The county record. [volume] (Kingstree, S.C.) 1885-1975, 1901-07-04
A CASE BEFORE rhE COURT
To Decide Governments Right 70 Tax
State DiSpenSary.

| j ne Siatc Ol oOuLn Ni.OilltI, dIt-
/ ing through the Governor and the
| Attorney General has initiated pro-
| ceedings before the Commissioner CT
! Internal Revenue to test the question
whether the State can legally be re-
quired to take out special tax stamps
as wholesale and retail liquor dealers
under their State dispensary laws.
and has made a demands upon the
Commissioner for a refund of all such
taxes hitherto paid. amounting to s4.-
9l6 While this sum IS not large. 1t
is realized that the principle at issue
is of great and farreaching impor-
tance. The one question involved is
whether the internal revenue laws OF
| the United States apply to the dispen-
sary system Of South Carolina so as
! to entitle the collector to demand the
payment of these taxes.
The entire dispensary system OF
! South Carolina is managed by board
of commissioners, consisting of three
persons selected by the State Legis-
Iature with Columbia as its headquar-
ters. This State dispensary distribu-
tes the supplies to the county dispen-
saries and these in turn are managed
| by county dispensers or agents. all
being under the board of State COM
missionerS. Under the law no liquor
can be sold at night or to be drank
on the premises of the dispenssry.
| The liquors sold are the property OF
the State and the profits accrue fixed
! by law and do not depend upon the
amount of their sales.
! In the brief filed with the Commits
sioner of 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
piled. authorized the imposition Of
| tax against a State or its instrumen.
talities of government and that such
an act containing any provision tax
! ing the instrumentalities Of the State
| government would be to that extent
unconstitutional. 1t is cOntended fur
! ther that the property Of State ami
| the means and instrumentalitieS en-
! pioyed by it to carry its laws into oDer'
alton cannot be taxed by the Federal
government and an opinion OF the late
| Judge Cooley on this question is quo.
| ted. If any internal revenue law or
the United States require the agents
| of the State and county dispenSarleS
of South Carolina each to pay tax
| to the United States before being per-
mitted to exercise the duties OF their
office. it is contended that the law is
unconstitutional and void. in this par
| ticular because the tax which 1t I'M
poses is purely and simply tax upon
| the instrumentalities by which the
State, through its laws.seeks to mini
mize the evils Of the liquor traffic with
in its borders. The Federal govern
ment. it is held. cannot constitutional
" interfere with the administration
of these laws by requiring a special
tax stamp to be paid by its officials as
condition precedent to the exercise
OF their duties.
Commissioner Yerkers has the claim
for refund of taxes By the State OF
South Carolina under consideration.
but has rendered no opinion yet. Whlte
il is true that this diSpensary system
NAV be designated State agency. am
| its maintenance upheld as constitu-
tional under the police power resident
| in all sovereignties. yet the CommlS-
sioner is inclined to the opinion that
! :. is not such a necessary STATE
cgcncy. or such a needful function OF
the State government as will exempt
il from Federal taxation. There are
certain agencies absolutely esSential
| to the life CT State, such as the
maintenance OF courts. executive ON
cials, collection of taxes for the pay
| mcnt Of necessary State expenses ana
| ii may be admitted that the nationai
government 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 work and assumes
direction in it's individual capacity
new aspect arises. If it is unconstitu-
tional to require the local agents en-
ployed under the dispensary system
of South Carolina to pay the govern
ment the sums required for retail ana
wholesale liquor dealers stamps lheA
this same State and all other States.
the Commissioner points out. could
take control not only Of the sale. Dut
| of the manufacture OF whiSkey. bee.
and tobacco. and if so then the queS
ton would arise, could the govern
ment levy any tax upon the products
| OF plants under and operated BY the
State and used for these purposes?
ii so. while the State might thereby
be able to pay all of their government
tai expenses. the general government
| it is said would lose an internal re.
Venue income OF some $500 100000 per
year.
1t is understood that if the Commis