The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1901-07-03
DIspE EAsARY vs. UNCLE sam.

DISpENShRY VS. UNCLE sam.
Brief Filed With the Internal
Revenue Commissioner.
Washington, June 30.-The State Of
South Carolina, acting through the
ssssGoyernor and Attorney General, has
instti ittuted proceedings before the
Of internal revenue to
test the question whether the State
can be legally required to take out
sssnecial tax stamps aswholesale and re-
ss;.t .ttai1 liouor dealers under their State
fispensary laws, and has made de-
the commission for re-
fund Of all such taxes hitherto pa1d,
amounting to 50, 9l6 Mhlie this sum l1.
rs not large, it is realized that the
principle at issue is Of great and far
reaekng Importance. The one ques.
ton involved is whether the Internal
revenue laws Of the United States
sanply to the dispensary system OF.
South Carolina, 50 as to entltle the
collector to demand the payment OF
these taxes. The entire dlspensary
system Of South Carolina is managed.
nv q board Of commissioners, consist
mo f,f three persons selected by the
State Legislature, with Columbia as.
ssfs headc1arters. This State dlspen-
sarya distri ributes the supplies to the
seonnty dispensaries and these IN turn
s;are managed by county dispensers, or
agents. all being under the board OF
State commissioners Under the Law.
no LIQUOR can be sold at night nor to
be drunk on the premises OF the dis.
pensary. The liquors sold are the
properly Of the State, and the profits
Saccfne to the State The salaries OF
AL the officials of the dispensary are
fixed by law and do not depend upon
fhe amount of their sales.
ss5 81 The brief fled with the commits
sieo,n,erof internal revenue on behalf of
the State It is contended that there is.
nothing in the laws Of the United
States authorizing the collection Of
internal revenue taxes which, even I'M
Dliedly, authorizes the imposition OF g
Tax against State or its instrument.
salities Of government, and that such
an Act containing any provision tax
inc the inst talities Of the State
sGoYernment would be to that extent
iitutional.
It is contended further that the
property of State and the means and
zinstrumentahties employed. by It to
searry its laws into operation cannot be
taxed by the Federal Government,
and an opinion Of the late Judge Cooley
.on this question is quoted. If any In
ternal revenue law Of the United
States require the agents of the State
and county dispensaries of South Car
soina each to pay tax to the United
States before being permitted to exer-
else the duties Of taelr Office, 1T IS
acontended that the law is unconstitu-
tional and void in this particular,
because the tax which it imposes is
purely and simply tax upon the IN
ssrumentalities by which the State,
through its law, seeks to minimize
the evils of the liquor traffic within
Its borders. The Federal Government,
is held, cannot constitutionally IN
sterfere with the administration Of
these laws by requiring a special tax
stamp to be paid by its officials
as a condition precedent to the ezer-
else af their duties.
Commissioners Yerkes has the claim
::for the refund Of the tax by the State
Of South. Carolina under sideratior,
but has rendered no opinion yet.
While it is true that the dispensary
system may be designated State
agency, and its maintenance upheld
Jas constitutional under the police
power resident in all sovereignties,
yet the commissioner is inclined to
the opinion that it is not such nee
sessary State agency, or snch needful
function Of the State Government as
1i "a exempt it from Federal taxation.
There are certain agencies absolutely
essential to the life Of a State, such as
the maintenance of Courts, executive
officials, collection of taxes for the
payment of necessary State expenses,
and it may be admitted that the Ma
tional Government can at no time and
IN no way, directly or indirectly, levy
a tax upon these necessary State
agencies; otherwise the Ntional Gov
eminent might tax them out Of exist
OuCS. oUl, &ES 0OtC10AOCAo SoAGS1IOS. !
when the State performs work and
assumes direction of an agency which I
has been and can be performed by its
citizens in their individual capacity,
q new aspect arises. If it is unconsti-
tutional to require the local agents en-
ployed under the dispensary system of I
South Carolina to pay the Government
the sums required for retail and
wholesale liquor dealers stamps, then
:snss same State and ell other States.
the commissioner points out, could T
take eaatrol not only of the sale but
of the manufacture Of whiske.y, beer
and tobacco and Il SO, then the ques
tor would arise, could the Govern
maat levy any tax upon tee products
OF pants under and operated by the
State and used for these purposes If
so, while the States might thereby be
able to pay all of~thesr governmental
expenses the General Government, It
IS said, would lose an internal revenue
income of some 500, 5000, coo per Eear.