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Mr. KEITH. No; but if I may present this now
Mr. TUCKER. I am very sorry I am called away. I will certainly read your article.
Mr. KEITH. And, Mr. Tucker, I should be glad to have your reaction to it also.
This was called forth primarily by the question repeatedly raised by Mr. Black of New York, who I regret is not here to-day. That question is as to whether it is right for New York to pay 25 per cent of the income tax and then take a part of that money to educate children in Mississippi—that is the question. And, in thinking the thing over as I was on the train, I worked out this answer to that question:
In the first place, it should be clearly understood that the State of New York as a State does not pay a single dollar of tax to the Federal Government; nor has it ever paid a dollar of direct tax to the Federal Government except a direct war tax of 1861, which was returned by the Federal Government in 1891. The Federal Government has raised its funds without resort to a tax on the States except as noted above, and it has not even ever made a State an agent for the collection of taxes. For many, many years the Federal Government depended entirely on imposts (tariff's) and on taxes on the manufacture of liquor, tobacco, patent medicines, etc., and occasionally matches and cosmetics, theater tickets, transportation, legal instruments, checks, drafts, and other evidences of transfers of ownership
Now, the income tax amendment to the Constitution of the United States provides that
The Congress shall have power to levy and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
This language is so clear and unequivocal that no one should ever make the mistake of saying that New York pays 20 per cent or 25 per cent of the Federal income taxes.
Thus corrected, the people who commonly speak in the language just quoted, grudgingly correct it by saying, "Well, the inhabitants of New York pay it, and there is no difference."
There is a world of difference. The income tax is assessed on the basis of citizenship or location in the territory of the United States. and not on the basis of citizenship or location in the particular State.
Now, the fundamental fallacy is to believe or to pretend to believe that New York as a State has anything to do with or say about the disposal of Federal funds derived from an income tax or any other source from which Federal taxes are derived.
Members of Congress are not State officers; they are National or Federal officers. The Federal Government and not any particular State checks up the qualifications, defines the duties, administers the oath of office, and compensates all Members of Congress. When individuals in a given State vote for Members of Congress they are exercising their national citizenship and not their State citizenship. Therefore what Congress deals with are matters that affect individuals as citizens of the United States and not as citizens of a particular State.
There are many people who do not favor an income tax, many who do not favor protective tariffs, many who do not favor excise taxes, sales taxes, privilege taxes, transfer taxes, inheritance taxes,
etc., and possibly some who are opposed to all taxes. North Carolina has no right to object to the employment by the Federal Government of law enforcement officers on the ground that the tax on the manufacture of cigarettes paid by persons and corporations within her borders, is a larger share of such expensethan is paid by a State such as Vermont, which pays little or no tax on the manufacture of cigarettes.
There is only one common-sense way of looking at this matter and that is that all Federal taxes raised by constitutional means belong, once they are collected, to our common, organized, collective social life which we call the United States of America. All moneys thus collected are ours to spend, as the wisdom of Congress may from time to time by legal process direct, for the common good. We may debate to our heart's content, in Congress and outside of Congress, as to the purposes of expenditures and as to the amounts we should expend, but when once we have given a legal answer, the case is closed, for the appropriation period at least. The talk about New York having to pay, under the proposed bill, for the education of children in Mississippi, is justly paralleled by a similar complaint about every expenditure by the Federal Government. Why should New York pay such a large proportion of the salaries of Senators and Representatives from Nevada, Mississippi, or Vermont? Why should New York pay such a large share of the expenses of maintaining Federal courts for Utah, Montana, or South Carolina? Why should New York pay such a large part of the expenses of the Department of Agriculture? A thousand similar questions may be asked, and to answer one is to answer all of them.
This is the answer:
First. New York, as a State, doesn't pay any of them. Second. Citizens of the United States, resident in the State of New York, are so numerous (10 per cent of the entire population of the country in 1920) and, fortunately, so wealthy (having in 1912, according to the Bureau of the Census, 13.3 per cent of the total wealth of the entire country) that the contributions made by them to the Federal Treasury under existing consitutional and statutory provisions are relatively great. Third. Every Federal expenditure is made in accordance with constitutional and statutory provisions and for the common, collective welfare of the citizens of the United States to whom every legally collected penny properly and rightfully belongs, and every Federal expenditure is authorized by a majority of those elected to each House of Congress and by the approval of the President of the United States.
