Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1901-07-01
SOUTH CAROLINA
RAISES AN ISSUE.
Will Test Legality Of Federal Tax
On Her Whisky Business
PROCEEDINGS INSTITUTED.
n Is Claimed That Ser Dispensar'
system f. "A Part OF Her state Cow
eminent Machinery.

Washington, June So'-Thc state OF
saith Carolina. acting through the
,,yernor and attorney-geueral has
lo.ltuted proceedings before the COM
-ssioner of internal revenue TO test
souestlon whether the state can be
'.,lly required to take out special tax
s,mps as wholesale and detail liquor
1,ler under It's state dispensary
nvs and has made a demand upon the
.orrlssjoner for a refund Of all such
yvas hitherto paid, amounting to
ugs The principle at issue is far
reaching.
THE one question involved Is whether
Che internal revenue laws of The
rnbsd states apply to the dispensary
,ystem of South Carolina SO as TO en-
ttIe Inc collector to demand the pay
,r'rt M these taxes. The entire dis
,Sn.srv system Of South Carolina IS
,,anaged by a board Of commissioners,
consisting OF three persons selected by
ho stats legislature, with Columbia
ts baaJouarters This state dis
rorsary distributes supplies TO the
lonntv dlypeusarles and these in turn
are managed by county dspensarles OF
AGENTS All being under the board OF
stata commissioners Under the law
,o louor can be sold at night nor
Srrnt am me premises OF the dispens-
ery The LIQUORS are sold as the prop
cri,. NJ the state and the profits accrue
~ me state The salaries Of all the
officials OF the dlspensaries are fAed
nv law and do not depend on the
emoupt of their sales.
In the brief filed with the commits
sloner OF Internal revenue on behalf
of me state. It Is contendei that there
is nothing in the laws Of the United
stotes authorizing the collection Of in
formal revenue taxes which even I'M
nliedlv authorize the imposition of q
lax AGAINST state OF its Instrumental
tics ~ government, and that such an
net containing such a provision taxing
tho instrllmentalities of state govern
,nept would be 10 that extent uncon-
sdtutlonal II Is contended iurther
that the property Of state ana the
means and instrumentadtes employed
by II to carry lis laws MO operation
cannot be taxed by the federal gov
eminent An opinion OF the late Judge
Cooley ON this question Is quoted.
II Inc internal revenue laws Of the
United states require The agents OF
the STATE and county disponsaries OF
South Carolina 10 pay a tax to the
United States before being permitted
20 accent the duties Of their Office.
It IS contended that the law Is uncon-
stitutIonal and void In this particular
because the tax 10 imposes Is purely
and simply a tax upon the instrument
olties by which the state through
It's laws, seeks 10 minimize the evils OF
the liquor traffic within lts borders
The federal government u Is held,
cannot constItutiOnally interfere with
the administration Of these laws by re-
curing a special tax stamp TO be paid
by lis officials as condition precedent
TO the exercise Of their duties
Commissioner Yerkes has the claim
for the refund Of taxes bv the state
Of South Carolina under consideration.
but has rendered no opinion yet
While II Is true that the dispensary
system may be designated as a state
agency and its maintenance upheld as
constitutional under the police power
resident In all soyereignites. yet the
commissioner Is inclined 10 The opinion
mat II is not such q necessary state
agency FOR such a function Of the state
government as viii exempt 1t from tax
alton.