Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-06-03
PROHIBITION BY TAXATION.

OF the federal rates.
PROHIBITION BY TAXATION.
Somebody has said that the power of tax i'm
plies the power to destroy In some instances the
tax power has been invoked for the express purpose
OF destructioa, which is certainly not what was orig;
inal]y intended in the grant Of powers of taxation.
Our tariff laws are described as revenue meas
ures. The raising of revenue is one of the purposes
for which customs duties are levied, and the re-
celpts from that source are very considerable. But
the purpose behind many Of our duties is not that of
raising revenue at all, but Of restricting or prevent
ing imports of certain commodities. Sometimes this
purpose is frankly avowed; sometimes it is quietly
understood. But the courts do not appear to ques-
ton the validity Of these duties, no matter what
their purpose.
A federal tax is imposed on butter substitutes
colored SO as to resemble butter, if these are handled
in interstate commerce. Nobody ever thought Of
deriving a revenue from this tax. The purpose was
to prevent the sale Of colored butter substitutes in
competition with butter. The question of protect
ing the purchaser from fraud docs not enter into the
case tail. Colored substitutes may not be sold as
butter, even though the tax be paid. The laws on
labelling. etc. provide protection against this sort
OF fraud. The purpose Of this tax is solely pro-
hibitory.
The federal government imposes a 10 per cent
tax on all issues Of state bank currency. Therefore
there arc no such issues: The purpose of the tax
was not to raise revenue, but to put tho state banks
out of the business of issuing currency. The old
state bank currency was a joke, and a grim one, at
that. There were as many currency laws as there
were states, and the quality Of the currency was as
variable as was the number Of issues. People &C.
cepted state bank notes at par one day, to find the
next day that the bank of issue had gone bump and
the currenck was just so much waste paper. Today
every paper dollar issued in the United States is
worth 700 cents. Depositors in a bank may lose
money If the business of the bank is unwiscly
handled. Stockholders may be ruined. But no hold
er of an American bank note loses a dollar, nor does
the government itself, which guarantees the cur
rency, lose anything. for it is fully protected.
In order to relieve the country of the intolerable
conditions caused by state bank issues it was neccs-
sary that such issues be discontinued Congress
was powerless to prohibit directly. 1t had the power
to tax. Accordingly it levied a tax 50 high that the
business could not live under it, and the state banks
immediately went out of the business in issuing cur
rency. The purpose was laudable, but in accomplish
ing it congress perverted it's taxing powers.
All of these taxes levied for purposes of re-
straint or prohibition, have been held valid bv the
courts. The law imposing a tax on the products of
child labor distributed in interstate commerce is
held invalid as being an improper use of the taxing
power and an unwarranted invasion of the police
powers of the state.
Specifically it appears that these cases are all
alike. There is. however, one important element
of difference. Prohibitory use has been made of the
taxing power in the other cases named. at least
|ostensiblv, tor the protection of consumers or users
who are scattered all over the country. Irrtfe child
labor law the nation has undertaken to saw to the
states that they shall not employ the labor of their
children for commercial purposes. If this can be
done the nation might, conceivably, impose similar
penalties on the distribution of goods from states =
which wages or working conditions did not conform
to an established federal standard, and might i'm
pose other conditions which would relieve the states
OF practically all their functions.