It is the particular responsibility of Congress to determine the purpose and amount of Federal expenditures for the common welfare and also to determine, within constitutional limits, the forms of taxation that shall be employed to supply the needed funds. If a certain amount of money is needed to maintain an efficient quarantine at our ports of entry, to fight the boll weevil, to dredge the entrance to Boston Harbor, to operate the Statue of Liberty, to supply typewriters to the House stenographers, to pay charwomen for cleaning the Federal building at Pittsburgh, or any other necessary item in the whole category of the general welfare, the proponents are properly required to show how and why the amounts asked for are to be expended. These proponents, however, are not expected or required to show exactly how the funds are to be raised.
Again, a Member of Congress may be honestly opposed to the income tax, the tariff, or to internal revenue of all kinds. He is justified in opposing taxation measures to which his judgment can not assent. On the other hand, he is sworn to uphold a Constitution which places the promotion of the general welfare on a par with providing for the common defense. And therefore proposals are to be considered in terms of their relation to the general welfare of the citizenship of the entire country and not simply in terms of having taxes reduced. Federal taxes should be as low as is consistent with the general welfare. Federal taxes may need to be revised upward or downward and the incidence of them shifted from time to time, but there can never be a time when the general welfare can be sacrificed or neglected. And there can never be a time when a citizen of the State of New York can safely view any question of national welfare wholly or predominantly from the standpoint of the citizens who elected him to Congress.
And therefore we may say that citizens of the State of New York, numerous though they be, and of every other State, wealthy though they be, are still citizens of the United States, subject to its Constitution and statutes, and bearing—each of them--the responsibility, and having, too, the high privilege of realizing by conduct and by paying taxes, the fundamental ideals of our Nation and of making it à more wholesome and more worth while Nation.
There is, however, a second kind of answer to the fundamental question which we are here considering:
Our country is a democracy. One ideal of democracy is expressed by the phrase "each for all and all for each. " Each for all” expresses the fundamental attitude which the individual should assume toward the organized, collective life which is, with us, the State and the Nation. “All for each" expresses the attitude which the State and Nation should have toward the individual.
Such an ideal can only be approximated, and human relationships must be constantly readjusted to maintain even the approximations. Nevertheless, we can not escape the ideal except by renouncing democracy. And, so long as we confess allegiance to the ideal, we are under the necessity of doing something more than preaching it. Lincoln said:
Upon the subject of education, not presuming to dictate any plan or systems respecting it, I can only say that I view it as the most important subject which we as a people can be engaged in. That every man may receive at least a moderate education, and thereby be enabled to read the histories of his own and other countries, by which he may duly appreciate the value of our free institutions, appears to be an object of vital importance, even on this account alone, to say nothing of the advantages and satisfaction to be derived from all being able to read the Scriptures and other works, both of a religio and moral nature, for themselves. For my part, I desire to see the time when education--and by its means morality, sobriety, enterprise, and industry-shall become much more general than at present, and should be gratified to have it in my power to contribute something to the advancement of any measures which might have a tendency to accelerate that happy period.
Theodore Roosevelt stood for one thing above all others, and that was what he called a “square deal.”
President Coolidge recently, in his New York speech, spoke about the obligation that rested upon all of us to extend aid to distressed farmers in the Northwest.
Patrick Henry, in the face of very grave dangers, advised his compatriots to this effect: “We must hang together or we shall hang separately.”
Now, all of these things and many others that might be cited and quoted are expressive of personal attitudes toward the realization of this ideal of each for all and all for each.
