New-York tribune., 1910-01-07
4 POOR DEPENnENnE-

In attempting to break the force Of
Governor Hughes's objection to the in
come tax amendment In its present
form his critics are obliged to urge that
Congress would never use the overliberal
grant of power which the amendment
carries to tax the securities of a state
and thus weaken its credit Our es-
teemed neighbor "The World" says
that the Governors fears are more
imaginary than real" because at is
hardly probable that Congressman would
pass a federal tax law impairing the
value of the public securities of the COM
''munities in which they live and for the
redemption of which their own prop
"erty is pledge" Governor Harmon of
Ohio puts the same idea little more
positively. He said on Wednesday:
Comfy between kindred sovereignties
should require the amendment TO be
taken as applying to incomes from pri-
Vate sources only. At any rate, | have
no fear that Congress, being elected by
the people of the states would ever pass
a law that would cripple or destroy their
states. If it should attempt this, its
members would soon fill political graves,
with their law tucked in behind them.
But, as The Tribune pointed out yes
terday, the conclusion that Congress, if
clothed with power to tax state Sc
curities, could be depended on not to
exercise that power is not based on salts
factory premises 1t conflicts absolutely
with experience Respect for state rights
and sense of 1.-The comfy between kin
dred sOvereignties" have not prevented
federal legislators, even Of the extreme
state rights school, from imposing taxes
on income from the securities of states,
counties and municipalities and what
happened in 1894, when the right of the
federal government TO lay such taxes was
gravely doubted, would not be at all I'M
likely to happen after the power of the
nation to tax incomes from whatever
source had been expressly established
by an amendment to the Constitution
1t was not through inadyertence that
the 53d Congress included state. county
and municipal bonds among the securities
income from which was to be taxed
under the WilSon-GOrman law by the
federal government The federal courts
had given decisions bearing on the con-
stitutiOnality of such taxation, foreshad-
owing the decision which invaldated it
when the income tax section of the
WilsOn-GOrman law was carried a little
later to the Supreme Court Senator
John Sherman, in 1894. when the income
tax was being considered, had called the
attention Of Congress to this sentence in
an opinion Of the Supreme Court. writ
ten by Associate Justice Nelson and
handed down in 1870:
Such being the separate and indepen-
dent condition of the states in our COM
pleX system, as recognized by the Con-
stitutiOn, and the existence of which is
so Indispensable that without them the
general government itself would disa&-
pear from the family of nations it would
seem to follow, as q reasonable, if not a
necessary, consequence, that the means
and instrumentalities employed for car
rying on the operations Of their govern
ments, for preserving their existence and /
fulfilling the high and responsible duties
assigned to them in the Constitution
should not be liable to be crippled much
less defeated, by the taxing power of an
other government, which power acknoWl-
edges no limits but the will of the legis-
lative body imposing the tax.
In the face of that opinion, which
subsequently was unanimously indorsed
by the Supreme Court in the decision in
the Pollock case, Congress deliberately
imposed a tax on incomes derived from
state, county and municipal securities.
In the Senate the issue was directly
raised by the amendment offered by Sen
ator David b. HILL on June % 1894.
Ee moved to attach to the provision ex-
empting from taxable sources Of income
'such bonds of the United States the
principal and interest Of which are by
1.-The law Of their issuance exempt from
"all taxation" the words 'and except
"the bonds of any state, county, munic-
''ipality or town. His amendment was
supported by Messrs. Allison, Sherman.
Hoar, Chandler and Mitchell. OF Oregon,
but it was opposed by Senator Vest, rep
resenting the Democratic majority, and
was defeated by vote of 80 10 %. Sen
ators Gray, OF Delaware, and Pugh, of
Alabama, voted with Mr.. Hill for the
amendment, but every other Democrat
voted or was paired against it.
Mr.. Hill then narrowed his amendment
so as to exempt income from state bonds
alone from federal taxation. Mr.. Nor
gan. OF Alabama. and MIR. Caffery, Of