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The Commoner.
5
fARY 14, 1915
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Now York even Now Jersey and several
t ana western states were relied on by
monts of the tax to prevent making It
itlonal. But ratification sot in. Ala-
ld off August 17, 1909, less than a month
no amendment had been formally sub
Illinois was one of tho early ratlflora,
York acted once and refused to ratify:
irned about and acted favorably in 1911.
things got to going they wont fast, until
ime a bandwagon stampede.
fight over the question in New York state
tlcularly interesting because of tho licrhfc
iws on some of the broader aspects of tho
income tax proposition. The ratification
amendment by tho New York legislature
ifluenced In a large measure bv Senator
f.who addrossed a loner argument in tho
feof a letter to Senator Davennort.- iircrinc
liftwable consideration of the amendment. As-
K? V i ft w
m, justice nugnes was governor of New
at the time and he had taken the posl
that the amendment would normit a tax
t'tSllcvied upon tho income derlvod from ntatc
Jboijl This was an important objection, and
ittftor Root took issue with Governor Hughes.
IWpbtaMetter he expressed regret that he could
wjagreo with the views which Governor
Hufhwi had expressed in his special message
to tHt;iegislature on the subject.
Aftor explaining why he could not accept the
Yitwifthat the amendment would permit a tax
Wkttjthe income from state bonds, Mr. Root
T'sti?0 nt consider that the amendment in any
4?. whatever will enlarge the taxing power
oqtw national government, or will have any
wpifexcept to relieve the exercise of that tax
laMfTOOwer from the requirement that the tax
M&SSmbe apportioned among the several states.
TkJfect of the amendment will be in my view
thymine as If it said: 'The United States may
ISIillax on incomes without apportioning the
tdJtnal taxation?', to bo determined bv tho
vTmtawm - - -
principles and rules which are now appll
Jgr the determination of that question."
WRoot in his letter pointed out that for
(tnan a hundred years after the adoption
constitution various tax laws of con-
wrero from time tn Hm hrmirrlif hnfnM
th'.rts on objections that they Imposed direct
taxitWa in violation of the rule of apportton
mPpThe decision of the courts, he said, uni
fomiry. sustained these laws from the Hylton
cwwgn 1796, which sustained an unapportioned
taxMi carriages, to tho Springer case in 1880,
whkh; sustained an unapportioned tax on in
coSgwii. Numerous laws were passed and en
tQxtb&L, he said, imposing taxes on incomes
without apportionment, and he declared that a
fffeat part of the means for carrying on the
cinlfwar was derived from such taxes.
Sfter reviewing the decision of the supreme
court in 1895, Mr. Root said in his letter that
tlftlierious aspect of the new Interpretation of
thVjconstltution was that it so ties the hands
ofthe legislative branch of the government that
without an amendment of that instrument con-
'K'.'', WJ8 can not subject to taxation, however great
J&iJiSS' neeas or Pressing tho necessities of the
jfjjg$rnment, either the invested personal prop
'&&& of tue country, bonds, stocks and Investor-
igats of all kinds, or the income arising from
.' tlui renting of real estate, or from the yield of
T ,;onal property, except by the rule of appor
liS?ment aTnon tue states.
fvKlt was so evidently Impossible to collect an
Swme tax by apportionment araonc the states
'-cordiner to nonulation." wroto tho Rdnnfnr
"tfeat the general judgment of the country con
firmed the opinion that the decision in the
Pollock case had practically taken away from
jttoiigress a power of vital importance to the
mineral government, a power the exercise of
yfthich had, at least in one time of peril, proved
3ntlal to the nation's life."
tMr. Root expressed the opinion that the
lendment would be no new grant of power.
i urged New Yorkers not to be selfish. Ravin cr
iat while a very large part of any income tax
uld be paid by them the question should be
awed from the Droader standpoint of national
triotism.
The records of the state department show that
ily three states absolutely have rejected the
come tax amendment. Tnese are uonnecticut,
5W Hamnshire and Rhode Island.
FTiPRnlto the action iust taken bv tho states
U income tax Is not a new institution in the
untry and was not wnen tne tarm iaw or
r
,!.
r
M
An Interesting Nebraska Measure
A bill (S. F. No. 400), was introduced In the
Nebraska legislature by Senator Dodgo of
Douglas county at the request of S. Arlon Lewis
of Omaha, Nob. Mr. Lewis is remembered as
having written tho original "Back to tho Land"
article in 1895 in Los Angolo3, Cal. Ho is try
ing, by practical methods, to carry out this work
to aid-In tho cause of human uplift. Mr. Lewis
says: "If this bill is passed it will open a now
avenue to tho worthy man to become indepen
dent and would tend to roliovo the congestion
of our largo cities in the far oast." The bill is
modeled somewhat after tho French credit
Foncier plan. Commoner readers everywhere
will bo interested in it. Tho bill follows:
Senate File No. 400. A bill for an act pro
viding that counties may Issue bonds to bo
known as agricultural development bonds, tho
funds so raised from the sale of these bonds to
be used to encourage agricultural development
in the state of Nebraska by the actual settler,
defining tho purposes, limitations and pro
visions of this act. Introduced by Senator
Dodgo of Douglas.
Bo it enacted by the people of the state of
Nebraska: Section 1. (Purposes.) Each
county in the stato is hereby authorized to issue
bonds in tho sum of not to exceed $200,000.00
to run 1-5 years, bearing interest at the rate oC
4 per cent. These bonds to be issued to raise
funds for the sole purposes as the provisions
of this act describe.
Section 2. Tho county commissioners shall
have authority to issue said bonds and tho
stato treasurer is authorized otherwise to in
vest stato funds available in such bonds offered
for sale.
