Evening star., 1935-01-11
PROCESSING TAXESI
CAUSING CONCERN
Federal Officials Worried
Over ConstitutionaIity
of Program.
BY DAVID LAWRENCE.

tional? This question is worrying
Government officials more than they
care to admit publicly.
The reasoning of the Supreme Court
of the United States in its latest de-
cision on the delegation of power by
the Congress to the executive branch
of the Government has been taken
to mean that Congress has no right
to transfer the taxing power to the
Secretary Of Agriculture without set
ting up a more or less exact standard
or rule to be followed.
Today the Secretary of Agriculture
can levy taxes on 13 basic commodities
and on all commodities which compete
or may compete with them. He can, in
his own discretion, announce what
the taxes shall be. He has arranged
for formal hearings. but the deter
mination of what the tax shall be is
wholly within his Judgment.
The Supreme Court in the oil case
pointed out that it was not sufficient
just to make declaration of desir-
able objective. In the matter of agri-
cultural processing taxes, the law
states that the aim is to bring about
parity as between farm and city
prices. But the Supreme Court may
look upon this as merely declaratory
or Introductory.
Tax Has Been Continued.
AS a matter of fact, in one or two
commodities the tax has been con-
tinued after parity has been reached.
There is another ground, too, on
which the constitutionaity of process
ing taxes may be attacked. It is that
the money is collected by the Gov
ernment from one set of citizens and
distributed to another class of citi-
zens without in any way being related
to the general taxing power of the
Government as it affects all classes.
In presenting his budget to Con-
gress, the President Jumped all the
receipts together, except those from
processing taxes, and also showed the
amounts that are being disburSed from
the processing tax fund. This would
seem to indicate that the New Deal
regards the processing tax operation
as separate unit, thus strengthening,
perhaps unintentionally, the view that
a class tax is being collected and dis
tributed. The method is in contrast
with the usual collection of receipts
from taxes from all the people and
the disbursement of the same to bene-
fit all the people.
A. A. A. Has Argument.
It is argued by the Agricultural Ad-
x,,et icfr hot
processing tax is indirectly of aid to
the whole country. but the Supreme
Court has rather intimated that de-
sirable or beneficial purposes are not
to be taken as the criterion and that
constitutional processes must be OBJ
served.
Something like s55O,ooO,000 has
been collected on processing taxes
and about S500,000,000 has been paid
out to farmers. The taxes have been
borne by the people generally in the
prices they pay for foodstuffs and
clothing and other articles of con-
sumption. In the case of pork prod
ucts, the processing tax Is rather sub
stantial and in the case of bread it
adds from a half to l cent in the cost
of every loaf. In cotton goods q few
cents of processing tax money Is ab
sorbed in the selling price.
The curious part of it all is that
the consumer is being taxed by the
Government to collect funds which
are used to cut down production SO
that the cost of living to the city
person is increased.
The justification of processing taxes
from an economic standpoint is not,
however, involved in the constitution
ality discussion. Can Congress dele
gate to a cabinet officer the right to
levy taxes? If taxes can be imposed
by Secretary of Agriculture Wallace
on basic commodities of the farm.
then Congress can authorize Secre-
tary Morgenthau or Secretary Roper
to impose processing taxes on shoes,
automobiles or dry goods or any other
articles of manufacture.
Question Not Before Court.
The question of delegating the tax
ing power has not yet come up for
challenge in the highest court. One
lower court has sustained the policy
on the cotton processing tax. 1t
seems inevitable that the problem will
get to the Supreme Court because
many food professors already see re-
sentiment rising against them for the
prices they charge, when, as matter
of fact, the processing taxes are di-
rectly and indirectly sending upward
the curve in the cost of living. Also,
as the prices go higher, the buyers
strikes develop and this in turn causes
q collapse of prices on some articles.
The arbitrary taxing power which
can be changed overnight by cabinet
officer is certainly a novel departure
from the historic practice Of our Gov
ernment, and yet. until the Supreme
Courts decision this week, there was
little doubt raised about the right of
Congress to delegate the taxing power
II 1t chose.
tcopyright 19351