Evening star., 1939-01-19
BY JOHN c. HENRY.

Accompanied by a plainly Worded
warning that the Treasury Depart
ment intends, on the basis of recent
Supreme Court rulings, to initiate
efforts to collect income taxes from
employees of many State agencies
and holders of many State securities,
President Roosevelt today called on
! Congress to enact legislation au-
thorizing reciprocal taxation on fu-
ture salaries and securities of Fed
eral. State and local governments.
To forestall such collection ef-
forts, retroactive in their applica-
ton, Mr.. Roosevelt placed the dead
line for corrective congressional
action at March Is of this year.
Mr.. Roosevelt's request supple
ments one of last April 25, out of
which arose study now under way
by a special Senate committee Of
this very question of terminating the
tax immunities heretofore granted
private income from public sources.
At that time, as at this, Mr.. Roose-
welt urged that the desired objective
be accomplished through legisla-
ton rather than by constitutional
amendment.
Points to Authority.
In todays message, however, the
Chief Executive approaches the
problem from different angle than
previously, first assuming the con-
stitutionality of such legislation
and then pointing out that recent
Supreme Court decisions have made
clear the authority of the Federal
Government to tax a large portion
of the income once held immune
from assessment.
Such taxation, he warned further,
would be retroactive for at least
three years and definitely impends
unless Congress takes action before
March IS.
In view of the fact that the
Bureau of Internal Revenue will
have no choice but to enforce our
income tax law as declared in the
latest decisions of the Supreme
Court" Mr.. Roosevelt said, prompt
legislation is necessary to safeguard
against the inequities to which I
have referred.
Prompt Enactment Needed.
The need, therefore, is for the
prompt enactment of equitable rules,
prospective in operation, which the
bureau can apply and taxpayers
can observe without that mass of
litigation which otherwise is to be
anticipated. We are confronted with
a situation which can be handled
with fairness to all and with rea-
sonable administrative convenience
only through the cooperation of the
Congress and the courts.
UNLESS the Congress passes some
legislation dealing with this situa-
ton prior to March Is, I am in
formed by the Secretary of the
Treasury that he will be obliged to
collect back taxes for at least three
years upon the employees of many
State agencies and upon the Sc
curity holders of many State cor
pOl dIC 1llotA AUlllCllIdlAIlCo, VIII llllo-
takenly, but in good faith believed
they were tax exempt. The assess
ment and collection of these taxes
will doubtlessly in many cases pro-
duce great hardship.
Accordingly, recommend legis-
lation to correct the existing in
equitable situation, and at the same
time to make private income from
all Government salaries hereafter
earned and from all Government
securities hereafter issued subject to
the general income tax laws of the
Nation and of the several States.
It is difficult for almost all citizens
to understand why constitutional
provision permitting taxes on in
come from whatever source derived
does not mean from whatever
source derived"
Cites New York Ruling.
In developing his contention of
the need of legislation to correct a
condition of inequity and confusion,
Mr.. Roosevelt made particular refer
.ence to the Port of New York Au-
thority ruling of the Supreme Court
last May.
In that ruling, the court majority