[Deschler's Precedents, Volume 3, Chapters 10 - 14]
[Chapter 13. Powers and Prerogatives of the House]
[C. House Prerogative to Originate Revenue Bills]
[§ 19. Senate Action on Revenue Legislation]
[From the U.S. Government Publishing Office, www.gpo.gov]
[Page 1863-1880]
CHAPTER 13
Powers and Prerogatives of the House
C. HOUSE PREROGATIVE TO ORIGINATE REVENUE BILLS
Sec. 19. Senate Action on Revenue Legislation
In addition to its mandate that the House originate all revenue
bills, article I, section 7 of the Constitution (2)
authorizes the Senate to propose or concur with amendments as on other
bills. Senate authority to amend revenue bills is broad, but not
unlimited. A principle frequently applied is that the Senate may
substitute one kind of tax for a tax that the House has proposed, but
may not impose a tax if one had not originally been proposed by the
House. Thus, the Supreme Court has held that a Senate amendment which
substituted a corporate tax in place of an inheritance tax which had
been proposed in the original House version did not contravene the
constitutional provision; for the bill had properly originated in the
House as a revenue-raising measure and the Senate amendment could
constitutionally be added thereto.(3)
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2. See annotation following article I, section 7, House Rules and
Manual.
3. Flint v Stone Tracy Co., 220 U.S. 107 (1911). See also Rainey v
United States, 232 U.S. 310 (1914).
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In a similar case, the House without debate and by voice vote held
that a Senate amendment in the nature of a substitute infringed upon
the House prerogative and returned the bill, as amended, to the
Senate.(4) In this case, the substitute, which was offered
to a House bill to amend the Railroad Retirement Act, sought to impose
a tax.
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4. See Sec. 15.8, supra.
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On the other hand, as a further application of the above principle,
[[Page 1864]]
the House tabled a resolution to return to the Senate a House excise
tax bill, which the Senate had amended by provision for a general
surtax.(5)
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5. See Sec. 16.1, supra.
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When the issue has been raised, the Senate has generally respected
the House prerogative. Thus, the Senate rejected a committee amendment
changing a definition in the Internal Revenue Code which was added to a
Senate bill granting independence to the Philippine
Islands.(6)~ On another occasion, the Senate sustained a
point of order that a Senate amendment affecting the Revenue Act,
offered to a House bill directed to administrative purposes rather than
raising revenue, infringed on the prerogative.(7) Moreover,
after the House returned a Senate bill to the Senate on the ground that
certain tariff schedule amendments infringed upon the House
prerogative, the Senate deleted the amendments.(8) And the
Senate has deleted amendments to the Internal Revenur Code that
appeared in a Senate bill.(9)
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6. See Sec. 19.3, infra.
7. See Sec. 19.4, infra.
8. See Sec. 19.5, infra.
9. See Sec. 19.6, infra. -------------------
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Constitutional Issue Submitted to Senate
Sec. 19.1 Because it requires interpretation of the Constitution rather
than the rules of the Senate, an issue as to whether a Senate
amendment to a House bill infringes upon the prerogative of the
House to originate bills raising revenue is decided by the Senate,
not the Chair.
On Mar. 28, 1935,(10) a question of order as to the
propriety of a Senate amendment to a House bill was submitted to the
Senate.(11)
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10. 79 Cong. Rec. 4583, 4584, 4586, 4587, 74th Cong. 1st Sess.
11. See also 84 Cong. Rec. 6339-49, 76th Cong. 1st Sess., May 31, 1939,
for submission of a similar issue to the Senate.
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The Senate resumed the consideration of the bill (H.R. 6359) to
repeal certain provisions relating to publicity of certain
statements of income.
The Vice President: (12) The question is on the
amendment offered by the Senator from Wisconsin [Mr. La Follette].
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12. John N. Garner (Tex.).
