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Show Income tax marks era injistory Will Figure in Forum of American Politics for Tears to Come. MAY AFFECT SECURITIES OF STATES AND CITIES Contended That Government Govern-ment Will Have Domination Domina-tion Over States. BY FREDERIC J. HASKIN The mifllalissj of lb.- sixteenth ameudment to the constitution and the determination of the Wilson adminis tratiou to follow it BP with an ineome T.it taw marks one of the wnvet important import-ant pages in the history of American taxation. It probably represeota the beginning of a new era in the application applica-tion of the revenue raiting policies of the federal government. On the one hand it settles manv questions about which there haa been much dispute, while on the other hand it opens up new fields of argument and contention which probably will figure in the forum of American politics for many yaars to come. It therefore becomes of para mount interest among the queationa in the public mind. And moreover, it gives to the people an issue they can feel, a tax that they do not pay unconsciously. un-consciously. A person who buys some thing upon which a euatoma duty baa been levied knows nothing of what the government levies upon him in the transaction unless he happena to be coming through one of the porta and gets held up for duties on what ha haa bought abroad. But the salaried man who finds deducted from hia salary to pav his income tax knows it with a good deal of csrtsiaty. How too Amendment Was Passed. The sixteenth amendment came about in a rnther unusual way. When congress con-gress met to make the Payae-Aldrich tariff law there had developed a wide-sad wide-sad ssntimsnt in favor of aa income tax. The rsvenues of ths government were not meeting the expenditures, snd nearly evervbodv agreed that the tariff was alrady too sigh. In looking about to find tome other source of revenue most eyes fell upon the income tax. It ia true that there was a supreme court decision whieh had declared the ineome tax an unconstitutional tax, if levied without apportionment among the states, but that decision was mads bv only one majority, five to four, and alter al-ter a divided court had failsd to declare de-clare it unconstitutional. And so it waa that many felt that the supreme court was wrong on its second thought. This feeling was the more pronounced because every previous decision during a hundred vesrs seemed to hsve been reversed by the second decision of the court. There was a determination in same quarters to put the matter up to the court again, nod at one time it looked as if the proponents of the Bailey Cummins amendment to ths Payoe-AI-drich law, providing for ths enact ment of an income tax law, would be able to muster enough votes in the senate sen-ate and house to pass it. At this junc-turs junc-turs Prescient Taft came upon the scene with a message to congrees expressing ex-pressing the view that the supreme court had tnken awav from the fed- eral government s power t waa generally gener-ally aupposed to have bad, anil one that it undoubtedly ought to hsve. He ndded that it might he nereasary for the salvation of the countrv io time of a great crisis. Sent to Legislatures Ue Mid. however, that he thought it would !" much better to make sure of that right through the medium of a constitutional amendment than by putting put-ting 00 the statute books a law already al-ready there and never repealed. He thought it wonld not add to the popular pop-ular confidence in the eourta for con gresa to enact a law upon lines that had been declared unconstitutional. It mav he aaid io passing that Mr. Taft. as well at many another statesman, fell into as amusing error concerning the income tsx lsw of 1804, when he aaid it was still upon the statute book.. As a matter of fact, the very aeeond line of the net provided for ite own expiration ex-piration bv limitation in 190". He therefore recommended that congreat pass a constitutional amendment amend-ment to ronititutionalixe an ineome tax law and that, pending tha passage of such an amendment a corporation tax be levied. Manv members of the senate sen-ate and house professed to see in this a sffort to prevent the immediate passage of aa income tax law snd for the time being opposed it. Finally, however, thev accepted the inevitable and joined in voting to send the amendment to the legislatures of ths states for ratifiestios. Many of them thought that those who backed the amendment were doing aft as ft means to choke off impending income tax legislation and to strengthen the su preme court s last decision by offering the amendment and have it fail of rati fication hv ths states. Them, they cos-tended, cos-tended, the court further could say that the people