The Dawson news. (Dawson, Ga.) 1889-current, 1923-01-02
ANOTHER INVASION OF
STATE RIGHTS IS SEEN
TUE PROPOSAL TO TAX GOV
The nnMMENr SECURITIES IS
T1y11s CHARACTERIZED.
RICH FAVOR PRESENT LAW
=. Them to Escape Taxation
ps Massachusetts Governor Attacks e1as
n WIS aid" and Calls 1t Myth.
c;+.s Numerous Instances

c;+as Numerous Instances
~. oonosition in congress to Pres
! ,a.nt Hardings suggestion that bonds
; iu.n bv states and cities should be
,' .h;oct 70 the federal income tax, the
saoy ss bonds issued by ordinary bus
:ra.s generations, appears to have
a ...,g the sponsors of the bill,
rr;tos Mark Sullivan, the well-known
Washington correspondent in the Sa-
yannah Press.
Invades State Rights.
Tho heart of the antagonism to
Harding's proposal lies in the fact that
GOES probably farther in the direc-
tion OF the invasion of state rights
Eban any OF the many steps that have
been taken in a century OF aggressive
rrowding on the part of the federal
government
The right of state to borrow mon
~ on such terms as it pleases and to
lax its citizens to pay the prlncipai
Ind interest of these borrowings on
j. Is own terms is about as fundamental
ANYTHING can be- The friends OF
ktate rights think that if this goes
Mere isn't much left and we might as
HE'LL wipe out the whole idea OF state
boundaries and individual state iden-
A. the same time even the oppo-
kents of the bill recognize fully the
leasons which gave rise to the pro-
Rosal. and admit that it is situation
demanding cure. Rich men and large
Investors buy the bonds of states be-
ause the income from them is exempt
rom taxation. The unhappy results
re two: One is that the federal gov
rnment loses the revenue; another is,
HAT funds which under ordinary cir
umstances might be invested in pro-
uctive business enterprises are now
lvested in the bonds of states. Stated
Eoughly, an investor who is rich
Snough to be in the class which pays
he higher surtaxes is better off if he
uys a state bond yielding AZ per
ent than if he buys the bond OF a
bilroad or a steel corporation or any
Their business yielding over e per
INT. The result is that business must
'ay an inordinate rate of interest in
Mrder to attract the investors money.
from this a considerable number of
Eher dubious results follow. There is
great incentive for the states to is
be more bonds and still more bonds.
#he states are tempted to go into all
brts OF enterprises, like road build
be-, the erection of expensive public
uildngS and the like From this it
Fsults that in addition to the divert
rs OF money there is also divert
g OF labor, which is embarrassing
ordinary business. OF course, there |
another way of meeting the situa-
.on. That would be to reduce the high |
rtaXes and so take away the condi-
on which leads the large investor to |
#eter state bonds. But any motion
8okmg toward reduction of the |
#gher surtaXes is so aggressively OPP |
Psed that 1t is almost hopeless.
Federal Aid Is Loader.
Among public men there is a stead
y growing disposition to feel that
#o much IS being done at Washing |
n and too little at the various state |
#pltals that the federal government
S already taken over more functions
pan it is able to handle efficiently, and
lat 1t is desirable to get back to what
Rs once a fundamental doctrine of
democratic party; namely, jealous
observation OF the rights of the states
famSt federal encroachment. 1t is
Rnted out, and it is quite true, that
other fields than this matter of tax
Tempt bonds the federal government
following a contrary policy of slim
Pting the states to greater expendi-
res, AS some men put it, congress is
Fadlly bribing the states to give up
pre- and more of the functions. Con-
esS, Tor example, has a system of
for road building
#leTeby the federal government will
certain amount provided the
MS will raise an equal amount. The
DIG building pork" bills are an
nj example. Yet another is the re-
tiiy-passed maternity bill. In con-
cion with this last the governor
= atate, Maine, actually rejected
federal governments gratuity, and
DONG so wrote a letter which is
Frhaps the best statement Of the
ne rights issue in its newly revived
pm. He said in part: r
Maternity Bill
n believe the time has come for
states OF the union to hold to
\ lc1ple and to carefully scrutinize aIl
II RS OF federal aid" before acce6t,
tnem. Having no doubt as to wba+
! DUTY Is III the matter | decline 20
scept the. Sheppard Towner bill az
4 state Tor the time being will stan tai
4 h New York, Massachusetts and
lode Island, the three states that
AV,e rejected it. The state of Maima
~ not sell its birthright. The prinnn;e
i not eXpediency, has been the ~
INNING factor with me in the sol.
OF this problem. The financial
Is OF federal aid is interesting III
pftered $4,000 has been referred IL
tree gilt to the state of Main
lie IN reality the federal COVERT
fnt is taxing the state to raise tbE-
#ney; and now, in order to helm orr
pthers and children, offers 70 MT
ck to the state the trivial sum ~
man two-thirds of 1 cent for each
5a onddt AT the present time owe
'oIo'VgO IS annually taken in taxes
ttie federal government from thS
pc OF Maine, and less than 81
wv IS returned to the state in the
M OF federal aid. This SIS. 600 006
Maine money is Maid into az 49,