Evening star., 1936-10-03
SOCIAL SECURITY
TO FACE BATTLE
ConstitutionaIity Alread dy
Challenged With Prospect
of Many Suits.

The tnr-redching effects OF the
aetp social security program, no,o
d leading topic in the national
political field, are discussed herein
the fourteenth and last OF q series
OF articles based on a frst-hdnd
surrey
BY BLAIR MOODY.
Like most other New Deal laws
which are based on a broadened con-
ception of the proper relationship OF
. government to its people, the So
cial security act, before 1t becomes
fully effective, must run a gauntlet Of
bitter attack on the grounds Of 'un-
eonstitutionality."
Though 1t has scarcely begun to
operate, 1t already has been taken
to the courts. Within the next year
specifically, just after Uncle Sam
tries to collect the first pay roll tax
next March-there will be steady
stream of lawsuits seeking to have it
tossed, in whole or parts, out the
nearest legal window. And the issue,
of course, will finally be decided by
nine elderly gentlemen who sit in
black robes in a magnificent white
marble edifice on Capitol Hill.
Whatever the ultimate fate of the
act. it is not likely to be determined
all at one gulp While it rode through
Congress as one all-embracing "presi-
Dental omnibus" it is in reality three
acts. 1t sets up three major systems
of relief to the aged and unemployed,
resting on three different financial
structures and dependent for validity
on three separate Constitutional issues.
without delving deeply into legalistic
debate, and certainly without at
tempting to pre-judge the delicate
questions involved, the issues on which
rest the systems of unemployment in
surance, old age pensions, and old
age annuities, can be rather simply
stated.
Government Tax Right.
1. Old-age pensions. This system,
based on direct grants-in-aid by the
Federal Government to States, is
generally considered to have the best
chance of any of being unheld. There
is no serious question of the Govern
ment's right to tax for general pur-
poses. nor to give money away out
of the general fund. The Supreme
Court, in an opinion by Justice Suther-
land, already has upheld the Shep-
pard-Towner act, providing grants to
60 o1 aid Qn6 child
welfare. In rejecting the contention
of Massachusetts, taxpayer that, by
offering to match" State funds. the
Government was coercing the State,
the court held that the argument OF
coercion can easily be answered be-
fuse to yield"
2. Unemployment % m pc nsation.
Here also the issue of coercion en-
ters. but in a different form.
The only part of the huge 'insur-
ance" structure that is Federal is the
pay roll tax that is running at per
cent now, per cent in 1887 and Jumps
to 8 per cent in 1888. In States en-
acting unemployment insurance plans,
EMPLOYERS are entitled to an exemption
equal to their State tax, up to 80 per
cent of the Federal levy.
To support the legality of this of
set" plan, Thomas H. Eliot counsel for
the Social Security Board. cites the
decision of the Supreme Court in the
famous Florida VS.. Mellon case. Flo
rida had been attracting large fortunes
to the State by having no inheritance
tax. The Federal Government enacted
a death tax, but permitted an offset OF
80 per cent for similar taxes paid
States. Floridas advantage over other
States was gone. 1t contested the law,
but the court, in another opinion by
Justice Sutherland, upheld it.
There had been much dispute be-
tween advocates of this offset plan and
Q grant-in-aid plan for financing un-
employment compensation. Those urg-
ing the grant-in-aid system Of match