El Paso herald. (El Paso, Tex.) 1901-1931, 1913-05-08

amendment to the coDstitu-
ton and the determination of the
Wilson administration to follow il IN
with an income tax law marks one IF
the most important pages in the his
tory Of American taxation. It probably
represents the beginning Of a new era
in the application Of the revenue rails
ing policies Of the federal government.
New Field for Argument.
On the one hand ii settles manv
questions about which there has been
much dispute, while on the other hand
it opens up new fields Of argument
and contention which will probably
figure in the forum Of American poll
tics for many years to come. 1t there
fore becomes of paramount interest
among the questions in the public
mind. And, moreover, it gives to the
people an issue they can feel, a tax
that they do not pay uncOnscfOusly. A
person who buys something uDo0
which a customs duty has been levied
knows nothing Of what the government
levies upon him in the transaction
unless he happens to be coming
through one Of the ports and gets held
up for duties on what he has bought
abroad. But the salaried man VINO
finds $50 deducted from his salary to
pay his income tax knows IL with a
good deal of certainly.
sentiment ElF0r8 TAX
The 18th amendment came about IN
rather unusual way When the con-
greSS met to make the Payne-Aldrich
tariff law there had developed a wide
spread sentiment in favor of an income
tax. The revenues of the government
were not meeting the expenditures, and
nearly everybody agreed that the tariff
was already too high. In looking about
to find some other source of revenue
most eyes fell upon the income tax i
H1r# rr-H
decision, which had declared the in
come tax an unconstitutional tax, If
levied without appOrtiOnment among
the states. but that decision was made
after a divided court had failed to de-
clare ii unconstitutional. And so il
was that many people felt that the
supreme court was wrong on its sec
ond thought This feeling was the
more pronounced because every pre-
viOus decision during a hundred years
seemed to have been reversed by the
second decision Of the court
Taft Urged Income Tax.
There was a determination in some
quarters to put the matter up to the
court again. and at one time II looked
as If the proponents of the Bailey
Cummins amendment to the Payne-Al-
drtch law, providing for the enactment
OF an income tax law, would be able
to muster enough votes in the senate
and house to pass it. At this Juncture
president Taft came upon the scene
with n message to congress expressing
the view that the supreme court had
taken away from the federal govern
ment a power it was generally sup
posed to have had. and one that 1t uu-
dOubtedly ought to have He added
that 1t might be necessary for the sal
walton Of the country in time Of
great crisis.
He said, however, that he thought it
would be much better 10 make sure OF
that right through the medium Of
constitutional amendment than BY put
ting on the statute books a law al
ready there and never repealed. He
thought IL would not add to the popu-
lar confidence in the courts for con-
gress TO enact a law upon lines that
mad been declared unconstitutional 1t
may be said in passing that Mr.. Taft,
as well as many other statesmen. fell
into an amusing error concerning the
income tax law Of 1894, when he said
II was still upon the statute books. As
matter OF fact, the very second line
OF the act provided for its own expira-
ton by Limitation in 1900
Opposition to Amendment.
He therefore recommended that
congress pass a constitutional amend
tax law, and that, pending the pass
age Of such an amendment a. corpora
ton tax be levied Many members Of
the senate and house prOfessed to see
mediate passage of an income tax law,
and for the time being opposed IL. Fl
naly, however they accepted the in
eVttable and Joined in voting to send
the amendment to the legislatures Ct
the states for ratification Many OF
them thought that those who backed
the amendment were doing so as a
means to choke off impending income
tax legislation and to strengthen the
supreme courts last decision by offer
ing the amendment and have It fail
of ratification by the states Then,
they contended. the court further
could say that the people had re
jected the income tax idea and that it
was not for the court to set up what
the people had thrown down.
But in spite Of all these conflicting
ideas. the proposed income tax law
failed Of passage, while both houses Of
right TO say whether they wanted an
income tax law or not If any Of those
who voted for the amendment did so
under the assumption that it would
law and then be defeated itself by the
OF u states they
reckOned without their host for the
18th amendment is now a part Of the
supreme law Of the land.
Interpretations Differ.
But it did not become the 18th
amendment until it had first revealed
that questions may arise concerning
its Interpretation almost as serious as
those concerning the direct tax"
clause of the constitution. which it
was aimed to settle. Justice Hughes.
now Of the supreme court, was govern
or of the state of New York when the
legislatures were asked to ratify Ii.
He recommended that It be rejected,
one of his grounds Of objection being
that it would tax state, county and
municipal bonds and therefore gives
the federal government practically
complete domination over the states.
The amendment says: THE congress
shall have power to lay and collect
taxes on incomes from whatever
source derived. without apportionment
among the several states and without
regard to any census enumeration" It
was cOntended that the words from
whatever source derived" gives to con-
gress the unquestoned power to tax
state and local securities to whatever
point II chooses, even to the point Il
destroying the credit of the divisions
issuing them
Federal Power Not Enlarged.
Tt would seem to the lay mind that
from whatever source derived" would
include everything. and so a great
many people hold They contend that
inasmuch as it is the last word II
naturally repeats anything incOnsist-
ent with IT. On the other hand, such
lawyer as senator Root opposes this
doctrine. He contends that the amend
ment does not enlarge in the slightest
the scope Of the taxing power Of the