The herald and news. [volume] (Newberry S.C.) 1903-1937, 1905-12-08
LIABLE FOR REVENUE TAX.
Federal Supreme Court Decides That
South Carolina Must Pay for Ev-
cry Dispensary-A Business
Matter

States decided tnat the natlOlaI gov
ernment may properly tax the state
liquor dispensaries of South Carolina.
The opinion was delivered by Justice
Brewer in the case of The State OF
South Carolina VS.. the United States.
This action was instituted by the state
of South Carolina to recover $4,000
paid to the revenue officers Of the ma
tional government on account OF the
sale of liquors by the state and county
dispensers under the dispensary law.
The state took the position that as
the dispensers sold liquor without
profit, they should not be taxed by
the government, but the tax has been
collected since 1893. This is said to
have been the first case in which
state unites in one undertaking the
exercise of it's police power together
with the prosecution of commercial
business. The court Of claims dis
missed the prosecution on the ground
that the exercise of police power was
But thinl y disguised, holding that the
real purpose was money making and
/ this decision was affirmed.
The contention on behalf Of the
state, was that as the United States
is beyond the reach of state taxation,
SO is the state equally beyond the
reach of United States taxation; that
neither the property nor the agencies
and instrum entalities used by the
state for the transaction of its busi-
ness can be subjected to any burden
of taxation by the United States. In
support of the proceeding by the ma
tional authorities, it was urged that
while rhis may be true as to any
strictly governmental functions, yet
when the state engages in what was
looked upon at the time Of the adop-
.tion of the constitution as private
business, the individuals acting tor
the state in the transactions OF that
business become amenable to the tax
ING powers of the United States. The
: court sustains the latter contention.
Admitting that the delicate. ques-
tion of preserving the even balance
? between the national government and
state government was involved1n the
case Justice Brewer laid down the
general proposition that there is no
constitutional Limitation on the pow
+ er of the general government to COL
i 1ect license taxes. "Looking at the
constitution in the light Of the con-
ditions surrounding at the time OF its
adoption, it is obvious" he said, that
the trainers in granting the full pow
er over license taxes TO the national
government meant that the power
should be complete and never thought
that the states by extending their
functions could practically destroy it.
.s s sSIfe trainers of the constitution
were not anticipating that state
would attempt to nonopolize any bus
mess heretofore carried on by lndl-
vidua1s.'
"Further, it may be noticed that the
TAX is not imposed on any property
belonging to the state, but is charge
on a business before any profits are
realized therefrom."
Quoting various decisions he de-
Quoted the following general conclu-
sion: t'These decisions, while not
controlling the question before us, IN
dicate that the thought has been that
the exemption of state agencies and
Observation-Disclosures from national taxa
tion is limited to those which are OF
strictly governmental character and
does not extend to those which are
used by the state in the carrying on
OF an ordinary private business" The
opinion dwelt at length upon the pos
sable consequences of concedlng the
nosition of South Carolina in the con-
troversy as follows:
ssThe right of South Carolina to
control the sale of liquor by the dis
pensary system has been sustained
The profits from the business in the
wear 1901 were over half million OF |