Imperial Valley press., 1939-04-09
These Taxes on
Federal Salaries
Nv CHARLES p. STEWART

Until very lately recipients OF
governmental salaries have not had
to pay any income tax ON them
Finally. however. Congress decreed
that these Stipends are taxable, ex-
actly like ordinary incomes. Oui
LEGISLATORS decision was Fought ON
the ground that it was mconstltu-
tional. The other day the federal
Supreme Court upheld Congress
government hireln9s do have to
pay income taxes. same as any
one else. This matter having been
settled the question arises: How
about taxes upon incomes derived
from interest upon federal, state
and still more local government
bonds. now classed as wholly or
partially tax exempt? The fight
won't end at the current session on
Capitol Hill. but it will wax pretty
hot, and is bound to continue until
one side or the other Is knocked
out. It's a corking important dis
pute. too. IL involves the interest
upon more than SO billions Of I'm
Gle Sans securities and those oi
lesser governmental units. 1t also
has a vital bearing upon business
in general. It's outcome may spell
the difference between good anc
bad times.
1t might seem as if Treasury
Secretary Morgenthau, whose jot
it is to popularize the sale of gov
ernment bonds by making them as
taxless as possible. should oppose
sticking the mwith an income inn
post. He favors it instead SO have
all treasury secretaries before him
since we have had an income tax
Such expert chaps see that the
present system is an economic nan
dicap.
The Couzens Case
One of the largest holders of in
come tax exempt securities we ever
had was the late Senator jane
Couzens Of Michigan. Senator
Couzens cashed in about 20 millions
on his Ford auto holdings and put
it into tax exempt federal bonds
Yet he always held that tax eX
emption was crime. Senator
William E. Borah thought SO like
wise (and does yet. no doubt. but
he persistently insisted that it was
constitutional He regularly asked
how Senator CouzenS could oppose
abrogation of exemption and yet
invest in tax exempt securities. To
which Senator CouzenS' reply in
variably was that he bowed to a
higher constitutional authority -
Senator Borah. He said he didn't
believe in exemption. but that the
Idaho senator knew best. of course
Senator Borah was recalcitranI
as ever. Net that he believes il
exemption but he believes in it.
constitutionality
And Senator CouzenS is dead.
The Supreme Court still is in thC
background
This is the difficulty:
Although interest ON government
bonds is less than interest on pri-
yate companies bonds. the interest
on private bonds. less income tax
is less than the untaxed interest on
government bonds.
Consequently conservative myes-
tors prefer government stuff (Which
is largely static) to industrial IS
sues (Which stir up busineSS.
There's an additional considera
ton:
Making out income tax returns is
a great nuisance.
Direct and Indirect
I believe in making taxes as dis
agreeable as possible. It makes
folks hostile to 'em. They're con-
scious that they're being taxed tc
have it rubbed in.
Indirect excises aren't noticed
To be called ON to submit a re
turn" by such and such a date. OF
heaven help you, under a Jail pen
atty, is enough to make anybody
sore.
I'd rather have my IS cents i'm
mune to any investigation what
ever.
1t makes for lower taxes. if they
make everybody mad.
Visible taxes are what are irri-
tating. And If there's any moro
visible tax than an income tax, I
.Ia,atf I,,apuf ,,y1,at l..