New-York tribune., 1910-01-06

tax income from federal securities Ac-
cording 10 the decisions of the Supreme
Court, the federal government is not JUS
titled in trying TO tax the property,
revenues or securities of the states or TO
use the taxing power in any way to
Interfere with proper state instrument
talities and functions. The defenders Of
the amendment In its present shape
will probably say that practically the
present m0dAs Cirendi would be main
tanned and that there can be no dan
ger in giving Congress power TO tax
income from all sources because the
states are themselves represented in
Congress and will not vote there TO in
jure their own credit at home. 1t will
be urged that the same people who elect
state legislatures elect Senators and Rep
resentatives, and that what their spokes-
men in the Legislature would not think
of doing their spokesmen at Washington
would also hesitate TO do. If Congress
imposed tax on incomes from state
securities. would 1t not logically he COM
PEELED TO tax incomes from federal bonds,
which are now expressly exempted from
taxation? To that question the friends
of the amendment will reply, "The as
sumption is absurd.
But is it absurd? Congress is not inn
mune from attacks of unreason. 1t would
be unrea sonable on its part TO interfere
with the market for state securities by
taxing income from them. But that is
exactly what the Democratic Congress
of 1898 50 did when it passed the Will
son German law The income tax sec
tion of that law did not exempt returns
from state and municipal securities, and
only the veto of the Supreme Court pre-
vented the collection of federal taxes on
income from such securities. The inclu-
sion of such bonds as taxable was one
of the grounds on which the Supreme
Court invalidated the Wilson German
income tax scheme. The court held that
the balance of powers between the states
aud the nation would be disturbed If the
central government were allowed TO in
terfere in that manner with the inherent
sovereignty Of the state governments.
But if an amendment is ratified expressly
giving the nation a power which 1t now
lacks, can Congress be expected to re-
frain always from using it? tenn
porary majority in Congress might be
led to think that the nations interests
required further sacrifice of state
rights and the Supreme Court would then
be powerless to step IN and save the
states as it did in 1895. 1t is even con-
ceivable that Congress. under the au-
thority granted by the amendment, might
proceed to tax income from United States
bonds. The warrant in the proposed
amendment would be broad enough. 1t
would only be question of exercising or
not exercising too liberal grant OF
power.
There is, therefore, undoubted merit
in Governor Hughes's suggestion that the
power of Congress be clearly limited in
any constitutional amendment which is
tc be ratified. We do not believe that the
two houses intended to ask for an au-
thority as unbOunded as that conferred
III the pending amendment. There is no
urgent reason for including state and
city bonds as sources of income TO be
taxed under federal law The govern
ment can properly surrender that
revenue. IL 1OlEicSS uttS lIol mean VI
want 10 claim it, it would be safer to
say so definitely at the start. If an in
come tax amendment is desirable it is
equally desirable TO have it drawn i'll
precise and definite form. Its limitations
should he expressed. not merely under
stood. There is wisdom in Governor
Hughes's nsistence that the new articles
Interpretation should hot be left TO
chance. but that its provisions should be
so guarded that they could not be used
to do a needless injustice to the states