Show Washington Digest Time Has Come to o Pay the e Fiddler New Tax Sources Must Be Found Supreme Court Decision Opens Way to Tap Salaries of Federal State and Local Government Employees Never Has Nation Had Such Gigantic Debt Delft J By WILLIAM BRUCKART S Service National Press Wasl Washington ington D. D C. C W WASHINGTON Court WASHINGTON Court decisions as a rule are difficult things for laymen laymen lay lay- men to understand True most ever everyone everyone ev ev- ev- ev er one who hears or reads an opinIon opinion opinion ion b by a learned justice will know what the result is whether is-whether whether one side or the other wins But generally speaking the public as a whole fails to understand the full importance of a decision It is not their fault Comparatively Comparative few person person person- are trained in law and a good many of those only believe themselves to be law lawyers ers For that reason as 35 well weIl as the fact that many persons do not have havethe havethe havethe the time or the opportunity to examine examine examine exam exam- ine court decisions I have been wondering won avow dering whether it is clear dear exactly what happened when Mr Justice Stone recently read the decision in inthe inthe inthe the case ease involving taxation of federal federal fed fed- eral and state employees No doubt most persons realized that Justice Stone had r ruled led there can be taxation taxation taxation taxa taxa- I tion of the salaries of federal employees employ employ- ees by state governments and that the federal government may tax the salaries of state officials and employees employ employ- ees and employees of lesser governments governments govern govern- ments like cities and md counties But there is more to the ruling than the simple statement just made very much more As a matter of fact I believe that those who were privileged to listen to Justice Stone that day heard an opinion that is going to go a long longway longway longway way way in changing the course of government government gov gov- from the federal government government govern govern- ment down to the lowliest township I think frankly that it will be several several several sev sev- eral years before the full force and effect of that decision will be exerted exerted ex ex- ex- ex exI I both nationally and locally but I am definitely convinced that It will be felt Celt and that it will have important important important im im- im- im effects upon governmental policies And beyond that tha t. t the decision told another story It told the story that our national state and local governments governments governments govern govern- ments are hard up for Cor tax sources It actually shouted to all who would listen b boys ys and girls your spending dance is over now its it's time to pay the fiddler Never Before Has the Nation Had Such a Gigantic Debt It can not be construed otherwise Never before in our history has the nation had such a gigantic debt a debt of more than 40 billion dollars Never before have the states or the cities or the counties had such debts where their state constitutions permit permit per per- mit creation of debt as they have today I do not know of anyone myone who can give accurate figures on the debts of oC governments of states cities cities cit cit- cit cit- ies anc and counties It is a tremendous sum They have danced and they too must pay their fiddler In the lush days when most folks were working and there was good business the taxes rolled in and there was little or no thought about spending money for Cor new roads new post offices courthouses new city halls new bridges and so on Money was spent rather liberally liberally lib lib lib- in those days There were bonds sold and the proponents campaigned campaigned campaigned cam cam- for bond issues in a big way They said in effect Aw come on and vote these bonds We can pay them off gil over 20 years and the little teeny added tax wont won't hurt It probably did not hurt in those days daye da 6 But there came the depression and there came 10 million million mullion mil mul- lion men out of work and there came the worst worst- business in a halt half century Then that teeny little bit bitof bitof of tax did hurt The taxpayers weren't paying taxes because they had bad no money to pay them There was however a bt The destitute had to be fed and clothed First the local authorities did it then the states and then the days das atthe of at the real dance began Billions upon billions were poured out of the federal federal fed fed- eral treasury to be used for tor feeding feeding feeding feed feed- ing and clothing and housing those whom the states and cities had cared for but could care for no longer And up zoomed the national debt It was about 16 billions to with start start with because only 9 billions of the World war debt had been paid off Since the taxes were not bringing bringing bringing bring bring- ing in enough money the federal treasury borrowed and borrowed some more Now They're Seeking Money T To o Pay Their Fiddlers Now the time has come to begin paying off the debts The states and the cities and the counties have been looking for tor money to pay their fiddlers The national government has been looking for money to pay its fiddlers Each unit of government nt has had to look around for new spots new things to tax Taxes are arc as high as can be regarded as productive in many of oC the usual I ways of taxation So where shall we turn was the question President Roosevelt