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Foreign Commerce and Federal Taxation

FOREIGN COMMERCE AND FEDERAL TAXATION. Understanding, then, the needs of the Federal Government, both as regards the relative amount to be raised and the peculiar requirements due to the political responsibilities which it has assumed, what funds should be set aside as the source of Federal income? In view of the fact that current income must accrue from current industry, it is natural to inquire what industry, if any, is placed under the special guardian ship or direction of the Federal Government, for it is to such an industry that Congress would naturally turn for revenue.

Other things being equal, a government should select for purpose of taxation those industries with which it holds some fundamental or constitutional relation. This is justified, if in no other way, on the ground of economy; for all the in formation gathered, and much of the machinery set in motion for the discharge of political and administrative responsi bilities may be used by the financier in the framing and executing of tax laws. The application of this generaliza tion to the Federal Government is clear. According to the Constitution Congress is intrusted with absolute control over foreign and interstate commerce. This was not the result of an accident or of a compromise. Says Webster : " The en tire purpose for which the delegates assembled at Annapolis was to devise means for the uniform regulation of trade." Says Chief Justice Marshall : " The power over commerce, including navigation, was one of the primary objects for which the people of America adopted their government." It was the necessity of a clear revenue, rather than a revenue dependent upon the whims of the several States, which caused the early statesmen to demand for Congress comprehensive fiscal powers; and it was the necessity for uniform condi tions for the development of a healthful commerce, and the establishment of an efficient industry upon the basis of that commerce, that led them to request from the States the con cession that the Federal Government should have the ex clusive right to levy import duties.

The reasoning involved in this demand may be best presented by an illustration. Were the State of New York, which enters more than one-half of the foreign goods brought into the United States, allowed to impose a duty upon their importation, it would result in placing the citizens of other States under tribute to the State of New York. Manifestly this would be unfair to the inland States, and could not be allowed in a justly organized Federal State. Moreover, were it allowed other States would undoubtedly establish reprisals against the State of New York, and the result would be the destruction of that commercial unity without which the industries of a people cannot flourish. Nor would the evil thus engendered be limited to an arrested commercial development. Commercial unity being thus rendered im possible, the spirit of solidarity, which is essential to the exis tence of a nation, would be impossible of realization. It thus appears that the people of this country are saved not alone from an embarrassing confusion of revenue laws, but from political disaster as well, by the fact that the Constitution grants to Congress the exclusive right to levy import du ties.

government, industry, congress, revenue and people