New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-12-05
FEDERAL TAXING POWER.
cTATE RIGHTS LIMITED.
No Constitutional Restriction on
Poscer to Collect TdaeS.

K
washington. Dec. The Supreme Court of
=. r-nited States to-day decided that the ma
s.,aI government may properly tax the State
,or dispensaries Of South Carolina The
teton was delivered by Justice Brewer in the
- If the state Of South Carolina VS. the
lifted states. This action was instituted by
s, state of South Carolinae TO recover $40. 600
IN 10 the revenue officers of the national gov
4ument on account OF the sale of liquors by the
cote and county dispensers under the Dispen-
=, law. The State took the position that as
80 dispensers sold liquor without profit they
..os,ld not be taxed by the government, but the
: ~ has been collected since 1888. This is said
:. have been the first case in which a State
,,es in one undertaking the exercise OF its
a,ics power together with the prosecution Of
commercial business. The Court of Claims
dismissed the petition the ground that the
.vercse Of police power was but thinly dis
o,,se5 holding that the real purpose was money
making, and this decision to-day affirmed.
qsa contention on behalf of the State that
os the United States is beyond the reach of
cse.e taxation, SO is the State equally beyond
:, reach of United States taxation; that neither
he property nor the agencies and instrumental
,iss used by the State for the transaction of its
business can be subjected to any burden of taxa
t,oa by the United States. In support of the
rrosseding ny the national authorities it was
,-ped that while this may be true to any
s+rictly governmental functions, yet when the
ctste engages in what was looked upon at the
time of the adoption of the Constitution as
.-ivste business the individuals acting for the
c.s+a in the transaction OF that business become
.roenable to the taxing powers of the United
GATES The Court sustains the latter conten-
ton.
Admitting that the delicate question of pre-
,srr,ing the even balance between the national
government and the State governments was in
yolved in the case Justice Brewer laid down
the general proposition that there is no con-
stitutional limitation on the power Of the gen
sraI government to collect license taxes: Look
ing at the Constitution in the light of the con-
ditions surrounding at the time of its adoption,
# is obvious" he said that the trainers in
granting fun power 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 prac-
tcally destroy it.
The trainers of the Constitution were not
anticipating that a State would attempt to
mcnopolize any business heretofore carried on
by individuals. Further, it may be noticed that
The tax is not imposed on any property belong
ing to the State, but is a charge on a business
before any profits are realized therefrom"
Quoting various decisions, he deduced the fol-
lowing general conclusion: These decisions,
while not controlling the question before us, in
dcate that the thought has been that the ex-
emption of State agencies and instrumentalities
from national taxation is limited to those which
IRE Of strictly governmental character and
the,
State in the carrying on Of an ordinary private
business"
The opinion dwelt at length upon the possible
consequences of conceding the position of South
Carolina in the controversy as follows: THE
right of South Carolina to control the sale Of
liquor by the dispensary system has been sus-
tanned The profits from the business in the
year 1901 were more than 100000. Minglfng
the thought of profit with the necessity of regu-
lation may induce the State to take possession.
In like manner. of tobacco. oleomargarine and all
other objects Of internal revenue tax. If one
State finds il thus profitable, other States may
follow and The whole body of internal revenue
tax be thus stricken down.
More than this there is a large and growing
movement in the country in favor of the acquisi-
ton and management by the public of what are
termed public utilities, including not merely
therein the supply Of gas and Water but also
taking into possession these public utilities lose
lis republican form Of government?
We may go even step further. There are
some insisting that the State shall become the
owner Of all property and the manager of all
business. OF course, this is extreme view,
hut its advocates are earnestly contending that
thereby the best interests Of all citizens will be
subserved. If this change should be made in
any State how much would that State contrib
ute to the revenue of the nation? If this ex-
irene action is not TO be counted among the
probabilities consider the result Of much
lice power the control of all those matters sub
ject 10 the internal revenue tax and also en-
cages in the business of importing all foreign
goods, The same argument which would ex-
empt the sale by State Of liquor, tobacco. etc,
rom license tax would exempt the importation
OF merchandise by State from import duty
While the State might not prohibit importatons,
as II can the sale Of liquor by private individ-
uas yet paying no import duty it could under
sell all individuals and so monOpolize the i'm
ponauon and sale of foreign goods
Obviously if the power of the State is car
tied to the extent suggested and at the same
uhe relieved from all federal taxation the ma
rs revenues. Trdeed Il all the States should
concur in exercising their powers TO the full ex-
tent II would ne almost impossible tor Inc rs
non TO collect any revenues In other words. in
uls indirect way it would be within the COM
potency Of the States to practically destroy the
enlclency Of the national government"
sented