The people's journal. (Pickens, S.C.) 1891-1903, 1902-12-04
WILL THE STATE RECOVER {?

The Claim of SoutI, Carolina
for Exemption From Revenue
Taxes.
\ Washington correspondent saws
that most important and far-reach-
ing test case, involving one aspect of
the old notification idea, is to be tried
in the Court of Claims, with the State
OF South Carolina as plaintiff and the
| United States as defendant. 1t is tho
| suit of South Carolina to rcCov cr the
sums paid for series of years as far
back as it is possible to 60 without en-
countcring the statute of limitations,
i'll internal revenue taxes on the liquor
traffic now conducted by that State un-
der its dispcnsary system.
AS is well known, the Federal gov
ernment makes no distinctions between
the persons who sell liquors, taxing
alike those who are engaged IN the bust
ness lawfully and unlawfully, and with
out regard to any local taxation or other
conditions imposed by State or munich
pal legislation. But it is also true that
the Federal government has no right
undor the constitution to tax the
Official agencies of a sovereign State,
when exercised in the performance of
the legitimate functions Of the State.
1t docs not and cannot, for instance,
tax State bond, or the funds in the
hands of State treasurer, or the oflico
of a Governor.
The State of South Carolina has
therefore hit upon the notion that un-
der it's dispensary system, evcry lawful
seller Of liquor is police functionary,
and that Federal tax upon the dis
pcnsary traffic is tax upon the police
power of the State. Commissioner
Ierkes, Of whom the demand for The
return of the money collected in taxa
ton was formally made before snit
was brought, searched all the public
literature he Gould find on the subie
including the official messages and
reports of the State officers, and found
in them abundant and satisfactory evil
dence that, whatever may have been
the idea of the original author or au-
thors of the dispeEsary idea, the pur-
pose of conducting the system is not
nearly 80 much plan for restricting
traffic IN lntoxicants as for acquiring Il
revenue. Indeed, it may be said that
that is practically the only purpose
now, the other being only incidental
thereto, if any attention whatever is
paid TO it.
The commissioner is therefore con-
testing the claim in entire confidence
that the State cannot recover. The
first consequence of the governments
| defeat would be a reduction of It's rcve-
| MUGS by from one hundred and fifty to
one hundred and seventy millions a
year at a single stroke. If the dis
pcnsary bars of South Carolina arc de-
clared legitimate State agencies Of the
non-taxable class, there will be moth
ing TO prevent the States going into
the Wholesale manufacture of liquors;
and what South Carolina can do in that
line other SUBSEQUENTLY all except
a few Of the remaining forty-four-
will do also. The tobacco industry
will follow in the same line as a mat
ter of course, and then the whole
fabric of internal taxation by the Fed
cral government " i'll go to pieces like
house of cards.
. South Carolina has retained for hel
counsel very able lawyer, Franklin
II. Mackey. The Attorney General
will probably give his personal atten
tion to the conduct Of the case for tho
government. The litigati IN is attract
ing wide attention among members o.
Congress and fiscal experts.
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