Section 3. The funds .raised by tho. sale of
these bonds shall only be used for agrlcultur.il
development work on unimproved lands in
the state in tho manner and for the purposes
as hereinafter set forth by the provisions of
this act.
Section 4. These bonds known as agricul
tural development bonds shall create funds to
be loaned to the actual settler for this develop
ment work In tho following manner and terms.
Section 5. Loans to settler applicants shall
be made for the term of 15 years at G per cent
interest payable annually, and in case of crop
failure an extension of one year to bo allowed
on the principal payment provided the annual
interest Is paid. The principal and Interest can
be paid off on or before maturity.
Section 6. This loan to carry with it the ex
press stipulation in addition to its terms of
payment of principal and interest, the express
agreement in accordance with application blank,
as set forth by tho provisions in this act. Any
violation of the express terms of this net to ob
tain a loan undor false protensos shall bo
deemed a felony.
Section 7. An application blank shall bo
issued in printed form providing as hereinafter
described, an applicant shall fill out under oath
each and every requirement therein.
Section 8. (Application form of blank.)
Tho following form of blank shall bo Issued,
stating namo and residence of the applicant,
age, single, or married, nationality, also tho
signaturo of threo resident freo holders who
shall vouch for tho good character of the appli
cant, and If a non-resident of said county, evi
dence of good character as shall bo satisfactory
to the county commissioners. Tho amount of
loan desired for the purpose only as providod for
in this act, namely to cloar titlo to land pur
chased or to be purchased, describing legally
said land, agreeing to furnish abstract showing
a good title In said land to said applicant. Stat
ing the price paid or to he paid for said land;
amount of said loan to bo not to excood 70 per
cent of tho value of tho land and its added value
by reason of this improvement loan. Stating
how much money said applicant has paid or can
pay In addition to this loan, agreeing to give
first mortgage to said county to secure tho
moneys advanced, said mortgago stipulating as
to Its terms that It Is to run not to exceed 15
years and that tho Interest rate Is C per cent
payable annually, and one fifteenth of tho prin
cipal sum shall become due and payablo each
and every year until Tully paid. Which prin
cipal sum, however, shall not be exacted until
the end of the second year, and in case of crop
falluro throughout suid county the county com
missioners shall have discretion to extend prin
cipal for ono year provided Interest is fully paid.
Section 9., All amounts over and above tho
sum required to clear title In said applicant shall
be used for the following sole purposes:
First. Erecting small house, barn, and dig
ging a well, and the balance to be used for tho
purpose of a team of horses, harness, wagon,
farm implements and soed. Should there be
any sum not so expended it shall be deemed a
credit to said applicant for the purchase of
other Jive stock or necessaries of living.
Section 10. The county commissioners shall
bo allowed discretion according to local county
conditions in the purchase of said items based
upon actual farm requirements provided they
do not exceed tho total of 70 per cent of tho
face value of loan.
Section 11. All bills for expenditure shall bo
O. K.d by applicant and iaid only by county
commissioners out of this fund by a voucher,
and all excess over and above expenses to said
county shall become a part of this agricultural
development funds, and shall be used only for
such purposes.
1894 was enacted. Way back in 1794 there
was tho famous carriage law tax. That statute
levied a tax of varying amounts on carriages,
then looked on as the vehicles of the rich.
James Madison was then a member of the
house. Ho had been a prominent member of
tho convention that framed the constitution.
Ho opposed the tax, denounced it as unconsti
tutional, fought it in congress and carried the
war into tho newspapers. George Washington
approved the tax, and so did Alexander Hamil
ton, who was secretary of the treasury when
tho law was passed.
The government collected the tax against tho
protest of a citizen of Virginia and on an agreed
statement of fact the controversy went to the
supremo court. Tho court decided that a tax
on carriages was not a direct tax and therefore
the law which imposed it and did not apportion
it among the states was constitutional.
From then on for a hundred years tho courts
sustained laws of congress which were objected
to as imposing direct taxes and not apportioning
them. In 1880 tho supreme court sustained an
unapportioned tax on income in tho famous
Springer case. This was brought by William
M. Springer of Illinois, then a representative in
the house. Mr. Springer refused to pay the
income tax assessed against him.
The government levied on his homestead in
Springfield, sold It, purchased it at the execu
tion sale and brought action of ejectment
against him. The case went to tho supreme
court on tho action of ejectment. Springer filed
with the supreme court a most elaborate brief,
prepared by himself, but tho court held the In
come tax law valid on the theory that direct
taxes in the meaning of tho constitution Included
only capitation or head taxes and taxes on real
estate. The tax on Springer's Income was held
to be In the nature of an excise and legal.
In 1895 the income tax law, which had been
included In the Wilson tariff act, was brought
before the supremo court in the case of Pollock,
against the Farmers' Loan and Trust company,
and In that case tho law was held unconstitu
tional and void. Two hearings were had. On
the first hearing a majority of tho court held
that a tax on Income derived from real estate
must be apportioned as a' direct tax, but the
judges divided equally, 4 to 4, on tho ques
tion whether a tax on income derived from per
sonal property must bo apportioned.
On the second hearing, by 5 to 4, tho court
held that a tax on Income derived from personal
property must be considered a direct tax and
must bo apportioned. All the judges agreed,
however, that taxes on Incomes derived from
business or occupations need not be apportioned.
Some ono of tho justices changed his mind be
tween the first and second decision. Who that
justice was Is more or less In dispute. It is
ono of the secrets of the supremo courtroom
which may never be divulged. One of the dis
senting opinions in the first case was by Justlco
White, who is now chief justice. The late Jus
tice Harlan concurred In the dissent of Justice
White and added a statement of his own.
