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 16

1-·

THE INCOME TAX
AND

THE PROGRESSIVE ERA

John D. Buenker

rrD\ Garland Publishing, Inc.
~

New York & London

* 1985

mancipating southern producers

CHAPTER VI

ouse of almost every southern
derations generally outweighed
f a few wealthy citizens.

These

of farmers and mill hands with
between city and countryside,
iewater and piedmont.

In this

·age white Southerner for his
:o overcome those who sought to

TOPPLING THE KEYSTONE:

THE AMENDMENT IN NEW YORK

The key to the fate of the proposed Sixteenth Amendment lay in the
northeastern industrial states.

The various commentators on the chances

of the amendment differed somewhat in their assessment of individual
states, but friends and foes alike were agreed that the greatest opposition
to ratification would come from the populous states of the industrial
Northeast.

The Census Bureau divided the area into three districts --

New England, Middle Atlantic and East North Central.

Its statistics

and those of the Internal Revenue Service spoke volumes about the regional
concentration of wealth in the nation.

The Middle Atlantic and East

North Central regions were ranked first and second in the amount of wealth
per state.

New England appeared well down in that category but led the

nation in the value of all products manufactured.

Northeastern states

also ranked well up in per capita income, despite their generally large
populations, with only Vermont and New Hampshire placing in the lower
half of states in that category.

Collectively, residents of the three

regions received almost sixty per cent of the nation's income.

When

the federal tax eventually went into effect, the inhabitants of five
northeastern states--New York, Pennsylvania, Ohio, Massachusetts and
Illinois--paid nearly seventy per cent of the bill.1
Even more significant than the amount of income in the northeastern
states was its degree of concentration in the upper brackets.

The most

thorough study of national income distribution found that "the greatest
disparity is in the Eastern States, particularly those with large cities."
The "Iron Rectangle" contained 189 of the 206 people in the nation with

264

to believe it would use this as an excuse to do so.

Even if it should, ;

on February 26, 1911.
~~::..:...:.;_;__;_-

the tax fell equally on all securities and was not discriminatory.

~all ed the amendment the "most seric

authority," the Columbia professor concluded, "should not be opposed

!

the organization of our goveri

in those cases where self-government means retrogression rather than

empower Congress to destroy s

progress."

Congress would use the power

Seligman had pressed for a state income tax for several years,

but temporarily dropped the idea to push for ratification because the

' who favored ratification, such as D
Republican Fort of New Jersey, four

debate was so "heated and close. 32
11

Finally, Cordell Hull, being freer to criticize Hughes than were

in messages urging ratification.

any of the governor's fellow Republicans, let loose the harshest verbal

reasoning, opining that "if our pa·

blast of all at his "officious intemperance." Accusing Hughes of placing

of a one percent tax will affect t

himself between the plutocracy and the people, the

are in a sorry state." 34

Tennessee Congressman

questioned Hughes' authority to even comment on ratification.

While it is difficult to asses

The governor,

Hull argued, had no constitutional role to play in the amendment process

had in other states, or even in NE

and had no right to veto what the legislature did.

to help the cause of the amendmenl

After reiterating

all the arguments that others had cited to counteract Hughes' contention,

the

Hull concluded by castigating Hughes for splitting hairs over this particular

In 1916, while Hughes was an asso

grant of federal power when he readily accepted more sweeping ones.

he assented to the unanimous deci

"He swallows the camel," Hull chided, "but strains at the gnat. 33

Pacific.

11

Despite the disagreement of such noted experts, however, Hughes'

merits of the Governor's obj1

This decision upheld th

tax law that was based directly c

objection to the adoption of the amendment received much currency in

Amendment.

several states.

the opposite position from Hughe~

The governor of Connecticut, Frank B. Weeks, based his

The decision, writter

opposition to the measure upon it and the legislative Committee on Federal

amendment "does not purport to c•

Relations in Massachusetts cited the argument as the reason for its unfa-

sense -- an authority already po

vorable report.

mine]

Lawmakers in Louisiana, South Carolina, and Utah cited

it in their speeches.

Governor Augustus Willson of Kentucky, as previously

noted, lavishly praised Hughes' interpretation of the

ame~dment

in the

or to limit and disting

ano th er, bu t.that the whole
.

pur~

income taxes, when imposed, fror

265
J

do so.

New York Times on February 26, 1911.

Even if it should,

1as not discriminatory.

In the extensive article, Willson

called the amendment the ''most serious encroachment on States Rights

"Central

J, "should not be opposed

since the organization of our government," declared that ratification

·etrogression rather than

would empower Congress to destroy states and municipalities, and insisted
that

income tax for several years,

Congress would use the power if it were so granted.

Governors

who favored ratification, such as Democrat Judson Harmon of Ohio and

• ratification because the

Republican Fort of New Jersey, found it necessary to dispute the view
riticize Hughes than were

in messages urging ratification.

=t loose the harshest verbal

reasoning, opining that "if our patriotism is so low that the possibility
of a one percent tax will affect the value and sale of bonds, then we

" Accusing Hughes of placing
le, the

are in a sorry state. 34

Tennessee Congressman

t on ratification.

Fort was particularly critical of Hughes'

11

While it is difficult to assess the influence that the Hughes argument

The governor,

play in the amendment process

had in other states, or even in New York, it is certain that it did nothing

re did.

to help the cause of the amendment.

After reiterating

the

counteract Hughes' contention,
litting hairs over this particular

l- '.

It is also difficult to judge either

merits of the Governor's objection or the depth of his conviction.

In 1916, while Hughes was an associate justice of the U.S. Supreme Court,

pted more sweeping ones.

he assented to the unanimous decision in the case of Brushaber v. Union

strains at the gnat. 33

Pacific.

experts, however, Hughes'

tax law that was based directly on the power conferred by the Sixteenth

received much currency in

Amendment.

t, Frank B. Weeks, based his

the opposite position from Hughes' earlier stand by stating that the

egislative Committee on Federal

amendment "does not purport to confer power to levy taxes in a generic

nt as the reason for its unfa-

sense

an authority already possessed and never questioned [emphasis

1uth Carolina, and Utah cited

mine]

or to limit and distinguish between one kind of income tax and

llson of Kentucky, as previously

another, but that the whole purpose of the amendment was to relieve all

ion of the amendment in the

income taxes, when imposed, from apportionment." In effect, as Hughes'

11

This decision upheld the constitutionality of the 1913 income

The decision, written by Chief Justice Edward White, took