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800,000 a year, or a total of 4,912,000. Statistics collected and compiled from official sources show that several thousands of farmers have annually been sold out for drainage taxes while other thousands are facing the same fate. Dispossessed, these farmers are and will be forced into the ranks of the unemployed. To enact this bill into law not only would be to give much needed and substantial relief to worthy farmers engaged in the fundamental industry of agriculture but also would be to prevent in a considerable measure further increase in the number of unemployed.

REDUCTION OF FARM TAXES

It is a plan to save highly productive lands that already are under successful cultivation.

It is a plan to prevent the utter ruin of farmers owning and operating lands, who are losing their homesteads because of their inability to pay heavy annual taxes levied on their farms for the public works which have been installed by authority of law, by refinancing the public works on a long-term basis and thereby reducing the annual tax levied against the individual farmer.

The extent of relief which each individual farmer can obtain under this bill can be definitely and exactly computed from his tax receipt.

MAKING IT POSSIBLE FOR FARMER TO PAY In order to readjust and more effectively distribute the burden of debt, districts created by authority of State law and having a definite status as political subdivisions, either as counties or special-tax districts, may refinance their public works--the public ditches, so to speak, that are supposed to be open and accessible to any farmer in the district who seeks an outlet for his own private ditches.

Under this plan districts which are unable to meet either the interest or the principal of their outstanding bonds, may refinance their undertakings by the issuance of refunding bonds; such refunding bonds to be accepted by the United States Government as security for loans sufficient to retire as they mature outstanding bonds and the accumulated interest thereon.

ADVANTAGES TO FARMERS EXPLAINED The advantages of this plan become evident when it is considered that the residents of these districts are pioneers who in response to the call of the Government in the first years of the World War undertook to do in a short period of time what heretofore had required a hundred years to accomplish. In a word, they issued drainage nds to run 20 years to pay for permanent improvements, the benefits of which were to be enjoyed by all succeeding generations, when in the very nature of the case the expense of constructing these public works should have been spread over at least 50 or 75 years. The refunding of the debts will constitute an extension of time and will thereby reduce the annual tax for works to an amount so small as to be surely within the farmers' ability to pay.

IMPROVEMENT TAXES CONSTITUTE THE LARGER BURDEN

At present, the improvement tax in many districts is more than half of all the taxes the farmer has to pay, more than school district, road and bridge, county, and States taxes combined. In a considerable number of districts this tax constitutes two-thirds of all taxes levied, and runs in many instances to an amount per acre equal to more than half the gross per acre earning of the land. From this it becomes apparent that the refunding of debts by means of long-term bonds will provide substantial and immediate relief to deserving farmers who are suffering sorely but through no fault of their own.

IMPROVEMENT COSTS IN ADDITION TO TAXES

This form of relief becomes the more appropriate when it is borne in mind that the expense of providing public ditches or drainage works is only a part of the burden which the individual farmer must bear, but that in addition to this there is the cost of providing and maintaining tile and surface drainage on his own farm to enable him to make use of the public works. There is ample precedent for affording this form of relief to be found in the reclamation act of 1902 and in each of its several subsequent amendments.

FARM RELIEF THROUGH TAX RELIEF

This bill would extend relief to several millions of farmers who are overburdened by taxes by putting into operation a plan for refunding certain bonded indebtedness, which plan would automatically suspend for a period of five years the collection of taxes levied on farm property to meet the interest and principal on this bonded indebtedness.

The plan does not apply to all bonded indebtedness of farm communities, but it does apply to drainage and other districts where the districts have been unable to meet the interest or principal owing to the inability of the farmers resident in the district to pay their taxes. The suspension of taxes, which, of course, are local taxes, is brought about automatically by reason of deferred interest payments and extended time of payments on principal. In other words, under the provisions of this bill drainage and other districts in distress may refund their operations, may suspend the collection of taxes for a period of five years, and may extend the period for which the bonded indebtedness is to run to not exceeding 40 years, thereby making it possible to greatly lighten the burden on the farmers resident in the distressed district.