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The amendment offered by Mr. La Follette is after line 5 insert
a new section reading as follows:
Sec. 2. (a) Section 11 of the Revenuc Act of 1934, relating
to the normal tax on individuals, is amended bv striking out
``4 percent'' and inserting in lieu thereof ``6 percent.''
[[Page 1865]]
(b) Section 12(b) of the Revenue Act of 1934, relating to
rates of surtax, is amended to read as follows:
``(b) Rates of surtax: There shall be levied, collected,
and paid for each taxable year upon the surtax net income of
every individual a surtax as follows:
``Upon a surtax net income of $4,000 there shall be no
surtax; upon surtax net incomes in excess of $4,000 and not in
excess of $8,000, 6 percent of such excess. . . .''
Mr. [Pat] Harrison [of Mississippi]: Mr. President, I make a
point of order against the amendment offered by the Senator from
Wisconsin. I do not think I formally made it yesterday, because the
Senator from Wisconsin said he desired to make a brief statement.
He made that statement yesterday afternoon, and I now make the
point of order that the pending bill is not, in a strict sense, a
revenue bill, and that for the Senate to attach a tax proposal to
the bill at this time would be contrary to that provision of the
ConstitutiOII requiring all bills for raising revenue to originate
in the House of Representatives. . . .
The Vice President: The point of order is well taken. The Chair
is ready to rule.
The present occupant of the chair has at no time declined to
construe the rules of the Senate; and if this were a matter of the
rules of the Senate, he would not hesitate for a moment to express
his opinion about it and make a ruling.
It seems to the Chair, however, that this is purely a
constitutional question; and under the rulings and under the
precedents for more than a hundred years, where constitutional
questions are involved as to the right of the Senate to act, the
Chair has universally submitted the question to the Senate.
The Chair thinks the logic of that rule is correct, the
reasoning of it is good, because the Chair might undertake to
interpret the Constitution when a majority of the Senators would
have a different viewpoint. So the Chair is going to follow a long
line of precedents and submit to the Senate the question whether or
not it is constitutional for the Senate to propose this amendment;
and it occurs to the Chair that the only question involved is, Is
this a bill to raise revenue?
So the Chair is going to submit to the Senate of the United
States the question as to whether or not the Senate, under the
Constitution, has a right to propose this amendment.
Mr. [William E.] Borah [of Idaho]: Mr. President, must that
question be determined without debate?
Mr. [Huey P.] Long [of Louisiana]: No: it is subject to debate.
The Vice President: The point of order has been made by the
Senator from Mississippi [Mr. Harrison] to the amendment of the
Senator from Wisconsin [Mr. La Follette]. The question before the
Senate is whether or not the point of order shall be sustained.
That question is debatable.(15)
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13. See also Sec. 19.4, infra, for further debate on this question.
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In connection with his ruling on the point of order made by the
Senator from Mississippi, the Chair asks unanimous consent to
insert in the Record some decisions and precedents prepared by the
parliamentary clerk. Is there objection? The Chair hears none.
The matter referred to is as follows:
[[Page 1866]]
[From the Constitution of the United States, as revised and
annotated, 1924]
Article I Section 7, Clause 1, Revenue Bills
All bills for raising revenue shall originate in the House
of Representatives; but the Senate may propose or concur with
amendments as on other bills.
``All bills for raising revenue.''
``The construction of this limitation is practically
settled by the uniform action of Congress confining it to bills
to levy taxes in the strict sense of the word, and it has not
been understood to extend to bills for purposes which
incidentally create revenue.''
U.S. v. Norton (91 U.S. 566) [1875].
Twin City Bank v. Nebeker (167 U.S. 196) [1897].
Millard v. Roberts (202 U.S. 429) [1906].
Questions Involving Constitutionality of Bills are Submitted to
Senate
Wednesday, January 16, 1924
The Senate, in a call of the calendar under rule VIII, reached
the bill (S. 120) to provide for a tax on motor vehicle fuels sold
within the District of Columbia, and for other purposes.
