The Skyland post. [volume] (West Jefferson, N.C.) 193?-1988, 1938-08-04

broadening the income-tax base, as
proposed by Senator Bob La Fol
lette of Wisconsin and widely advo-
Gated by many others. At the same
time the Attorney Generals office
is engaged in drafting law which
would subject all salaries of State
and municipal employees to the Fed
eral income tax, from which they
are exempted.
That, also, has been widely advo-
Gated and strongly urged for several
years It has been believed that it
could not be done except by a Con-
stitutional amendment, but the De-
partment Of Justice is preparing to
urge Congress to attempt it by stat
ute, believing that when such law
is brought before the Supreme Court
for a test of its constitutionality
there is an excellent chance that it
will be upheld.
The High Court decided last
spring that it was constitutional for
the Federal Government to tax the
incomes of certain public "authori-
ties" and their employees, and it
would be only short step from
there to taxing salaries directly paid
by states and their political subdi-
visions.
The principle that states and their
administrative agencies or instru-
~oo-4o1;+;oc oonnox ho fovoI hxy tho
Federal government, and that they
in turn may not levy taxes on Fed
eral instrumentalities was laid down
by Supreme Court when John Mar
shall was Chief Justice. Under that
ancient ruling, the United States
could not tax state bonds and the
states could not tax Federal bonds.
NOn-Taxable Office Holders
That, however, was rs years be-
fore the Constitution was amended
to permit the Federal government
to levy a tax on incomes from
whatever source derived" and the
Supreme Court has never been
called upon to determine whether
that permits taxation of state-paid
salaries or not.
It has been estimated that more
than two million state, county and
municipal office-holders who do not
now pay Federal income-taxes
would be required to contribute to
the cots of government on the same
basis as persons in private employ
ment, were the bars let down.
If the tax exemptions on salaries
and bond interest are removed, Ad-
ministration officials believe, there
will be no occasion to increase Fed
eral revenues. And if the Treasury's
plan of broadening the tax base is
adopted, there will be still less pres
sure for higher taxes.
The La Toilette plan, to which
Roswell Magill, Acting Secretary of
the Treasury and its foremost tax
expert is giving his attention, would
reduce the exemptions from income
taxes on both married and single
individuals.
Everyone would pay tax on in
comes of more than $4,000 year, if
married, and more than $500 year,
if single 1t has been estimated that
this would add more than 70 mil
lion dollars to the Governments
revenues on the basis of present
incomes.
The Mexican Situation
These tax problems are among the
matters which are being put into
shape for discussion with the PreSi-
dent when he returns from his Pa
cific vacation cruise. Another mat
ter which is pressing for Presiden-
tial attention and on which there
have been many radio-telephone
conversations between Washington
and the cruiser Houston, is our rela-
! tions with Mexico.
Months of negotiations with the
Mexican government in the effort to
obtain compensation for American
citizens whose property in Mexico
has OccIl ScALSO, nave SOI AAO"iICAC'
In the last days of July the Secre-
tary of State sent strong note to
the Mexican capital demanding that
the provisions of the inter-Ameri-
can treaty calling for arbitration of
such claims be lived up to.
At the same time Secretary Hull
insisted that Mexico make "ade-
quate, effective and prompt COM
pensation" for farm lands seized,
some of them as long ten years
ago, and totaling more than 10 mil
lion dollars in value. No specific
reference was made to the recent
Mexican seizures of oil well prop
erty owned by Americans, but the
definite implication of the State
Departments note was that it is up
to Mexico to live up to its obiga
tions under international law or for