The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1909-06-16
TO TAX EARNINGS
President Taft Offers a Plan to
Raise Revenue
In Special Message Addressed
to the Congress.
GET INCOMES LATER
BY Means of an Amendment to
the Constitution.
Calls Attention to Adverse De-
cision of the Court.

Washington. June 16.-President
Taft today sent the following message
to congress on the subject of a tax
on net earnings of corporations and
an income tax amendment to the con-
stitution:
To the Senate and House of Repre-
sentatives:
1t is the constitutional duty of the
president from time to time to re-
commend to the consideration of
congress such measures as he shall
judge necessary and expedient In
my inaugural address, Immediately
preceding this present extraordinary
session of congress, / invited atten-
tion to the necessity for revision of
the tariff at this session and stated
the principles upon which l thought
the revision should be effected. re-
ferred to the rapidly increasing deficit
and pointed out the obligation on the
Z part of the trainers of the tariff bill
to arrange the duty so as to secure an
adequate income and suggested that
if it was not possible to do so by i'm
port duties, new kinds of taxation
must be adopted and among them
recommended a graduated inheri-
tance tax as correct in principle and
as certain and easy of collection.
The house of representatives has
adopted the suggestion and has pro-
lection of such tax. In the senate
the action of its finance committee
and the course of the debate indicate
that it may not agree to this provision
and it is now proposed to make up the
deficit by the imposition or a general
income tax in form and substance of
almost exactly the same character Is
that in the case of Pollock versus
Farmers Loan & Trust company, 1o7
L. S. 4S9. which was held by the Su-
"A direct
therefore not within the power of the
federal government to impose unless
apportioned among the several states
according to population This new
proposal. which I did not discuss in
my inaugural address or in my mes
sage to the opening of the present
session makes it appropriate for me
to submit to the congress certain ad-
ditional recommendations
The Courts Decision.
The decision of the supreme court in
the income tax cases. deprives the ma
t5onal government of a power Which
by reason of previous decisions of the
court, it was generally supposed the
government had. 1t is undoubtedly
power the national government ought
tc have. 1t might be Indispensable to
the nations life in great crises. AL
though I have not considered con-
stitutional amendment as necessary to
the exercise of certain phases of this
isied me that an amendment is the
only proper course for its establish
rnent to it's full extent. l therefore rec
ommend to the congress that both
houses by a two-thirds vote, shall pro-
pose an amendment to the constitu-
ton, comforting the power to levy an
income tax upon the national govern
nent without apportionment among the
states in proportion to population. This
course is much to be preferred to the
one proposed of re-enacting a law once
judicially declared to pe unconstitu-
tional. For the congress to assume
that the court will reverse itself and to
enact legislation on such an assump-
ton will not strengthen popular con-
fidence in the stability of the judicial
construction of the constitution.
The Wiser Policy.
1t is a much wiser policy to accept
the decision and remedy the defect by
amendment in due and regular course
Again, it is clear that by the enact
ulent 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 book
, law already there and never repealed
'euil simply be suggesting to the ex-
ecutive officers of the government their
possible duty to invoke litigation If
the court should maintain it's former
view no tax would be collected at all
If 1t should ultimately reverse
itself still no taxes would have been
collected until after protra cted DELAY
1t is said the difficulty and DELAY in
securing the approval of three
fourthS of the states will destroy all
chance OF adopting the amendment.
OF course no one can speak with GER
tainty upon this point but | have be-
come convinced that a great majority
of the people of this country are in
ment with power to levy an income
, tax and that they will secure the
adoption of the amendment in the
states, if proposed to them.
Second, the decision in the Pollock
case left power in the national gov
ernnent to levy an excise tax which
accomplishes the same purpose as a
corporation. income tax and it is free
from certain objections urged to the
proposed income tax measure. 1
therefore recommend an amendment
- the tariff bill imposing upon all cor
Porations and Jointly stock COM
panies for profit, except national
banks, otherwise taxed. savings banks
excise tax measured by two per cent
of the net income of such corpora
tions. This is an excise tax upon the
privilege of doing business as an
artificial entity and of freedom from a
general partnership liability enjoyed
<5y those who own the stock.
Would Bring i'll $25, 600, 900.
an illol IAleu THAT Two. per cent
tax of this character would bring into
the treasury of the United States not
less than 100000. The decision
OF the supreme court in the case of
Spreckels. Sugar Refining company
against McClain, seems clearly to es-
tablish the principle that such tax
as this is an excise tax on privilege
and not a direct tax on property and
Is within the federal power without
apportionment according to poptlla-
tion. The tax on net income is nre-
ferable to one proportionate to a per
of