The evening times. [volume] (Washington, D.C.) 1895-1902, 1901-07-18
THE TAX ON DISPBNSARIBO.
Commissioner Yerkes Prepared 10
Decide Against South Carolina.
state Laws, It Is Held. Do Not Abro-
gate or NuIIify the Federal Stat
uteS-NO Apprehension Felt rs TO
the Suit OF Governor NcSyTccney.

gate or Nu3Iify the Federal stat
uteS-NO Apprehension Felt rs to
the Suit Of Governor NcSSyccney.
An official Of the Treasury Department.
who is in a position to know. in comment
ing on the contention of the State of
South Carolina that the Internal Revenue
Bureau has no legal right 10 tax South
Cardinals State dispensaries, and that II
should reimburse the State Of South Caro-
lima for moneys paid for internal revenue
tax. said this morning that the decision
of the Commissioner of the Internal Rev
cuue Bureau would be against the con
tentiou Of the State of South Carolina.
1t Is said that a decision has been ar
rived al by Mr.. Yerkes after frequent con
situations on the matter by him with At
toTney General Knox
IN connection with this controversy II
viii be recalled that Governor NCSweeney
few days ago made demand on the
Internal revenue collector for the district
of South Carolina for the return of all
the taxes collected by the Government
from the dispensers Of liquors in that
State since the dispensary law became
effective in 1893. The collector referred
the question to Mr. Yerkes, the Commits
sioner Of Internal Revenue, who promptly
refused to recognize the claim.
At the same time that this demand was
made a suit was fled in the Court of
Claims by Franklin H AIackey. IN behalf
of South Carolina, for the return Of the
taxes The amount involved is only $40
900, which represents an annual tax Of 50
collected by the Government from each
man actually engaged in dispensing
liquors in South Carolina under the State
dispensaTy law, and also a tax of Sl25
from the State dispensaTy commissioner
Mr.. Ma~tey's brief declares that the
liquor traffic in South Carolina is not
private but q State business: that the
men engaged in it are agents Of the
State, and are paid ont Of the general
revenues Of the State; that their compeu-
sation does not in any way depend on the
amount Of sales they make. but is regu-
lated and guaranteed by law, and that
by levying tax on these agents the Fed
eTai Government is interfering with the
police power of the State
As the Court Of Claims has adjourned
until the second Monday in October. the
trial OF the case probably cannot take
place before November or December If
South Carolina loses in the Court OF
Claims an appeal will at once be taken
20 the United States Supreme Court As
the Supreme Court has sustained she con
stitutonaIity Of the South Carolina dis
pensary law, on the ground that it pro-
vides simply for legitimate exercise of
the police power Of the State. great con-
Germ mas been aroused as TO how the
court Will reconcile this view to the OBJ
yious necessity OF DENYING the couten-
ton which the South CaFoliniaus are now
making 1t is believed that if the Su-
prsme Court should sustain the present
contention, a serious and perhaps fatal
blow would be dealt TO the internal rev
enue system, and that before long Con-
gress would be compelled to devise an en-
tircIy new excise scheme.
It is pointed oGt thai If South Carroll
ma s peculiar excise law should make that
State immune from the Federal tax on
the liquor business other States would
soon follow her lead, and ultimately ali
the States would be in q position to defy
the Federal authority in an important
particular.
Mr. Eerkes is not appTehensive Of the
outcome Of the suit. Mr.. Yerkes, hoz--
ever. admits that at first glance the de
cisions Of the Supreme Court in all SINH
lar cases seem TO favor the South Caro-
lima contention. He says the court oDin-
ion UNFOLDING the South Carolina dis2eE-
sary law distinctly declares that law to
be q correct exercise Of a States police
power. but does not say that this power
can be SO cXerJed as 10 nutlify the laws
OF the United States and the regulations
Of the internal revenue system.