The Idaho Springs siftings-news., 1909-09-25


eminent impose the inheritance tax
would not have been particularly
heavy. Still. with the Inheritance tax
foreclosed, the question then arose as
TO what tax should be imposed in or
der to make up the deficit This uues-
ton arose in the Senate. For the in
heritance tax had passed the House.
and had been stricken out by the
finance committee of the Senate.
A part of the Republicans and all
OF the Democrats of the Senate united
in pressing for consideration a general
income tax on individuals throughout
the United States. II left an exemp-
ton Of those whose incomes did not
exceed 5000, but upon the rest ii i'm
posed a general income tax of 2 per
cent II also imposed a tax under
the former income tax upon Inherit
ances. and ii was as inQuisitorial as
possible in subjecting the business OF
every individual in the community to
Investigation. and permitted the exam
ination OF his books and all private
evidences of what his business con-
sisted Of and what his income was
This investigation was to be carried
on by the collectors and deputy col
lectors of the internal revenue. The
Law was as near as it could be made
to the income tax law which had once
been considered by the supreme court
some ten years ago and which was
held to be unconstitutional by vote
of five TO four. II was conceded that
the tax would probably raise $15o,000.-
0O0 to 5000, 900 900, which was far in
excess of the needs of the govern
ment if the tariff bill was to retain
its general form. as proposed. and SO
to produce revenues which should be
reasonably expected. Our friends, the
Democrats, favored the income tax
with a view to substituting it for the
tariff as an income-producing measure.
thus minimizing the effect Of the tariff
in protecting the industries Of the
country.
Would Have lnterfered.
In other words, the passage OF the
income tax bill would have lent sup
port probably to the proposition to
have a tariff for revenue only. and
would have interfered with the pro-
tective policy to which the Repupli-
can party is pledged.
tOne further objection to the income
tax amendment was that it had been
declared unconstitutional by the su-
preme court, and to invoke a second
decision upon that issue was to Ques-
ton the uniformity OF the decisions
of the supreme court, and to drag the
court into political discussion which
whatever its decision, could not make
for its standing as an impartial tribu-
nal before the people. 1t indicated a
diversity OF view between congress
and the court-two coordinate branch
es-with reference to the constitution
ality OF the law which it seemed un-
wise to perpetuate in a formal stat
nte. But the income tax amendment
seemed quite likely to pass by vote of
all the Democrats and a sufficient
number Of Republicans. Therefore
those who were opposed to the in
come tax amendment looked about to
see il compromise could not be pro-
posed less Objectionable than the in
come tax amendment, which would
satisfy enough Republicans who were
inclined to favor the income tax to
prevent the passage of that amend
ment. Such compromise was found
in proposal to pass the present cor
poration tax, and also the Joint reso-
luton already referred to, proposing an
amendment OF the federal constitu-
ton to the state authorizing the gen.
eral government to impose an income
tax without appodtioning it as a di-
rect tax according to the population
of the states.
Constitution Does Not Forbid.
For sake of clearness, l may say
that the constitution does not for.
bid the levying of an income tax by
the central government. The section
of the constitution involved in general
terms forbids the levy Of a direct taa
by the central government unless such
direct tax is apportioned among the
states according to their population.
The Supreme Court. in the last de-
cision referred to. held that the in
come tax was a direct tax, and, II
levied at all by the central govern
ment, must be apportioned according
to the population of the states. This
made the imposition OF such a tax ut.
terly impracticable. and so construed,
in effect, forbade a general tax at sill.
But there are decisions of the Su.
preme Court authorizing an excise taa
to be levied on business corporations
and to be measured by the gross in
come or the net income OF the busi-
ness; and therefore 1t seemed to the
general. as it has to a great many ex
cellent lawyers, entirely within the
decision Of the Supreme Court as con
stftutional to provide that all corpora
tions engaged in business for profit to
pay to the central government an ex-
else tax equal to l per cent of their
mn IA
that 2 per cent would produce about
$25, 100000. Subsequent Investigation
seemed to show that this was a very
decided underestimate. and that l
per cent would produce that amount.
and that that amount would be sum