The herald and news. [volume] (Newberry S.C.) 1903-1937, 1916-01-28

''The supreme courts decision has
absolutely unfettered the income tax
as a source of revenue" said Repre-
sentative Hull of Tennessee, author OF
the law. "All doubt is removed and
! CONGRESS left mucn freer to act be-
lieve congress will take advantage OF
the opportunity to amend the law ma
terially. Without any unusual or un-
| lust changes it can be made to yield
S1S5, 5,O0O GOO to $195, 100000 a year, as
against $S5,OOO,OOO or $90,OO0,OOO at
present
10 Increase Taxes.
Representative Hull is preparing
amendments to carry the tax to in
comes below $4,000 and make graded
increases in surtaxes on incomes ex-
ceeding $4,000 a year.
So far, the problem of raising the
revenue for national defense, although
approached from many angles has not
been carried toward any definite So
luton because with the constitution
alt:ty of the income tax undecided ad-
ministration leaders were reluctant to
place too mucn dependence on it.
In it's decision the supreme court
construed for the first time the 10th
amendment to the constitution, under
which the tax is levied, and gave it the
broadest Interpretation possible.
The decision was announced by
Chief Justice White. 1t was rendered
in the appeal of Frank R. Brushaber
from tne action of the New York fed
eral court in refusing to enjoin the
Southern Pacific, of which Brushaber
was a stockholder, from paying the tax.
The case raised substantially every
point involved in all the five income
tax cases before the court with the
exception of the effect of the provision
allowing mining corporations to make
a per ~ent deduction annually from
gross income for depletion OF mines.
This provision is: regarded as being an
amendment to the old corporation tax.
Within the Law.
The basic error of those who at
tackled the constitutionality of the tax,
Chief Justice White held, was in re-
garding the 18th amendment as en-
towering the United States to levy a
direct tax without apportlonment
among the states according to popula-
ton. In substance the court held that
the 18th amendment had not empoW-
cred the federal government to levy
new tax, but that "the whole purpose
f the amendment was to relieve all
income taxes from a consideration OF
the source whence the income was
derived"
Those opposing the tax had urged
that the 18th amendment provided that
income from whatever source de-
rived" should be taxed without regard
to the apportionment among the States.
Tiney argued that the Underwood-Slm-
mons income tax provision by reason
of exemptions of certain incomes from
taxation had not come within the
meaning of the amendment.
Chief Justice White said the power
of the federal government to levy an
income tax had never been questioned.
Quoting at length from the famous in
come tax decisions of 1895, he declared
that the court tnen recognized the fact
that taxation on income was in the
nature of an excise entitled to be en-
forced as such unless and until it was
concluded that to enforce it would
amount to accomplishing the result
which the requirement as to the appor-
tionment of direct taxation was adopt
ed to prevent, in which case the need
xould arise to disregard the form and
consider the substance alone and hence
supject the tax to regulation as to ap-
portionment which otherwise as an ex-
else would not apply to it."
To Avoid Trouble.
The court then decided, he ADDED
that the effect of the tax on the in
come from real estate was the same
as if a direct tax had been levied on
the real estate and that it was with
view of obviating such questions that
the amendment had been adopted.
Inasmuch as the amendment had not
conferred the power to levy an income
tax, said the chief justice, it could not