Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1916-01-25
FEDERAL INCOME
TAX UPHELD; NEW
REVENUE SOURCE
US. Supreme Court Sweeps
Aside Every Conten-
ton Raised.
UNANIMOUS DECISION
BY HIGHEST TRIBUNAL
Opens Way for Increasing Rate
on Great Fortunes to Help
Pay for Defense.
PROPOSALS ALREADY PENDING
PROPOSALS ALREADY PENDING
Can BE Made to Yield Nearly 5000
100000 Year Instead OF
S0O,OOO,OOO as Now.

WASHINGTON, D. c.. January "a
The income tax was declared constitu-
tional to-day by the United States Su-
preme Court in n unanimous decision,
which swept aside every contention
ratsod against II. and. in the opinion
or congressional leaders. opened the
way for increasing the tax rate on
great fortunes to help pay for national
defense
Proposals are pending IN Congress TO
tax incomes more than 100000 as
high ms 80 per cent. Leaders on all
s'des agree that out OF the impetus
which the decision to-day Will give
such proposals is likely 20 come
definite movement 10 levy on the
revenues from great private fortunes
for some OF the millions The govern
mont must raisc 20 carry out the army
and nav increases
Tho Supreme Courts decision has
absolutely unfcttcred tho income tax as
source OF revenue said Representa-
'ive Hun. o: Tennessee" author OF the
law "AN doubt is removed. and Con
gross is left much frccr to act / be-
lcv" Congress wll TAX" advantagc Of
tho oppcrtunity 10 amend tho law ma
t"-iaiiy Withou, any unusual or un-
just charEcs. X can u. made to WELD
siSa,oco.ooo 10 si.j. 90" ycar as
aEains, sS5. 600. 600 or 500. 600. 600 at
present"
Representative Hun Is preparing
amendments 10 carr ,he TAX to in
comes below 5000. ma make graded
Increases In tho surtaNcs on incomes
cNrcoGin: $4,000 "A wear
Not CARnIED TOWARD
ANY DEFINITE SOLUTION
so far the probicm ot raising the
revenue for national defense, although
approached from many angles. hns no,
been carried toward any definite soIu-
t'oU. because with tho constitutionality
az tho income tax undecided. admins
'ration leaders were reluctan, To place
too much dependence on IT,
In It's decision. the supreme Court
construed for The FIRST time the six
tccntE amendment To the CONSTITUTIONS,
under which the tax is levied. and gave
II The hroadest Interpretation possible
rejecting suggestions TO contine its
scope TO narrow limits
The decision was announced by Chief
Justice White. and was rendered in
the appeal OF Frank r Rrushaber from
the action OF tho New York Federal
Court In refusing TO cnjoln the South
crn Pacific. OF which Brushaber Was n
case raised substantially every point
involved In all the five income tax
cases before the court. with the excep-
tion OF the effect or the provision al
lowing mining corporations TO make n
per cent deduction annually from
gross income for depletion OF mines
This provision Is regarded as being an
amendment 10 the old corporation tax.
rather than a feature OF the income
tax.
CHIEF JUSTICE WHITE
POINTS OUT BASIC ERROR
The basic error OF those vino at
tackled the consti;utionality of the tax.
Chief Justice White held. was in re-
Rardng the sixteenth amendment as
empowering the United States 10 levy
a direct tax without apportionment
among the States. according to popu-
lation. In substance. the court held
that the sixteenth amendment had not
empowered the Federal government TO
levy new tax, but that the whole
purpose OF tho amendment was TO re-
lieve all income taxes from consid-
Grafton OF the source whence the in
come was derived"
Those opposing the tax had urged
the sixteenth amendment provided that
income from whatever source derived"
should he taxed, without regard to ap-
portionmcnt among the States They
argued that the Underwood Simmons
income tax provision, by reason OF
exemptions of certain incomes from
taxation, had not come within tho
meaning of the amendment
Chief Justice White said the power
OF the Federal government to levy an
income tax had never been questioned
income tax decisions OF 1896, he de-
ciared the court then recognized the
fact that taxation on income was in
the nature of an excise entitled to be
enforced as such. unless and until II
was concluded that to enforce 1t would
amount to accomplishing the result
which the requirement as TO apportion-
mcnt of direct taxation was adopted TO
prevent, In which case the duty would
arise to disregard the form and con-
slider tho substance alone. and hence
subject the tax to regulation as appor-
t!onment. which otherwise. as an ex-
cess, would not apply TO it,
ADOPTED WITH VIEW
OF OBvLtTING DOUBT
The court then decided. he added,
that the effect OF tho income tax from
real estate was the same as If direct
tax had been levied on the real estate,
and that II was with view OF obviat-
ing such questions that the amendment
had been adopted.
Inasmuch as the amendment had not
conferred the power to levy any In
come tax. said tho chief Justice, it
Continued on Third Page)