State Of New York et al v. Mnuchin et al

Filing 47

DECLARATION of Owen T. Conroy in Support re: 44 CROSS MOTION for Summary Judgment .. Document filed by State Of Connecticut, State Of New York, State of Maryland, State of New Jersey. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59, # 60 Exhibit 60, # 61 Exhibit 61, # 62 Exhibit 62, # 63 Exhibit 63, # 64 Exhibit 64, # 65 Exhibit 65, # 66 Exhibit 66, # 67 Exhibit 67, # 68 Exhibit 68, # 69 Exhibit 69, # 70 Exhibit 70, # 71 Exhibit 71, # 72 Exhibit 72, # 73 Exhibit 73, # 74 Exhibit 74, # 75 Exhibit 75, # 76 Exhibit 76, # 77 Exhibit 77, # 78 Exhibit 78, # 79 Exhibit 79, # 80 Exhibit 80, # 81 Exhibit 81, # 82 Exhibit 82, # 83 Exhibit 83, # 84 Exhibit 84, # 85 Exhibit 85, # 86 Exhibit 86, # 87 Exhibit 87, # 88 Exhibit 88, # 89 Exhibit 89, # 90 Exhibit 90, # 91 Exhibit 91, # 92 Exhibit 92, # 93 Exhibit 93, # 94 Exhibit 94, # 95 Exhibit 95, # 96 Exhibit 96, # 97 Exhibit 97, # 98 Exhibit 98, # 99 Exhibit 99, # 100 Exhibit 100, # 101 Exhibit 101, # 102 Exhibit 102, # 103 Exhibit 103, # 104 Exhibit 104, # 105 Exhibit 105, # 106 Exhibit 106)(Conroy, Owen)

Exhibit 106

INCOME-TAX AMENDMENT.
BY WILLIAM E. BORAH, ?. S. SENATOR.

It is persistently urged that by adopting the proposed con
stitutional amendment providing for the levying of an income
tax without apportionment some new or additional taxing power

will be conferred upon Congress, some limitation placed upon
the powers of the State. Many are led to believe that we are in
effect readjusting the taxing power as between the national and
the State governments. With much apparent earnestness a warn
ing is sent forth from certain sources every few days that the

States should look well to this attempt to take away some of
their present power. Even so profound a constitutional lawyer
as ex-Senator Edmunds says, in an article lately printed in the
" Congressional Eecord " : " In so sweeping and unlimited a form
(is the proposed amendment) as to grant Congress the right to
tax the very States themselves by impositions upon their bonds
and other sources of revenue. . . . For what reason is this great
and radical change and surrender proposed ?"
What " radical change " is to be made, what " surrender pro
posed " ? I submit that the position thus taken by the ex-Senator
cannot be sustained either upon reason or authority.
Is there any doubt in the mind of any lawyer, or layman for
that matter, who has considered the subject, that Congress has
power to levy an income tax now?under the Constitution as it
at present exists ? May we not, if we apportion the same, levy an
income tax at the present time ? Congress has the power now to
do precisely that which is deemed revolutionary and destructive to

the States. There has never been any difference of opinion
among lawyers or in the decisions as to the power of Congress to

levy an income tax. The sole question has been as to whether

it should be apportioned or not, and the sole purpose and only
effect of the amendment is to relieve from the necessity of ap

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INCOME-TAX AMENDMENT.

757

power to embarrass or destroy the other. In other words, that
there must always be subtracted from this unlimited taxing power,

plenary though it be, the right of a State government to exist
and perform its functions. Upon this principle and upon this
principle alone the instrumentalities of the States are exempted*
Marshall, when confronted with the claim of the States of the
right to tax the instrumentalities of the national Government,
boldly stated that no provision of the Constitution could be found

to prohibit such taxation. But said the justice: "There is no
express provision (of the Constitution) for the case, but the
claim has been sustained on a principle which so entirely per

vades the Constitution, is so intermixed with the materials which
compose it, so interwoven with its web, so blended with its texture,

as to be incapable of being separated from it without rending it

into shreds."

Later, when the question was presented as to the power of the
Government to tax the instrumentalities of the States, the court
was met with the rule long established that there was no limit
to the taxing power of Congress. " That it might be exerted upon

all individuals and upon every species of property" was con
ceded. If so, upon what theory was the income from State bonds

or State officials' salaries to be exempted? Solely upon the
theory that these sovereignties were in their spheres independent,
and that the " admittedly unlimited power " to tax related alone
to the property or incomes from sources within the jurisdiction
of the sovereignty laying the tax. That the State government
and its instrumentalities of sovereignty were not within the juris
diction or subject to the control of the national Government was

the conclusion reached. The court said:

" It is admitted there is no express provision in the Constitution that
prohibits the general Government from taxing the means and instru
mentalities of a State, nor is there any prohibiting the State from taxing
the means and instrumentalities of the Government. In both cases ex
emption rests upon necessary implication and is upheld by the great law
of self-preservation, as any Government whose means employed in con
ducting its operations, if subject to the control of another and distinct
Government, can exist only at the mercy of that Government."

It will be recalled that the income tax of 1864 covered specifical
ly incomes from State securities and the salaries of State officers.

This law was held constitutional. That is, it was held that the
tax need not be apportioned. There was, therefore, before the

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758 THE NORTH AMERICAN REVIEW.
court precisely the situation we would have should this amend
ment be adopted and the rule of apportionment discarded. We
had an income-tax statute specifically covering the subject-matter
of incomes from the State securities, and we had numerous de
cisions of the Supreme Court to the effect that the taxing power
of Congress was plenary and yet the court held that you could

not tax State securities or bonds. Did the court so hold upon

the theory that State bonds were excepted from the taxing power
under the Constitution, or that the language of the taxing power

was not sufficient to cover the same? By no means. On the
other hand, in this very decision, it is said that there was no
limitation to the taxing power of Congress. Did it hold this
because the statute itself did not cover this kind of property ? By
no means. The effect of those decisions was that, notwithstanding
the unlimited taxing power of Congress when standing alone, it
must be construed in the light of the fact that we have a dual

Government. The decision was based upon the law of self
preservation?the whole scope and plan of Government as outlined
in the Constitution being that there were two separate and dis
tinct sovereignties unembarrassed by each other.
Let us suppose that this amendment is adopted and Congress
should pass a law levying an income tax upon the income from

State bonds. It would then be said that a statute covering this
specific kind of property passed under an amendment covering
incomes "from whatever source derived" would certainly au
thorize the tax. But eould it not be said in complete answer to
this that upon several previous occasions Congress had passed a
statute taxing incomes from State bonds under a constitutional
provision wmich the court had held covered property of every
nature and kind, but that aside from the plenary power of taxa
tion and the specific provisions of the statute there was another
principle which must obtain when construing the Constitution
providing for a dual form of Government and that that prin

ciple remains intact? The court did not hold, for instance, in
the Pollock case that the income tax on State bonds was void
because it was unapportioned. It held, notwithstanding the lan
guage of the statute and the plenary power of the Constitution
under which it was passed, that the national Government could
not tax these State bonds for the reasons theretofore announced
in the case of Collector vs. Day and above quoted.

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