Education began in this country as a home responsibility, and when it started out and became a community responsibility and people attempted to levy taxes, there was the protest of the man who had no children to send to school, and finally that was overcome after a strenuous, bitter fight. Then education, from a community affair, became a State affair, and the State when it began to tax the property of the citizens of the State and to distribute back portions of the money to the different parts of the State in proportion to the number of children in the different communities, met with opposition; that proposition was strongly opposed, and the decisions of the courts of the State upheld the ideal in the principle that the State had a right to tax all of the wealth in it for the education of all of the children in the State. Now, the question comes as to whether or not the Federal Government may use its taxes, from whatever source derived, in aid of education in this country. We already have this sort of precedent to this effect. Twenty-five hundred thousand dollars is being appropriated annually from the Federal treasury for the support of colleges of agriculture and mechanical arts in the several States. We have the direct appropriations to the States in the Smith-Hughes Act, distinctly and directly for educational purposes. So that there has been at least a beginning of precedent. Whether or not the principle has been established is for you to determine.
The CHAIRMAN. Is your idea, Mr. Keith, that the Congress can appropriate money for anything that they think is for the general welfare of the people of the country?
Mr. KEITH. I think they can; yes, sir.
The CHAIRMAN. Whether there is any specific clause in the Constitution to hang it upon or not.
Mr. KEITH. Yes, I think the question can be determined by the Supreme Court. I think that has been our procedure and our policy. Whenever there has been a cause having sufficient merit, having sufficient collective merit and collective welfare back of it, having sufficient bearing upon national welfare as to induce Members of the Congress to appropriate money for that purpose, Congress has done it and has left the question of constitutionality to the courts.
The CHAIRMAN. You think that a Member of Congress ought to vote for a measure that he does not think is constitutional ?
Mr. KEITH. I do not.
The CHAIRMAN. After having taken an oath to support the Constitution?
Mr. KEITH. Certainly not. If a Member thinks this bill is unconstitutional he should vote against it. If he thinks any other bill is unconstitutional he should stand against it; even though it means his elimination from Congress, he should stand against it; he should not vote contrary to his convictions in this matter, certainly not.
Now, the third argument is founded on the principle of economic justice.
We know that the town began with the exchange of commodities at the crossing of two or more roads. As exchange increased in volume and variety, the town grew larger. But back of the early town was the open country, the farmer who exchanged his surplus products for the surplus wares of some other producer. The middlemen served both parties to the exchange. The region in which these producers lived was called the hinterland of the town. The simple, primitive condition that has just been described created what was known as the "self-sufficing community,” which became the AngloSaxon town and the mother of democracy, for these communities were self-sustaining, too.
The application of power to production and transportation through the use of machines changed this simple town life profoundly. It is still being changed by new inventions and machines. The railroad brought people closer together and accentuated economic interdependence. Even the neighborhood mill give way to the large flour factory. Soap is no longer made by each family nor are stockings knitted in every household. Our giant and clever machines are replacing handwork of every description. The community broadens out by means of relationships of economic interdependence until it is literally true that an ever increasing multitude serves each one and also that each one serves an ever increasing body of consumers.
The forces that have just been described brought people together in towns of ever increasing size. Our population in 1890 was 63.9 per cent rural and 36.1 per cent urban. The passing of 30 years saw the ratio changed to 48.7 per cent of rural folks and 51.2 per cent of urban dwellers. While the mode of life of each group has changed, the gap between them has not been bridged. The urban group has been forced into cooperation by its mode of life. The rural group is still characteristically individualistic and independent. There are advantages and disadvantages with regard to each group.
One clear difference emerges. The wealth per capita, even when measured in terms of real estate taxable, increases with density of population. The only exception is where vast natural resources become the property of a sparse population, as in Nevada. Also, the amount of ready money increases with population. Pressure of population on land increases the value of 'land. This, in turn, increases rents, prices, and wages, and this movement keeps compounding itself. Therefore, our rural and village populations do not have the economic strength and ability in normal times that our larger centers of population have. In times of economic glut or of strikes, lockouts, etc., the open country and the villages are only slightly affected. The surplus of the individual farmer or villager must still be sold on the open market for what it will bring and sometimes the farmer has no money.
And yet the great industrial center has not made itself nor does it sustain itself. It has a double hinterland. There is the one that supplies it with food, clothing, houses, fuel, etc., and another one that, by buying its products, furnishes it with the wherewithal to feed, clothe, house, and amuse its members. From the services of this second hinterland come the funds with which to support education