has believed for a long time that it ft was rather silly that officers and employees o of the federal government should not be taxed by their home states He has believed too that the federal government should have the right to tax the income of at those who were held to be exempt from income taxation taxation tax tax- because they worked for a state government or city government government govern govern- ment or a county government or orsome orsome orsome some agency of those governments i Likewise Mr Roosevelt has contended contended con con- tended that income from Crom federal bonds and income from bonds issued by state and local governments and school districts and drainage districts districts dis dIs- and irrigation districts should be taxable He has thus far been unable to accomplish anything in inthis inthis inthis this direction and the matter was not before the court It It It- therefore did not figure in Justice Stones Stone's ion Sometime such taxation may maybe maybe be brought about I hope so anyway any way because it is a proper subject of at taxation it seems to me But to get down to another direct result of the Stone ruling which by bythe bythe the way was supported by seven of the nine justices of the highest co court rt Pay of Federal Employees Tax Exempt for 69 Years For the last 69 years the pay ot of any federal official or employee could not be taxed in any form by any state or local government Of course there was no income tax during most of that time either national na na- national or state and during most of that time as well there was not the press for government revenue that now obtains But to repeat for 69 years state or local governments could not touch the pay of a federal federal fed fed- eral worker nor could the federal government touch the pay of a state or city or county worker even after the federal government turned to income income income in in- come taxes as a revenue source Some judge somewhere sometime had said the Constitution prevented it It was just taken for granted All of that now has been changed however and if the pay of a county judge is sufficient to fall within the Hie federal tax brackets he will pay It will be the same with everyone from the governor on down and from the mayor on down It wll be the same with federal officials and other federal employees stationed or living living living liv liv- ing within a state that Imposes income income income in in- come taxes on its residents No one has yet calculated how much additional tax will be obtained by the federal government as a result result result re re- sult of the decision Nor has anyone anyone any any- one made a real guess as to what the ruling will mean in additional dollars and cents to state governments governments governments govern govern- ments which may now safely impose impose im im- im pose the income tax on all federal employees In the case of the federal federal federal fed fed- eral payroll the civil service commission com com- commission mission figures there are something like t thousand receiving checks twice each month There are in addition hundreds of employees of outfits like TV TVA A. A and other cor cor- The stock of at these Is owned by the federal government and they are therefore instrumentalities instrumentalities instrumentalities of the fc federal d al government hitherto with payrolls exempt from sta state te income taxes There is one thing however ot of which we may be sure the jobs the political plums the 5 thousand and thousand 10 dollar jobs have suddenly become less juicy They are less lucrative by about on ona ona ona a 10 thousand 10 dollar job What Effect Will Additional Taxes Have on Jobholders Very important also In my opinion ion Is the effect this additional tax will have upon the mind of at the job job- holder You know a jobholder very frequently is most willing even anxious anxious ious to spend the taxpayers' taxpayers money It Is one way by which he can curry I favor make votes for himself 1 have a feeling that many of those jobholders are going to st stop p and think a wee bit more He may possibly possibly pos pos- sibly stop to think how much it will take out of his pocketbook That ought to be helpful bec because it ought to reduce the number of flannel flannel- mouths going about the county or district shouting for another bond issue before the ink on the last one gets dry One ne of ot the results therefore therefore there there- fore possibly may be to cause that type of public official and advocate of ot to favor Cavor living within the income of at tax receipts To make it complete now we ought to have the same kind of recIprocal reciprocal reciprocal re re- re- re taxation of income from federal bonds and bonds issued by state and local governments and their agencies Mr Roosevelt has said he believes these can be taxed that that is those to be issued in the future under future under present laws Some very fine legal minds in congress believe on the other allier hand that creation creation cre cre- of such a taxing right will require require require re re- re- re quire amendment of the tion In any event it ought to be bedone bedone bedone done for the good of the country There can be no doubt in the mind of anybody that tax free bonds sell sen like hot cakeS cake They bring better better better bet bet- ter prices than bonds of industrial corporations and tho like because the interest from those bonds must bear its fair share of tax e 0 Western Newspaper Union Unton |