New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-05-02
THE INCOME TAX AMENDMENT
Objections to Its Provisions Lacking IN
Weight, James IL. Gray Thinks.

TO the Editor Of The Tribune
Sir: Whether the words from WnateNef
source derived in the proposed income
tax amendment empower the federal gov
eminent TO tax incomes derived from state
bonds is a question not likely to come
before the courts In our time. IL the
amendment passes it is improbable in the
extreme that Congress viii attempt TO
tax income derived from such bonds
This is the real weakness of Governor
Hughes's argument. Whether sound IN
theory or not. the probability OF the exer-
else of the power is SO remote that the
argument has no practical force The PROP
ability that even If such tax should De
laid 1t would be of an amount surhcieht
to impede the operations of state finance
Is so small as to defy calculation
AS a matter Of fact. if income from state
bonds were taxed at the same rate as other
income there would be no impeachment TO
the states financial operations For there
would be no other investment into when
money could be put which would not De
equally subject to the income tax. Ana
state bonds would still be exempt from
direct taxation or other forms Of excise
taxation. and they would still have All the
exemptions from state and local taxation
which are now conferred upon them
The only way IN which an income tax
could impede the financial operations OF
the state governments would be by law
which should tax the income derived from
them AZ a greater rate than other income
Such law Is uuthinkable in our American
poIity.
1t may be argued that such bonds would
thereby be made less desirable for foreign
investors. as probably an income tax on
them might be collected before paying The
interest to the foreign investor But there
are tue answers 20 this. ~ The economic
condition of the United States is such that
the necessity for seeking foreign aid IN
floating American securities Ufll be less
and less and VIII soon disappear: % all
foreign governments which lend money 10
America now impose a rate Of income tax
much greater than IS ever likely to be i'm
posed In America. and the rate Of interest
In foreign countries is lower than here and
is likely 20 remain SO
This objection 10 the proposed amend
ment Is like some OF the objections which
were urged to the adoption Of the Consti-
tuition Itself, perhaps technically good IN
theory but IN practice utterly chirerical-
For example,
The powers Of Congress. under the new
Constitution, are complete and unlimited
over the purse and the sword, and are per-
fectIy independent Of and supreme over the
state governments whose Intervention IN
these great points Is entirely destroyed BY
virtue Of their power Of taxation Congress
NAV command the whole or any part Of +hs
properties of the people They may i'm
pose what lmposts upon commerce tney
may impose what land taxes, and taxes,
excuses and duties on every fine article
that they may Judge proper con
gress may monopoltze every source or reNe-
nue.. and thus Indirectly deTfolish the state
governments. for without funds they could
not exist. (AddresS OF the minority IN the
Pennsylvania Convention, quoted in Story
on the Constitution Vol L. Page 2'Sr see
ton 29s, fourth edttfOn1
This class or objections now seems alb
surd to US, for Congress has never at
tempted to do anything OF the sort
The truth is, matters Of government and |
cannot always be conducted |
on the basis on which a lawyer examines |
and certifes a title. In governmental at |
fairs some reliance must always be placed |
On the people and the capacity OF their !
for doing the sensible thing. |
II a great and needed reform is always |
TO be stopped because there is some remote /
and theoretical possibility that the repre- |
of the people Will grossly abuse /
the power confded to them. no reform will /
ever take place II Is not possible to draw |
a law constitution TO which some OBJ |
lection based on the possibility OF abuse
Of power, cannot be urged.
The argument that the power to lay |
income taxes may be used by Congress to |
impede the financial operations OF the /
states OverlOoks a great feature OF our |
the federal government and
the state governments are not hostile SOW
erei5nties. eacQ OF which may seek ad-
rautage at the expense OF the other, Both !
the federal government and the state gov
are representative OF the people |
The same people are represented in the fed |
sral government for accomplishing certain !
governmental end$ and in the state gov /
ernments for accomplishing other govern |
mental ends The people represented in the /
atiOnaI government are no more likely !
TO do anything TO Injure the people rep
resented IN the state governments than /
4 mans right hand is likely TO take hostile /
action against his left hand
Those who anticipate such hostility fail /
% apprehend the nature OF our political 1
system and the temper Of our people.
JAMES NJ. GRAY.
Brooklyn. April -. 1910