps the best and clear
est exponent of the internal revenue svs-
tenn of the United States, and is accepted
as one of the best authorities on the SUBJ
ject.
az have read Colonel Smithson's opinion
to the effect that the Supreme Court decis-
ion in the income cases practically invali-
dates all internal revenue taxes, but l do
not think it is sound" said Mr.. Eldridge.
at must be remembered that only an alb
stract of Chief Justice Fuller opinion has
been transmitted by telegraph, and it may
be enormously reported.
"There is only one phrase in the opin-
ion, as contained in the press report, which
position, which is as follows: The power
to tax real and personal property and the
income from both, through apportionment,
is conceded; that such a tax is a direct tax
in the meaning of the constitution has not
been denied, and in our judgment cannot
be successfully denied 1 think that the
words such a tax in this phrase refer to
income taxes and not to the power to tax
j ~,
that the opinion decided is that an impost
on the income from real and personal
property is direct tax, and cannot be laid
under the constitution unless apportioned
among the States according to population"
Mr.. Eldridge quotes the language of the
constitution as follows:
Sec. 8 a. The Congress shall have the power
10 lay and collect taxes, duties. imposts and
common defense and general welfare of the
United States; but all duties, impostS and ex-
ciseS shall be uniform throughout the United
States.
Sec. Q "a. No capitation other direct tax
shall be laid unless in proportion to the census
or enumeration hereinbeforc directed to be
taken.
1.-The Supreme Court decided in 1915, in,
the case of Hilton against the United
States Is Dallas 1917, that direct taxes were
only capitation taxes and taxes on real
estate, and this has always been under
stood as the constitutional meaning up to
the present time,'' he continued. Inter
nal taxes on spirits, tobacco and beer have
always been called, both in this country
and England, excuses on duties. The ear
lest internal revenue act. passed March 3,
1871, by a congress which included many
of the makers of the constitution calls the
tax on domestic spirits a duty. The taxes
on spirits, beer and tobacco have always
been classed by all political economists as
indirect taxes, because they are uitim ately
paid by the consumers.
at is not to be believed that the opinion
of the Chief Justice, when revised for pub
LEGATION, will contain anything invalidat-
ing these taxes. 1t would simply throw
all the taxing powers of the Government
as heretofore understood into utter con-
fusion and wipe $40, 000, 900 annually from
the revenue; for it is not supposable that
any administration would undertake the
farcical absurdity of apportioning such
taxes according TO population.
'There is one class of internal revenue
taxes, however, which l think is logically
invalidated by this decision, and it is those
comprising the special or annual license
taxes on wholesale and retail liquor-deal-
ers, rectifers, brewers and manufacturers
and dealers in oleomargarine. These pro-
duce about 100000 year. 1t would
seem that personal tax on an individual
for the right to do business ought to be
considered direct tax if there is any such
thing, otherwise we have the monumental
absurdity of declaring that the tax on the
income from mans business is direct
tax, whereas the tax on the mans right to
do the business is an indirect tax.
1.-The fact is that no one has been able to
determine exactly what the makers of the
constitution meant by the phrase direct
taxes either at The time or since the con-
stitution was adopted. The Supreme
Court early in this century found it neces-
sary TO make a definition of this term,
which they did in the case of Hilton vs.
the United States; and having given the
definition, it should have been left undis-
turbed."