Evening star., 1944-11-20
High CoutDeniesc Cos
|0f State Vote Drive Is
|DeductibIe Tax Item

|UeQuCIIOIe ldx ITEM
The Supreme Court held today
that State officer seeking re-elec-
ton is not entitled to deduct CAM
lpaign expense in computing his in
come tax.
The 5-to-4 decision brought a
brisk dissent by Justice Black, who
said in effect that it would dis
criminate against the thousands OF
State officials subject to Federal in
come taxes"
In another decision adverse to the
Oklahoma option of community
property law, the court, dividing, to
IL, ruled that a husband and wife
who elect to come under that law are
not entitled thereafter to divide the
community property equally between
them for purposes of computing
Federal income tax. The decision
was read by Justice Roberts with
Justices Douglas and Black dissent
ing.
| Tax Court Upheld.
The campaign expenditures de-
cision affirmed ruling of the tax
court of the United States. II
grew out. of the efforts of Michael
F.. Mcdonald, judge of the Court
LOT Common Pleas of Luzerne
County, Pa, to be reelected in
1889. He sought to charge off
against his income tax Demo-
cratic party assessment of $4,000
and more than $1,000 for other ex-
penses, whish he said were "re-elec-
ton expenses" The claim was dis
allowed by the commissioner of
internal revenue, who added an as
sessment of $2,506 to Judge Nc
Donald's taxes.
The court declared the disallow-
ance of campaign expenses had long
precedent in that 1t was consist
emily reflected by legislative his
tory, court decision, Treasury prac-
tice and Treasury regulations. 1t
then laid down three specific
grounds for denying the allowance.
Denies Judges Contention.
In response to the jurist's con-
tention that he had spent the money
in carrying on a trade or busi-
ness" which would make the tax
exemption possible, the court said
he was entitled to deduct all eX-
penses that related to the dis
charge of his functions as a judge.
But his campaign contributions were
not expenses incurred in being a
judge, but in trying to be a judge"
The taxpayer had argued that he
was defeated for reelection and
that, therefore, his campaign ex-
penses constituted a loss incurred
in a transaction entered into for
profit" and were deductible.
The final contention raised by the
taxpayer. and one on which the
court laid the greatest emphasis, was
that a revenue act amendment Of
1912 was broad enough to provide
for the exemption.
Justice Frankfurter said about this
that ''the amendment of 1912 merely
enlarged the category of incomes
with reference to which expenses
were deductible"
He added, too, that eve certainly
cannot draw intimations" that Con-
gress had intended to broaden the
exemption base in the light of the
fact that the Congress had been
increasingly restrictive against
campaign contributions and polit-
ical activities by Government off,
cials"
Black Hits Majority Opinion.
Justice Black hit hard at the ma
jority opinion on this point in his
dissent, declaring that the act of
1912 ''articulated the purpose of
Congress to wipe out every vestige
of policy which denied tax deduc-
tions for legitimate expenses in
Cured in producing taxable income. "
To deny that Congress intended
this, he said, in this case is to apply
construction which "carves out of
the section (of the law which Con-
gress intentionally-or so we must
assume-put there"
Justice Black also pointed to ref
erence in the majority opinion to the
restrictions Congress has been ap-
plying to campaigning by. Govern
ment officials and said:
Congress has not attempted to
regulate expenditures of candidates
for State office I can hardly con-
ceive that we should infer that it
wanted to penalize through its tax
laws, necessary campaign expense
and thereby condemn a practice of
campaigning that is as old as our
country and which exists in every
State of the Union. This is not,
of course, to be taken as denoting
approval of corrupt campaign ex-
penditures or of any of the myriad
abuses which beset our systems of
election. But we ought not to evis-
cerate revenue act, and deny this
State official a deduction for ex-
penses incurred in a State election
campaign because Congress has lin
| tied campaign contributions in Fed
eral elections, and has restrictive
Legislation against political activities
by Federal employees"
War Bonds
fCoptjnuad From Eirst pooeA