The plan is simple. Under section 1, the Secretary of the Interior is authorized to lend, out of a revolving fund which this bill creates, to any such district or legal entity an amount sufficient to redeem bonds and meet acrued interest under restrictions imposed by this bill and under regulations administered by the Secretary of the Interior

It will be noted that under section 3 loans are not made to individual farmers, but that loans can be made only to districts which are political subdivisions and legal entities existing under and by virtue of the laws of the State where located. It will be noted that the same section also provides that no loan shall be made by the Secretary until, by examination of the engineering works of the district, he has satisfied himself that the drainage works are operating with reasonable success and are giving the lands designed to be benefited a reasonable degree of relief.

The Secretary is further required to make an appraisal of the value of the taxable property of each district applying for a loan, and he is to make no loan until he is satisfied that it can be and will be paid at maturity.

Section 3 also carries a safeguard against any speculation in outstanding bonds, by restricting the loan which may be made to any district to an amount which could be and would be paid at maturity, even though that amount may be much less than the face value of the outstanding bond which it is proposed to refund. In a word, the Secretary is not to lend an amount in excess of the actual value of the outstanding bonds.

Section 4 carries the necessary provisions for safeguarding the loan, such as the requirements for the setting up of the annual tax to provide an adequate sinking fund, and that said sinking fund must be deposited in the Treasury of the United States.

Section 5 provides that these loans shall be made for a period of not exceeding 40 years, the exact period in each case to be determined by the Secretary of the Interior.

This same section provides that these loans shall bear interest at a rate of 3 per cent, payable annually.

Section 5 also provides (and this is one of the most important provisions as a relief measure) that during the first five years of the loan the interest shall accrue and be payable during the succeeding years of the loan in equal annual installments.

This section further provides that these loans shall be secured to the Government by the issuance and delivery to the Secretary of the Treasury by the applying district refunding bonds payable to the United States in the amount of the loan, and it shall appear on the face of each bond that it is a lien on the taxable property within the district securing the loan.

It is further provided, as a safeguard, that no district may issue additional bonds for any purpose without having first obtained the written consent of the Secretary of the Interior, so long as this indebtedness remains unpaid.

Section 7 limits the extent of this relief by creating a revolving fund and limiting the annual appropriations thereunder to $20,000,000, the total amount of the revolving fund so created being $100,000,000, to be appropriated at the rate of $20,000,000 a year for five years.

The appropriateness of this form of relief is found in the faet that local taxes are the greatest source of distress throughout the farming areas of every State in the Union, and in the further fact that the tax levied in these drainage and other similar districts is greater than all other local taxes. In many cases, it has been shown by testimony before your committee, the taxes for drainage and similar bonded indebtedness is greater than all State and local taxes combined. Therefore, to permit a refunding of these operations on a plan that would give the residents of these distressed districts a practical moratorium for five years on all taxes for drainage and similar purposes, and thereafter to provide for a low rate of interest and to provide further for a long-term extension of credit, would be to provide a very sane and effective relief.

That there is very great need for this relief has been shown to your committee by the testimony of scores of witnesses from some 25 or 30 States throughout the Union. The testimony shows that the farmers residing in these districts are in a sense victims of civilization. They have had forced upon them by circumstances over which they had no control, or, at least, little control, expensive improvements which, all combined, have made a burden they could not beara burden so large that to-day, the testimony before your committee shows, hundreds of thousands of deserving farmers are losing their homes and having their lands sold out from under them to pay their drainage taxes. They have to meet taxes for roads, which in many instances have been voted upon them by the residents of cities. Those who have agitated the rapid building of roads (and this includes the farmer himself) seldom have considered how much of a road tax the farmer could in comfort pay. The agitation for good roads, beginning with the part that the Federal Government has taken in it, the further part taken by State governments, and also the part that is taken by the chambers of commerce of cities, has constituted an irresistible propaganda that has given us the roads but also a great burden of taxes.

The same is true in the matter of schools. The agitation for larger and better country schools—the movement for the consolidated school district-has emanated, to a large extent, from the residents of the large cities, who have given little thought to, and who have had little knowledge of, the burden that a consolidated school district puts upon a struggling farmer. Roads and schools are a part of civilization. So is drainage. So is irrigation. But drainage is necessary in order to get the land to yield a living to its occupants. The same is true of irrigation. The living must precede everything else. The farmer could not escape drainage and irrigation. He might have taken his roads and his schools in smaller doses. If left to his own judgment, doubtless he would have done so; but both roads and schools were urged upon him by his neighbors and his fellow citizens, and forced upon him by the collective action of all the citizens of his State. Drainage and irrigation were forced upon him by nature itself.

