Evening star., 1931-04-29
BY ASHMUN BROWN.

DdJ9ITldllSIH lilGlG llaS NANPS
argument and a new--to the United
Satisfactory regarding the raising
and distribution of public revenues.
Briefly stated, it is that the Federal
Government employ its theoretically
painless system of taxation TO raiSe
money to be distributed among the
states to be expended by the States as
they see fit without any Fede al au-
thority following the Federal dollar
That is to say, the new plan Woulo
be for Uncle Sam to take on larger
and ever larger responsibility for col
lecting revenue for the several States,
the Federal Treasury supplantlng to
considerable extent the 48 State treas
uries
This marks a progression from the
earlier idea on State subsidies, So-called,
subsidies that have grown from $1,000
600 a year in 1912 to 2O0,O00,OO
wear in 1881. All State subsidies, so
far. have been on the $3.50 or matched
dollar basis. the Federal Government
furnishing the first dollar, the State the
second. and the Federal Government
regulating the manner in which the
two shall be spent
Invasion of States Rights.
Against this principle many power
ful voices have been raised on the
yased, that the end of it all would be
cc,nplete Capitalization of government,
with a gigantic Federal bureaucracy
controlling the most intimate affairs OF
the people. and that to collect taxes
for Federal purposes and spend them
for non-Federal purposes is dishonest
this last being a paraphrase OF the
opinion of Chief Justice Chase in a
leading case decided by the Supreme
Court in 1868. % Wall, 54l)
Il am convinced, said President
Coolidge in his budget message to Con-
gress in December. 1924, that the
broadening of this field of activity is
detrimental 10th to the Federal and
the State governments. Efficiency Of
Federal operations is impaired as their
scope is unduly enlarged. Efficiency OF
State governments is impaired as they
relinquish and turn over to the Fed
eral Government responsibilities which
are r:ghtfully theirs. l am opposed to
any expansion Of these subsidies: Ny
conviction is they can be curtailed with
benefit to both the Federal and State
governments"
Former Gov. Lowden of Illinois and
Gov Pitchie of Maryland have at
tackled the Federal aid system as an
improper invasion of the State field.
involving the gradual breakdown Of
local self-government in America.
Rich Eastern States Object.
Eastern and Northern States which
furnish the bulk CT the Federal rev.
enues-New York alone furnishes about
one-third of the total-haYe objected
because their tax money goes in such
large proportions to the weaker States.
1t has been shown that wyoming. for
example, gets back in subsidies 1898
.NF r7oI re
North Dakota gets back 1868 per cent,
and so on. while New York gets back
less than l per cent.
But" argue the advocates Of the
new theory, these figures mean moth
ing Business has b@en SO centralized
that the great corporations and in
vestors centersd in the East are merely
intermediates in the collection of taxes
for the Federal Government. They are
paying on profits derived from sources
in ell parts of the Union. All we are
asking is that this tax-raised revenue
be redistributed back TO the point Of its
origin
Here IS an admission that after all,
the poor pay the taxes originally, which.
as noted above, is something which
marks progress in an understanding Of
the subject Of taxation. But the appi-
cation Of this discovery by the propo-
ASlltS Oi lie SgSleEl ana LfleII
that the Federal Government should
become essentially a tax collecting
agency for the States raise new and
startling possibilities.
Propose State Subsidiary.
The new idea was much TO the front
IN recent hearings before the Senate
Committee On Education and Labor, of
which Senator Metcalf of Rhode Island
is chairman. Among other State SUBJ
sidy measures on which that commit
tee held hearings was one sponsored by
Senator Nye of North Dakota, the
duplicate of bill introduced in the
House by Representative Brand Of
Ohio. 1t proposes an annual subsidy Of
s100,900,000 TO be distributed among the
States on matcned-dollar basis for
the promotion OF rural education. It's
title is, TO aid in the reduction Of
taxes on farm lands and to promote
elementary education in rural areas
On this measure L. j. Taber, master
Of the National Grange, submitted an
extended brief opposing an extension Of
Federal bureaucracy or Federal control,
but asking the enacting Of this bill on
the ground that it IS only returning TO
rural areas small portion Of the
money that they have already contrib
uted to national wealth" He argued
that tire cities, whence come the bull,
OF the Nations income tax receipts nls Y
IN justice allow portion Of the Fed
eral income taxes 20 be distributed over
rural areas
Tax Reduction for Farm Relief.
In explanation. he said.
Changes in the Nations industrial
and financial methods require changes
in taxation. We cannct hope TO check
the Capitalization Gin business) that is
going forward. There has been a de-
cline in the number of industrial units
throughout the Nation. II is estimated
that in another 10 years more than so
per cent Of our present individual blisi-
ness units viii find themselves absorbed
or merged with some larger business
unit Unnecessary combinations and
cenCralizatien shOuld be checked. but
regardless Of all tendencies in this d.
rection. We must recognize the con-
ttuued concentration Of wealth and tax
paving ability IN few restricted areas.
Almost half Of the Nations income
tax Is paid by citizens Of seven States.
This number VIII be further reduced,
giving emphasis to the challenge TO
our national lead rsllip 10 find an equi-
table msthJd Of sending back TO The
various areas portion Of the taxable
wealth that they themselves have helped
TO build. The b ST type OF farm relief
that can come is relief in the way Of
tax adjustment and reduction"
All of which, il Will be observed. re-
duceS itself 70 the argument: Let the
Federal Government tax the rich and
give the money to the poor rural dis
tricts, whose sources Of taxation are
oYerburdened
This thought was expressed in other
evidence presented to Senator Metcalfs
committee An example IS found in a
letter written by Sidney Il Hall State
superintendent Of education of Virginia
dated February 2. cordially approving
the idea OF the appropriation Of $780,
LIc..-n..nr ~. Ill -c.-1,la In. u