Evening star., 1909-06-16
AMEND CONSTITUTION
TO ALLOW INCOME TAX
Urges That Proposal Be Submitted
to the States for Vote.
TWO PER CENT ON EARNINGS
Rate Sufficient to Raise $25, 100000
to Meet Requirements Until
States Have Acted on the
Amendment Proposition.

The President today sent the following
special message to Congress. dealing with
the proposition to tax the undivided net
earnings of corporations. and TO submit
to the states of the Union an amend
ment to the Constitution giving Congress
power to tax incomes:
ITO the Senate and House of Repre-
sentatives:
1t is the constitutional duty of the
President from time to time TO recon-
mend to the consideration of Congress
such measures as he shall judge neces-
sary and expedient. In my inaugural
address. Immediately pending this present
extraordinary session of Congress. l in
vited attention to the necessity for a
revision of the tariff at this session. and
stated the principles upon which thought
the revision should be effected. l re-
ferred to the then rapidly increasing
deficit. and pointed out the obligation
on the part of the trainers of the tariff
bill to arrange the duty SO as to secure
an adequate income. and suggested that
II 1t was not possible to do so by inn
port duties, new kinds of taxation must
be adopted, and among them l recon-
mended graduated inheritance tax as
correct in principle and as certain and
easy of collection. The House of Rep-
reSentativeS has adopted the suggestion
and has provided in the bill it passed
Tor the collection of such a tax. In the
Senate. the action of its finance COM
mittee and the course of the debate in
d1cate that 1t may not agree to this pro-
vision, ana IL Is now proposed to make
up the deficit by the imposition of a
stance of almost exactly the same char
acter as that which in the case of
Pollock agt. Farmers Loan and Trust
Company Q57 U. s.. 42D was held by
Supreme Court to be direct tax, and
therefore not within the power of the
federal government to impose. unless ap-
portfoned among the several states ac-
cording to population. This new pro-
posal. which l did not discuss in my
inaugural address, or in my message at
the opening of the present session. makes
II appropriate for me TO submit to the
congress certain additional recommended
tions.
Amendment Deemed Necessary
The decision of the Supreme Court in
the income tax cases deprived the ma
tIonal government of power which, by
reason of previous decisions OF the
courts. it was generally supposed that
government had 1t is undoubtedly a
power the national government ought to
have. 1t might be Indispensable to the
nations life in great crises. Although
nave not considered a constitutional
amendment as necessary to the exercise
OF certain phases of this power a ma
ture consideration has satisfied me that
an amendment is the only proper course
Tor the establishment to its fuu ex-
tent l therefore recommend to the Con-
gress that both houses, by two-thirds
vote, shall propose an amendment to the
Constitution comforting the power TO levy
an income tax upon the national gov
ernment without apportionment among
the states In proportion to population.
MS course is much TO he preferred
10 the one proposed of re-enacting a
law once judcially declared to be un-
constitutional. For the Congress tn as
sumo that the court will reverse itself
and to enact legislation on such an as
sumption. will not strengthen popular
confidence in the stability or judicial con
struction of the Constitution 1t IS much
wiser policy to accept the decision and
remedy the defect by amendment in die
and regular course.
Again, 1t is clear that by the enact
ment of the proposed law the Congress
VIII not be bringing money into the
Treasury to meet the present deficiency
but by putting on the statute books a
law already there and never repealed
will simply be suggesting to the executive
ofncers OF the government their possible
duty to invoke litigation. If the court
should maintain its former view no lax
would be collected at ALL If il should
ultimately reverse itself. still no taxes
would have been collected until after
protracted delay.
1T is said the difficulty and DELAY in
securing the approval of three-fourths of
the states will destroy ali chance of
adopting the amendment. OF course. no
one can speak with certainty upon this
L become rI,a,
great majority of the people of this
country are In favor of Nestins the ma
t1onal government with power 10 levy
an income tax, and that they will secure
the adoption of the amendment in the
states. If proposed 10 them
Second. the decision in the Pollock
case left power iii the national govern
ment to levy an excise tax which accom-.
plishes the same purpose "a a corpora
tion income tax. and is free from Ger.
tain objections urged to the proposed in.
come tax measure.
Tax to Meet Present Needs.
II therefore recommend an amendment
to the tariff bill imposing upon all cor
porations and joint stock companies for
profit. except national banks totherwise
taxed. savings banks and building and
loan associations. excise tax measured
by per cent ON the ne. income of such
corporations This is an excise tax upor
the privilege Of doing business as AN arti
fetal entity. and OF freedom from gen.
eral partnership liability enjoyed by thos.
who own the stock.
Il am informed that > per cent tan
of this character would bring into ths
Treasury of the United States not less
than S2Jbn.atD.
The decision of the Supreme Court il
the case of Spreckels Sugar Refining
Company against McClain tl93 L. s.. :;97
seems clearly to establish the principl.
that such tax this is an excise taN
upon privilege and not direct tax or
property, and Is within the federal power
without apportionment according To popu
lation. The tax on net income Is prefer
able TO one proportionate to a percentage