The Savannah morning news. (Savannah, Ga.) 1900-current, 1901-07-01
Her LIQUOR TAXES
SOUTH CAROLINA oBJECTs TO PAY
ING REVENUE.
CAN A STATE BE TAXED !?
THE COMMISSIONER ASKED FOR AN
OPINION.

1t Is Proposed to Make a Test Case
to Ascertain Whether state
Conducting "a Liquor Dispenssry
Is Liable for Wholesale and Retail
StaInp Taxes as Is an individual
DeaIer-Good Reasons Given why
This Should Not he the Case-Prac-
ticaI1y, 1t Will Hardly Work.
Washington, June SO.-The state of
South Carolina, acting through the gov
ernor and the attorney general, has in
itiated proceedings before the Commits
sioner of Internal Revenue to test the
question whether the state can be legally
required to take out special tax stamps
as wholesale and retail liquor dealer un-
der their state dispensary law, and has
made a demand upon the commissioner
for refund of all such taxes hitherto
paid, amounting to $49l6. While this sum
is not large, 1t is realized that the prin-
ciple at issue is of great and far reach
ing Importance. The one question in
volved is whether the internal revenue
laws of the United States apply to the
dispensary system of South Carolina SO
80 w SAAeAtAC l4lC SOAlSCtOI " 0Glil4Ilu lHe
payment of these taxes. The entire dis
pensary system of South Carolina is man.
aged by a board of commissioners con-
sisting of three persons selected by the
state legislature, with Columbia as its
headquarters. This state dspensary dis
tributes the supplies to the county dis
pensaries and these in turn 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 dispensary. The liquors sold are
the property of the state and the profits
accrue to the state. The salaries of all
the officials of the dispensaries are fixed
by law, and do not depend upon the
amount of their safes.
No Law to Authorize 1t.
In the brief filed with the commissioner
of internal revenue on behalf of the state
il is contended that there is nothing in
the laws of the United States authorizing
the collector of internal revenue taxes
which, even impledly, authorizes the i'm
position of a tax against a state or it's
instrumentalities of government, and that
such an act containing any provision tax
ing the instrumentalities of the state
government would be to that extent un-
constitutional.
1t is contended. further, that the prop
erty of a state and the means and in
strumentalities employed by it to carry
It's laws into operation cannot be taxed
Dy the federal government, and an opin-
Ion OF the late Judge Cooley on this ques-
tlon Is quoted. If any internal revenue
law OF the United States require the
agenes OF the state and county dispen-
saries of South Carolina each TO pay
tax to the United States before being per-
mltted to exercise the duties of their
off1ce it is commended that the law is un-
constitutional and void, in this particular.
because the tax which it imposes is pure
ly ana simply a tax upon the instrument
taltles by which the state, through its
laws, seeks to minimize the evils of the
liquor traffic within its borders. The fed
eral government, it is held. cannot
constftutionally interfere with the
administration of these laws by recurring
special stamp tax to be paid by its
officials as a condition precedent to the
exercise of their duties.
The Commissioners View.
Commissioner Yerkes has the claim for
refund of taxes by the state of South
Carolina under consideration, but has
rendered no opinion yet While it is |
true that this dispensary system NAV
De designated state agency and its |
maintenance upheld as constitutional nm |
der the police power resident in all SOW |
ereignties, yet the commissioner IS in |
clined to the opinion that it is not such
a necessary state agency. or such a need
Iul junction OF the state government as
VIII exempt 1t from federal taxation
There are certain agencies absolutely
essential to the life of a state such as
the maintenance of courts, executive Of
ncials, collection OF taxes for the pay
ment of necessary state expenses and it
may be admitted that the national gov
ernment can at no time and In no way
directly or indirectly levy tax upon
these necessary state agencies; otherwise
the national government might tax them
out Of existence But the government
contends, when the state performs a
work and assumes direction of an agency
which has been and can be performed by
its citizens In their individual capacity,
a new aspect arises. If Il Is unconstitu-
tional to require the local agents en-
ployed under the dispensary system of
South Carolina to pay the government
the sums required for retail and whole
sale liquor dealers stamps, then this
same state and all other states the com
missioner points. out, could take control
not only of the sale. but of the manufac-
ure of whisky, beer and tobacco, and
{ so then the question would arise could
he government levy any tax upon the
products of plants under and operated by
he state and used for these purposes? II
10 while the states might thereby be
lble to pay all of their governmental
expenses the general government, II is
aid, would lose an internal revenue in
ome Of some 100000 600 per year
1t Is understood that If the commits
toner's decision is against the state, as
GEMS probable, the case eventually will
o to the Supreme Court of the United