Tax Shrinkage

It is a principle of U. S. law that no citizen can refuse to pay a tax. It is another principle of U. S. law that, having paid, a taxpayer has a right to sue and, if the tax is found illegal, recover his payment from the Government. Last summer Congress passed an AAAmendment, which, in the event processing taxes are found unconstitutional, forbids their recovery unless each taxpayer can prove he has not passed the taxes on to the public. To date some 1,000 cases have been taken to court by processors who contend that since the principle of a taxpayer's right to recover has been impaired, the principle of his obligation to pay before suing no longer holds. Last week the first such case was acted on by the U. S. Supreme Court.

Eight rice millers from Louisiana asked an injunction to restrain the collection of the 1-c- a lb. processing tax on rice pending a court decision on their argument that the tax is illegal. Refused an injunction by lower courts in the South, they got a decision from the Supreme Court. By vote of 6-to-3 (Brandeis, Stone and Cardozo dissenting) the Court granted a temporary injunction. Until the legality of the processing tax is decided the rice millers can deposit the tax alleged to be due with a depositary chosen by the Court, get it all back if they eventually win their case.

Not the New Deal but the U. S. Treasury was the sufferer. Lawyers foresaw that the revenue from processing taxes, shrunken to a rivulet since legal battles began, would now dry up completely, stay dry until and unless processing taxes are found legal.

This file is automatically generated by a robot program, so reader's discretion is required.