had rejected the income tax idea aid that it was not for ths court to set up what the people had thrown down. Serious Question Arises. states. The amendment says "The congress con-gress shall have power to lay and collect taxes on Incomes from whatever eourre derived, without apportionment among the several states and without regard to any oemros enumeration-" It was contended con-tended that the words "from whatever source derived" gives to congress the unquestioned un-questioned power to tax state and local securities to whatever point It chooses, even to the point of destroying the credit of the dlvlelone Issuing them. It would eeem to the lay mind that "from whatever source derived" would Include everything, and so a great many people hold. They contend that lnasmu'-n as It le the laat word It naturally repeals anything inconsistent with It. On the other hand, such a lawyer as Senator Root opposes this doctrine. He contends that the amendment does not enlarge in the slightest the scope of the taxing power of the federal government, snd that Its only sftsct will be to relieve the exercise of that taxing power from the requirement that the tax shall be apportioned appor-tioned among the states. So we see that If the present congrees shall enact a law taxing Incomes derived from elate and local securities there will probably he, another great legal fight and another Income tax decision. It Is generally believed, be-lieved, however, that while rongieae will not waive Its power to tax such securities. securi-ties. It will not embraoe them In ths forthcoming law History of Previous AmSTaimauta. Tha Ineome tax amendment took a little more than three years to negotiate the tortuous channele of legislative approval ap-proval by the etatee. In this respect It fared much better than waa expected even by Its friends. There have been only four amendments to the organic law In mors than a century, and three of these were civil war amendments The twelfth amendment revised the electoral system, tha thirteenth freed the slaves. When the fourteenth amendment wat pending It waa ratified by Ohio and New Jersey, but before the result was proclaimed pro-claimed they withdraw their ratifications At tha same time, several southern etatee which bad rejected it had new legislatures leg-islatures nut In by the reconstruction forces, and they rail fled It- By denying to Ohio and New Jersey the right tc rescind their ratifications and by -ranting the southern states the right To rescind re-scind their rejections, a necessary three-fourths three-fourths of the states was secured. About the earns thing happened with the -leenthunsndment. New York rescinded Ita muftcerjon, but this action waa Ignored; Ig-nored; (lsngla res landed its rejection sad Its aettea was acssptsd snd so the fifteenth amendment la a part of the eoa-ttltutlon. eoa-ttltutlon. There were two attempts to adopt a thirteenth amendment that failed. One provided for taking away the cltleeashlp snd the right to hold office of any man who would accept or retain a present, pension, office er emolument from any foreign government or potentate Two days before James Buchanan rntsed to be president he approved a Joint resolution resolu-tion sending to the states for their approval ap-proval a constitutional amendment providing pro-viding that esngToss could not Interfere with the domestic concerns of a state, even down to the question of slavery. Illinois ratified It and sent Its ratification back to Lincoln's secretary of state. Mr. Seward No other state did so. ToxnOTTOw : ' THE INCOME TAX. ZL The Pllimd Law. But in spite of all these conflicting ideas, the proposed income tax law failed of passage, while both houses of congress promptly gave the etatee the right to aav whether they wanted aa income tax law or not. If any ef those who voted for the amendment did so under the assumptloa that it would first defest the proposed income tax lw and then he defeated itself by the noneoa-eurrenee noneoa-eurrenee of twelve stfttes, they reck oned without their host, for ths sixteenth six-teenth amendment it sow ft part of the supreme law of the hand. But it did not become the sixteenth amendment until it had first revealed that questions msy arise concerning Its Interpretation almost as serious ss those concerning the "direct tax" clause of the constitution, which It wss slmsd to settle set-tle Mr. Jueti.e Hughes, now uf the supreme court, waa governor of the state of New York when the legislatures were asked to ratify It. He recommended that It be rejected, one of his grounds of objection ob-jection being thst It would lax state, county and municipal bonds, and therefore there-fore fttvs the federal government p recti rec-ti uefiy oosasaeU atratsatts. ewer - the |