The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1910-02-21
FORT ANSWERS HUGHES.

| If any further answer were necessary
in addition to that already made tc
Governor Hughes's objection to tho
proposed income tax amendment to the
Federal constitution, that answer has
been made by Governor Fort of New
Jersey, Governor Hughes put the stress
of his objection to that amendment on
the point that Congress would by 1t
be empowered to tax incomes from in,
terest on State and municipal bonds;
and that that was direct attack upon
the States credit and upon the rights
Of the States to protect themselves.
Governor Fort IS answer to this is
not, Of course, put in the form of a
reply to Governor Hughes. 1t is car
ried in his message TO the New Jersey
legislature. distinctly and unqualiiedly
favoring the ratification Of the proposed
amendment, That part of his message
which relates to :he objection raised by
Governor Hughes, is as follows:
The argument made is that tax upon
incomes from this source might 0D de-
crease the value of securities In the mar
such a tax. impair the power OF the
states. Neither OF these suggestions
seems to me to have force.
sSPpDse up po per ,cenn eenIum Of tax were were
a tax the holder OF $1,000 per cent
state or municipal bond would pay an
Income tax on $40 per year, which would
amount TO 10 cents per annum. II the
patriotism OF our citizens and the inter-
est OF our financial institutions. who take
and hold State and municipal securities
tax to affect the value of State or muni-
cipal securities, we are, indeed. In an
unfortunate condition in the republic.
No one can believe that such a condition
exists
AS to the claim that the Federal gov
eminent might injure the States, as such.
by taxing State bonds under an income
tax. there are two satisfactory answers;
First. The Congress is representative
OF the States, and elected by the citizen
ship thereof. and the remedy is In the
hands of the people of the States by not
returning such Congressman.
Second. The patriotism of our people
IS such that no Congress could be elected
that would lay any tax with view OF
destroying the power or integrity OF the
States II this be not true. the relation
OF cur States TO the republic Is surely Of
much less Importance than many OF US
have hitherto supposed.
Which seems absolutely conclusive,
1t is good reasoning, good patriotism,
good economics, good statecraft, AS a
practical application of the question,
further, the Springfield Republican
points out that in the case supposed,
the holder of the State bond would find
there was no discrimination exercised
against him; that he could gain nothing
by selling his State bond and investing
IN some other form Of security. because
that other form of security would be
subject to the same fax and might IN
fact yield larger rate of interest, in
which case he would have to pay more
income tax.
The sweeping language of the amend.
ment as proposed, including all income
from whatever source derived, would
not stop at the taxation of income from
State or municipal bonds. 1t would un-
doubtedly reach also. income from inter
est on u. S. bonds, and quite properly
so too. because there would be no rea-
son why the holder Of U. bond
should object to including the interest
on that bond in his income return, be.
cause he could not do better in any
possible case than to hold on to his
bond. If he sold, say, a $1,000 two
per cent bond and invested his money
in State bond, or in any other form
of security, that security would doubt
less draw a good deal more interest
than he would get from his U. s. bond,
and so his income tax would be greater
The fact that a u. S. bond draws
smaller rate of interest than any other
form Of investment security, and so re-
turns the holder less amount TO in
clude in his income returns, woul.l be
an incentive for every holder of u. S.
bond to keep it.
The more Governor Hughes's obiec-
tions to the amendment are considered,
the clearer it is that he got off wrong
In obJecting to the ratification of that
amendment by the legislature Of New