The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1901-07-01
STATE WANTS A REFUND
SOUTH CAROLINA PROTESTS AGAINST
PAYING 4 LIQUOR LICENSE.
Holds hat such n Tax Is unconstitu-
ment on the Matter.

WASHINGTON, June B.-The state OF
South Carolina. acting through the Gov
ernor and attorney general. has begun pro-
ceedings before the commissioner of in
ternal revenue TO test the question whether
the State can be legally rquired TO take
out special tax stamps as wholesale and
retail liquor dealers under their state dis
pensary laws. and has made a demand
upon the commissioner for a refund Of all
such taxes hitherto paid. amounting to
$4.9l6. While this sum is not large, II Is
realized that the principle at issue is i'm
portant and far-reaching.
The question involved is whether the
internal revenue laws of the United States
apply TO the dispensary system OF South
Carolina so as TO entitle the collector TO
demand the payment of these taxes. The
entire dispensary system of South Caro-
lima is managed by a board of commits
sioncrs consisting of three persons selected
by the State Legislature. with Columbia
as It's headquarters. This state dispensary
distributes the supplies to the county dis
pensaries and these I'm 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 drunk on the premises OF the
dispensary. The liquors are sold as the
! property OF the State and the profits ac-
crue 10 the State. The salaries OF all the
officials OF the dispensarics are fixed by
law and do not depend upon the amount
OF their sales. In the brief filed with the
commissioner OF internal revenue on be-
half OF the State II Is contended that there
is nothing In the laws of the United States
authorizing the collection OF internal reve-
nue. taxes which even implicitly authorizes
the imposition OF n tax against a State
or its instrumentalitics OF government, and
that such an act concerning any provision
taxing the instrumentalities or the state
government would be TO that extent uncon-
stitutional. IL IL commended further that
the property OF Il State and the means and
instrumentallties employed by IL 10 carry
It's laws into operation cannot be taxed by
the federal government, and an opinion
OF the late Judge Cooley on this question
Is quoted.
II the internal revenue laws OF the United
States require the agents of the state and
county dispensaries OF South Carolina TO
pay n tax TO the United States before be-
ing permitted TO exercise the duties OF their
Office IL IL contendcd that the law IL un-
constitutional aud void I'm this particular
because the tax which II Imposes Is purely
and simply n tax upon the instrumentali-
ties by which the state. through It's laws.
seeks 10 minimize the evils OF the liquor
traffic within It's borders. The federal gov
eminent. II Is held. cannot constitutiOnally
into fere with the administration OF these
laws by requiring n spccia! tax stamp TO be
paid by It's officials rs q condition prece-
dent 10 the exercise OF their duties.
Commissioner NcrNes has The South Caro-
lima claim for refund or taxes under con-
siderat.on, but has rendered no opinion
yet. While IL L. true that this dispcnsary
system may be designated a state agency
and it's maintenance upheld as constltu-
uonal under the police power resident In
1 eli aAN.EAtHnItgg NTi rho tnNlggitaaa IL
inclined 10 the opinion that 10 Is not such
"a necessary state agency or such n needful
function Of the state government as will
cNcn.pr TX from taxation. There are Ger
tain agencies absolutely essential 10 the
life OF 4 STATE. such as the maintenance
Of courts. executive officials and collection
state expenses. and IL may be admitted
that the national government can at no
ti-rc ana in no way. directly or Indirectly.
lcVy a taA vpon these necessary state
sgl ucies. The government contends when
{ the Stale performs a work and assumes
i direction OF an agency which has been and
can he performed by its citizens In their
individual cnpacitN a now aspect arises.
~ 10 l. unconstitutional 20 require the local
agents employed under the ~dispensarN sys-
tern 90 South Carolina 10 pay TO the govern
meut tho sums required FOR retail and
I Wholesale liquor dealers stamps then this
sain. State and All other States. the COM
mieaionet points out. could take control
/ rot only of tho sale. but of the manufacture
OF whisky. beer and tobacco. and then tho
question would arise could the govern
trent levy any tax upon the products of
plants under aud operated by the state
tho State. must thereby be able go pay an
az their governmental expenses the genera
government, II 3 said. would lose An IN.
tcrnnl revenue income OF SONS 500. 200. ooc
per year. II II understood that II the com.
miaslonet's decision In against the State.
as seems probable. the case eventually Will
80 to the supreme Court of the United
states.