Evening star., 1938-05-29
By JOHN H. CLINE.

PUWtI ny WIllltIlIlS uOWIl uilIlulu-
ties claimed by the States, but it can
hardly be said that the opinion offers any
support for the Presidents contention that
the Sixteenth Amendment should be in
terpreted to eliminate all tax exemptions.
In his message to Congress last month
khe President asserted the Sixteenth
Amendment expressly authorized Congress
ITO lay and collect taxes on incomes, from
whatever source derived" A fair read
Ing of that language, he continued, would
seem to authorize taxation of income de-
rived from State and municipal, as we'll
as Federal bonds, and also income derived
from State and municipal as we'll as Fed
eral Offices
This seemingly obvious construction"
Mr., Roosevelt said, was not followed by
the courts, which read into the amend
ment" policy of reciprocal tax immunity.
While Mr. Roosevelt's Interpretation of
the amendment has considerable support,
there is also a good bit to be said on the
Fslde OF the courts, which he omitted.
In the first place his quotation of the
Sixteenth Amendment was not complete,
the exact language of the Constitution
lay and collect taxes on incomes, from
whatever source derived, without appor-
tionment among the several States and
without regard to any census or enumera-
ton"
Key to Decisions.
The clause omitted by the President in
his message is important since it formed
the basis for the decisions holding that
the amendment did not abolish reciprocal
tax immunity as between the States and
The Federal Government
The original Federal income-tax law
was declared unconstitutional, the courts
holding that it was direct tax and
must, therefore, be apportioned among the
States.
After that decision the Sixteenth Amend
ment was proposed and ratified Debates
In the Congress and in the States indi-
ycated that its purpose was to eliminate the
need for apportionment of the tax
1t is interesting to note that when Chief
Justice Hughes as Governor of New York
laid the proposed amendment before that
States Legislature for ratification, he had
some doubts as to its meaning
In fact he went so far as to express
some apprehension that it might be con-
strued as extending the taxing power of
the Federal Government to income not
heretofore taxable. Proponents of the
1measure insisted, however, that such was
not its purpose.
Cited in 1920 Decision.
The Hughes incident was mentioned by
the Supreme Court in 1920 when it held
that the amendment did not permit the
taxing of the salary of a District Judge be-
cause of specific constitutional prohibi-
tion against reduction of his salary
The opinion in that case said: THE
purpose of the Sixteenth Amendment was
not intended to extend the taxing power
to new or excepted subjects, but merely to
7remove all occasion otherwise existing for
apportionment among the States of taxes
laid on income"
The reasoning of that decision was ap-
piled to other cases arising under the i'm
piled prohibitions of the Constitution
against mutual taxation by State and
Federal governments, the final result be-
ing that vast potential source of tax rev.
enue was immunized by the court
Chief Justice Marshall first enunciated
the doctrine of Federal immunity from
State taxation in the celebrated case of
McCulloch VS.. Maryland, in which tax
on notes issued by national bank in Bal
timore was declared unconstitutional The
tax in that case applied only to national
bank notes and was therefore discrimina-
tory, but the court later extended the doc
q
to all banks.
Evolved Limitation Doctrine.
Chief Justice Marshall recognized the
fact that the Constitution contains no ex-
press limitations on the power of either
State or National governments to tax the
Nnstrumentalities of the other, but, be-
heving that "the power to tax involves
the power to destroy" he evolved the doc
trine of implied limitation
It was not until 1871 that the court
first recognized in the case of Collector vs.
Day that the taxing power of the Federal
Government, as applied to State instru-
mentalities, also is subject to implied
limitations. That case decided that the
salary of State judge was immune from
% Federal income tax, the theory being
that, despite the fact that the Constitution
gave Congress the power to tax, there
was, nevertheless, an implied limitation on
that power which operated to prevent i'm
pairment of the sovereignty of the States.
Referring to that decision in the Port
Authority case, the court said:
1.-THE immunity which it implied was
sustained only because it was one deemed
necessary to protect the States from de-
struction by the Federal taxation of those
governmental functions which they were
exercising when the Constitution was
adopted and which were essential to their
continued existence"
Although the decision in Collector vs..
Day was limited to State judicial officer
engaged in an essential State function,
there grew up belief that the principle
Of that decision would be applicable to q
vast number Of other State employees and
instrumentalities. In the Port Authority
case, unfolding tax on incomes of three
employees, however, Justice Stone, speaking
for the court, seemed to take the position
that the implied immunity should be rec
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