Evening star., 1936-04-03
RIGHTS MENACED
BY W|NDF ALL TAX
Levy Upon Illegal Levy
Would Involve Principle for
Court to Settle.
BY DAVID LAWRENCE.

There's a principle of transcendent
Importance in the so-called "windfaI"
tax which President Roosevelt has
asked Congress to enact. 1t concerns
the right of the Federal Government
to use its taxing power in violation OF
the Constitution and then, when a
final decision is rendered, to turn about
and levy another tax on top Of an
illegal tax.
Most certainly this procedure will
be challenged in the courts, and, If
previous Supreme Court decisions are
to be taken as precedents, the $780,
100000 which is expected by the Roose-
welt regime to be derived from the
proposed "windfall" tax may never be
collected into the Treasury.
When the House Ways and Means
Committee appointed a subcommittee
to consider the Presidents recon-
mendation, it was believed that a bill
would be written which would give
some idea of how the "windfall tax"
was to be assessed. But instead of a
bill report has been issued by the
subcommittee which throws little light
on the all-important question of how
such a tax can be valid.
Retroactive Question.
The Supreme Court has ruled that
an excise tax cannot be retroactive,
but the House subcommittee is try
ing to classify the new "windfall''
tax as an income tax, which, OF
course, could be retroactive. But can
there be a tax on a tax? Can Con-
gresS circumvent a Supreme Court
decision, such as was unanimously
rendered in the rice millers' proc
essing tax case, whereby all justices
agreed that the tax was invalid and
that the Government would be a
"trespasser" if it attempted to COL
lect it?
If Congress has the right to collect
a tax once declared illegal by simply
changing the terminology. and calling
it an income tax, would there be any
limitation on the taxing power?
These questions some day will un-
doubtedly occupy the attention of the
courts if the present "windfall tax
plan is carried out. But there is an
other fundamental of equal interest
to the public. 1t centers in another
question, which is whether the Fed
eral Government can discriminate be-
tween taxpayers in the same class.
The House Subcommittee, for in
stance, speaks of companies which
have been "unjustly enriched" by the
processing tax, but it so happens there
were companies which would be bank
rupted if they had to pay the tax
Can unjust enrichment" be set up as
a standard between taxpayers? There
is no justification in the precedents for
such an unequal application Of the
laws of the land, and it would seem to
be contrary to the fifth amendment
which guarantees against such in
equality.
Importance to Taxpayers.
The plain truth is that the Govern
ment does not like to lose the $780,
100000 involved in processing tax
money. but it is worth many times that
sum to the taxpayers of the country
to be secure in their rights not to be
Disseminated against and in their
right to prevent the taxing authority
from levying an assessment on an al
ready outlawed tax
Thus, if the courts did permit a tax
to be levied on a tax once declared
illegal, there are all sorts of injus-
tees which could be committed in the
name OF the taxing power.
The real story, of course, is that the
administration is in an awkward DO
sition politically because its budget
Is so much out of balance, and, in the
interim between now and election, it
is supposed to be popular to attack
unjust enrichment" irrespective of
whether the money will ever be COL
lected. There are no precedents to
justify the use of the taxing power
to equalize economic misfortunes or
to correct the hazards of a system
wherein the Government hands out
subsidies before being sure that it
can collect the money to pay for It.
(Copyrtght 1Q3RO