It has seemed to your committee that the relief of conditions like these is fundamental and would constitute an important step in practical farm relief.

Of course, not all farm taxes can be relieved, but under the plan provided in this bill the largest single item of local taxes can be so reduced as to make the burden light enough to be borne without distress.

The demand for relief for drainage districts comes from a farm population of approximately 5,000,000, which, according to the census of 1920, lives within these drainage districts.

These 5,000,000 are, for the most part, small farmers. The average size of their holdings is about 65 acres. They have their all invested in their farms. In some districts, it has been shown to your committee, thousands of farmers have lost everything because of their inability to meet their drainage taxes. In some areas 60 per cent of the farm population has been dispossessed, their land having been taken for taxes.

The relief provided in this bill would be readily available to, and would help the conditions known to exist in considerable areas of 34 different States of the Union,

A reasoned legal opinion has been submitted to your committee covering the question as to what section or clause of the Constitution would permit such appropriations as this bill authorizes. The opinion submitted maintains that the so-called general welfare clause (Art. I, sec. 8, clause 1) constitutes ample authority for such an appropriation.

A portion of this legal opinion follows:

sense.

CONSTITUTIONAL AUTHORITY The preamble of the Constitution states:

"We, the people of the United States, in order to form a more perfect Union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America."

It is, of course, well settled legally that the preamble constitutes no grant of power to Congress. However, it is expressive of the larger purposes for which the Constitution was established, among which we find that of promoting the general welfare.

Article I, section 8, clause 1, of the Constitution provides:

"The Congress shall have power to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defense and general welfare of the United States; but all duties, imposts, and excises shall be uniform throughout the United States."

As bearing upon this clause, the following principles have been established by decisions of the United States Supreme Court:

"The Constitution must be given a reasonable interpretation, according to the import of its terms, and not differently from its obvious or necessarily implied

(Gibbons v. Ogden (N. Y. 1824), 9 Wheat. 188; Cohen v. Virginia, 6 Wheat. 380.)

“Upon the examination of every question of construction, the great leading interest of the Constitution must be kept constantly in view, and it must be interpreted according to its true interest and meaning. (U. S. v. Wong Kim Ark. (Cal., 1898), 169 U. S. 699; McCulloch v. Maryland (Md., 1819), 4 Wheat. 419.)

“When investigating the nature and extent of the powers conferred by the Constitution upon the General Government, it is indispensable to keep in view the objects for which these powers were granted. If the general purpose of the instrument is ascertained, the language of its provisions must be construed with reference to that purpose and so as to subserve it. (Maxwell v. Dow, 176 U. S. 601; Legal Tender Cases, 12 Wall. 531.)

"The Constitution, establishing a frame of government, declaring fundamental principles, and creating a national sovereignty, is not to be interpreted with the strictness of a code of laws or of a private contract. (Fairbanks v. U. S., 181 U.S. 287; Legal Tender Cases, 12 Wall. 531.)

"That which is reasonably appropriate and relevant to the exercise of a granted power is to be considered as accompanying the grant. (Marshall v. Gordon (N. Y., 1917), 243 U. S. 521; McCulloch v. Maryland (Md., 1819), 4 Wheat. 316.)

“The powers confided to the General Government are to be taken as broadly granted and as carrying with them authority to exercise those powers and to pass those acts which may be reasonably necessary to carry them into full execution, and are not to be nullified by astute verbal criticisms with regard to the grand aim and object of the instrument. (Fairbanks v. U. S., 181 U. S. 288; Williams v. The Lizzie Henderson, 29 Fed. Cases 17, 126 A.)

"The presumption is in favor of the validity of an act of Congress, and it is only when the question is free from any reasonable doubt that the court should hold an act of the lawmaking power of the Nation to be in violation of the fundamental instrument upon which all power of the Government rests. (Nicol v. Ames, 173 U. S. 515.)

There has been some question as to the interpretation of the so-called welfare clause (Art. I, sec. 8, clause 1). Do the words "to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defense and general welfare" constitute another distinct and substantial power, or are the latter words connected with the former so as to constitute a qualification upon them? It is now generally established that the latter is the correct interpretation

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