New-York tribune., 1901-07-01
STATE DISPENSARY RIGHTS
EOUTH CAROLINA WILL TEST CONSTI
TUTIONALITY OF TAN STAMP
QUESTION.

Washington June 3o-The State of South Caro-
dina, acting through the Governor and the At
torney-Genera has opened proceedings before the
Commissioner of Internal Revenue TO test the ques-
ton whether the State can be legally required to
take out special stamps a wholesale and
retail liquor dealer under State dispensary laws,
and has made demand upon the commissioner for
refund Of all such hitherto paid. amounting
To sisl6 While this is not large, it is realized
that the principle is great and far reach
Ing in Importance
The question involved is whether the internal
revenue laws of the United States apply to the dis
pensary system of South Carolina to entitle
the collector to demand the payment of these
taxes. The entire dispensary system of South
Carolina is managed by a board of commissioners
consisting of three persons selected by the State
Legislature with Columbia it's headquarters.
This State dispensary distributes the supplies to
the county dispensaries and these in are
managed by county dispensers agents all being
under the Board of State Commissioners. Under
rhe law no liquor can be sold at night or drunk
on the premises of the dspensary. The liquors are
sold the property of the State. and the profits
Rccrue to the State. The salaries of the officials
of the dspensaries fixed by law. and do not de-
pend upon the amount of their sales.
In the brief filed with the Commissioner of In
lternal Revenue behalf of the State il is con-
tended that there is nothing in the laws of the
United States authorizing the collection of inter
nal revenue taxes which, by implication, au-
thorizes the imposition of tax against State or
its instrumentalities of government and that such
eRn act containing any provision taxing the insru-
1nentalities Of the State government would be to
that extent unconstitutional.
II is contended further that the property of a
State and the means and instrumenalities employed
iby il carry its laws into operation cannot be
raxed by the Federal Government. and an opinion
spf the late Judge Cooley this question quoted
II the internal revenue laws of the United States
Mcguire the agents OF the State and county dis
pensarfes of South Carolina to pay into the
sxercise the duties of their office it is contended
hhat the law is unconstitutional and void in this
particular because the tax which it imposes is
purely and simply tax upon the instrumentalities
kby which the State through its laws. seeks TO
minimize the evils of the liquor traffic within its
rborders. The Federal government IT is held cannot
constitutionalIy interfere with the administration
rof these laws by requiring special tax stamp 10
be paid by its officials a condition precedent TO
the exercise of their duties.
Commissioner Yerkes has the claim for refund
Of taxes by the State of South Carolina under
eideration but mas rendered opinion yet. While
tt is true that this dispensary system may be des
Aeid as constitutional Under the police power resi-
dent in all soveregnties. yet the Commissioner is
sary State agency such a needful function of the
State government as VIII exempt IL from Federal
i, There are certain agencies absolutely essential
Courts. executive oficias. collection Of taxes for
NAV be admitted that the Natona2 Goyernment n 1T
can time and in way. directly indi-
Yectly, levy tax upon these State agen-
cies; otherwise the National Government must tax
them out OF existence. The government contends
when the State performs work and assumes direc-
tion of agency which has been and be per-
Horned by its citizens in their individual capacities
aspect arises.
If It is unconditional require the local agents
employed under the dispensary system of South
Carolina 10 pay to the government the sums re
Quired for retail and wholesale liquor dealers
stamps, then this same State and all other States
the com oon1issiGner s ion points ITS out could take control
whskey, beer and tobacco and If so. then the
question would arise. Could the government levy
any tax upon the products of plants under and op-
Grated by the State and used for these purposes +?
r II while the States thereby be BILE to pay
ali Of their governmental expenses. the general
government il is said. would lose internal reve-
nue. income of s2o00o00oo a year. 1t is under
stood that IL the commissioners decision against
the State, seems probable, the case eventually
will 80 10 the Supreme Court of the United States