The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-07-22
STATE INCOME
TAX ACT FACES
LEGALITY TEST
Yale & TOwne of Stamford,
Conn.,, in Suit Say Law
Is Unconstitutional.
OTHER GROUNDS CITED
"Non-Residents Made to Suf-
fer and Interstate Com
merce Burdened."
OTHER GROUNDS CITED

Suit in equity has been begun by
the Yale & Towne Manufacturing
Company. lockmakers of Stamford,
Conn, to restrain Eugene NJ. Travis,
State Comptroller, from enforcing the
State income tax law.
Although the suit is directed at the
provision which requires Yale
Towne, as employers paying salaries
in their New York offices, to deduct
. per cent of the sums paid to non
residents, It will lead to a thorough
test of the State act as it's provisions
apply to non-residentsi The COM
plaLnt alleges the act to be uncon-
stitutional on a number OF grounds.
A motion to dismiss the suit has been
made by Charles d. Newton. Attorney
General. and argument will be made be-
fore Judge Learned Hand on Thursday
morning.
Minor allegations include one that
the law, II enforced. will subject the
plaintiffs to hardship in that 1t will put
them to an expense OF at least $1,000
for the clerical labor necessary to carry
out the law and will subject them to the
threat OF suits that may be instituted
by employees to recover the sums with
held as tax instaiments.
Challenge of COnstituti
The paragraph in which the constitu-
tionality OF the law is challenged fol
lows:
The said statute of the State OF
New York is illegal and unconstitu-
tional, and 1t is, in particular. con-
| trary to and in violation OF the guar
antees and provisions OF the Constitu-
ton OF the United States. as follows:
| 1t Is contrary TO and in violation of
Article l. Section s, of said Constitu-
tion In that 1t interferes with and d.
| rectly burdens commerce between the
different States. 1t is contrary to
and in violation of Article /. Section
| 10 OF said Constitution in that ii i'm
| pairs the obligation OF contracts be-
| tween your orator and its employees.
| 1t Is contrary to and in violation of
Section . OF Article 4 of said Consti-
| tuition in that It deprives the citizens
of the States OF Connecticut and OF
New Jersey of the privileges and i'm
munities enjoyed by the citizens OF
the State of New York.
It Is in violation OF the Fourteenth
amendment to said Constitution in
that it abridges the privileges and I'M
| munities OF citizens OF the United
I States residing in, and citizens OF,
Connecticut and New Jersey and
States other than the State of New
York and in that 1t deprives your
orator and its said employees of their
properties without due process OF Law
and denies to them the equal protec-
tion of the laws.
Asks to Enjoin Comptroller.
The complainant asks that an injunc
ton issue restraining Comptroller Travi
and his agents from seeking to enforc
the law In so far as II requires the com
plainant to withhold a percentage Of tn
salaries Of his employees. The court
asked to restrain the Comptroller fror
requiring the complainant TO give any in
formation regarding salaries II pays o
the income 1t returns TO employees VIII
reside outside of the State.
The law as 1t stands leves a fiat ia
Of 2 per cent. against the income OF nor
residents earned in the State The ia
for residents Is graded: per cent o
the first 10000 of taxable income, 2 pc
cent. on the next $4,000 and 3 per cen
on taxable income in excess Of $4,000
New York State officials were quick {
explain that this method Of calculatio
was an inadvertent mistake in the Law
The 2 per cent. fiat rate was the origins
scheme, but was abandoned in favor {
the graded method. It was left in, how
ever. as applying to non-residents.
Gov. Smith has intimated that he wi
ask the next Legislature to consider I'll
practicability OF amending the law so a
apply the $1,000 and $4,000 primary eS
emptions to non-residents who receiy
their whole income in New York.