Evening star., 1944-06-22
Stute Tax Power Seen
Increased by Courts
Writer Asks Congress Probe
on Commerce Interference
By David Laurence


By David Laurence
While the Supreme Court, under the
influence of the New Deal appointees,
has been steadily enlarging the judicial
Interpretation Of the so-called com
merce clause" of the Constitution so
that nearly everything nowadays can
be controlled by the Federal Govern
ment whether in peacetime or war
time, it is not generally realized that
the court has also simultaneously in
creased the power Of the States to inter-
fere with the interstate commerce.
Thus study of recent decisions of
the court shows that it has let loose a
food Of opinions permitting the 48
States TO exercise their taxing power in
such manner as to interfere with busi-
ness across State lines. The way has
been opened to the making of virtual
tariff barriers between the States just
because the Supreme Court thinks that
the States have almost unlimited power
to tax
The old principle of law was that the
Supreme Court protected interstate
business from undue burdens imposed
by the State, but the new rule is that the
States may exercise their taxing power
aggressively and, even though a good
deal Of confusion is created, the court
takes the position that this is some
thing for Congress to correct.
Air Firms Seen Victims.
The chief victims Of this chaos, ap-
parently, are to be the aviation COM
panies Various States are beginning to
look upon the aviation companies as
sources Of new tax revenues. Few things
can kill the initiative Of the communica-
tions systems in this country more
quickly than excessive taxation. With
almost every State clamoring for more
airports and more airplanes for peace
time uses, narrow-visioned officials In
State capitals may prevent that growth
and expansion unless Congress puts a
stop to it.
Not long ago In the State of Georgia,
for example, large airplane company,
which has been relying on the tax rul-
ings of that State for seven years and
has had Its returns regularly audited
and accepted by the State, now finds
that arbitrarily the Commissioner of
Internal Revenue there reverses him.
self and orders taxes collected retro
actively for those same seven years. This
viii not enhance the reputation of
Georgia among business throughout the
country.
Other examples of arbitrary inter-
ference with interstate commerce are
pending In the courts, but the i'm
portant point Is that Congress has done
very little to protect aviation from these
interferences. Bills have been intro.
duced, but are slumbering In com
mittee.
Members Of the Supreme Court may
have In the back Of thsir minds tlhat
the way TO get Congress to act y 10
create more and more confusion ove9
the tax powers Of the States. There
are some New Dealers, Of course, IN
Congress who would like to have al
businesses put under Federal ncenses
and all corporations required TO rub.
NIT to constant supervision by Q bmeau
of corporations in Washington.
The States. of course, would resist
such an encroachment, but II It be-
came difficult for companies TO operate
In interstate commerce. the paradoxical
situation might arise where businesses
themselves would be appealing TO Con-
gress to save them from the harass-
ments Of State taxation and State bur.
dens imposed on companies doing busi-
ness In interstate commerce.
Recent Case Cited.
In a recent case involving the taxa
ton of airplanes in the State of Minne-
sofa, the Supreme Court held that
because Minnesota was the home port,
taxes should be applied, but there were
tntimations in Justice Frankfurter's
majority opinion that this would not
prevent other States from imposing
taxes as well. Justice Black in a con-
curing opinion said that he would not
"foreclose consideration of the taxing
rights of States other than Minnesota" /"
He said:
"The differing views of members of
the court in this and related cases
illustrate the difficulties inherent in the
judicial formulation of general rules to
meet the national problems arising
from State taxation which bears in
incidence upon interstate commerce.
These problems, it seems to me. call
for congressional investigation, consid-
Grafton and action"
Many States are beginning to adopt
what are known as use taxes" Others
are tinkering with gross receipts"
taxes, and the effort seems to be to
impose more and more taxes on busi-
nesses which come into the States
from the outside. This, to be sure.
comes under the power of Congress to
regulate. But Congress seems remark
ably passive in the face of the problems
which the Supreme Court is constantly
creating as consequence of new deci-
slons on constitutional law.
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