Mr. McKellar made a point of order against the bill on the
ground that it was a revenue measure and that under the
Constitution of the United States all revenue-raising measures must
originate in the House of Representatives, and that the bill had no
place on the Senate Calendar.
The question was argued, and Mr. Lenroot made the contention
that it was not the function of the Chair to pass upon the question
of whether bills are or are not in violation of the Constitution.
After further argument, the President pro tempore (Albert B.
Cummins, of Iowa) made the following ruling:
``The Chair is of the opinion that he has no authority to
declare a proposed act unconstitutional. The only precedent which
the Chair has been able to find since the question arose was
presented to the Senate in 1830, and the Vice President then in the
chair ruled in accordance with the suggestion which the Chair has
just made, holding that it was a question which must be submitted
to the Senate and one which could not be ruled upon by the Chair,
which entirely concurs with the views of the present occupant of
the chair in the matter. The question before the Senate, therefore,
is, Shall the point of order which is made by the Senator from
Tennessee [Mr. McKellar], which is that the bill now under
consideration is unconstitutional and should have originated in the
House of Representatives, be sustained? [Putting the question.] The
ayes have it, and the point of order is sustained. The bill will be
indefinitely postponed.''
January 22, 1925 (14)
The Senate had under consideration the bill (S. 3674)
reclassifying the salaries of postmasters and employees of the
Postal Service, readjusting their salaries and compensation on an
equitable basis, increasing postal rates to provide for such
readjustment, and for other purposes.
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14. The incident of Jan. 22, 1925, is discussed at 6 Cannon's
Precedents Sec. 317.
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Pending debate,
[[Page 1867]]
Mr. Swanson raised a question of order, viz, that that portion
of the bill dealing with increased postal rates proposed to raise
revenue, and, under the Constitution, must originate in the House
of Representatives, and was therefore in contravention of the
Constitution.
The Presiding Officer (Mr. Jones of Washington) held that the
Chair had no authority to pass upon the constitutionality of a
bill, and submitted to the Senate the question, Shall the point of
order be sustained?
On the following day the Senate, by a vote of 29 yeas to 50
nays, overruled the point of order.
The bill was subsequently passed and transmitted to the House
of Representatives. On February 3 the House returned the bill to
the Senate with the statement that it contravened the first clause
of the seventh section of the first article of the Constitution and
was an infringement of the privileges of the House.
The message and bill were referred to the Committee on Post
Offices and Post Roads, and no further action taken. A House bill,
H.R. 11444, of an identical title, was subsequently passed by both
Houses and became a law. . . .
March 2, 1931 (15)
Mr. Capper moved that the Senate proceed to the consideration
of the bill (S. 5818) to regulate commerce between the United
States and foreign countries in crude petroleum and all products of
petroleum, including fuel oil, and to limit the importation
thereof, and for other purposes.
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15. The incident of Mar. 2, 1931, is discussed at 6 Cannon's Precedents
Sec. 320.
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Mr. Ashurst made the point of order that the bill was a
revenueraising measure, and, under the Constitution, should
originate in the House of Representatives.
The Vice President submitted the point of order to the Senate.
Mr. Capper's motion was subsequently laid on the table, and the
point of order was not passed upon.
December 17, 1932
The Senate had under consideration the bill (H.R. 7233) to
enable the people of the Philippine Islands to adopt a constitution
and provide a government for the Philippine Islands, to provide for
the independence of the same, and for other purposes.
Mr. Dickinson offered an amendment imposing on imports of pearl
buttons or shells, in excess of 800,000 gross in a year, the same
rates of duty imposed on like articles imported from foreign
countries.
Mr. Walsh of Montana raised a question of order, viz, that the
amendment proposed to raise revenue and could not, under the
Constitution, originate with the Senate.
The Vice President submitted to the Senate the question, Is the
point of order well taken? and
It was determined in the affirmative.
Subsequently, Mr. Dickinson stated that the amendment above
indicated was identical, except as to the commodity, with the
language in the bill dealing with sugar and coconut oil; when
The President pro tempore ruled that in view of the language
contained
[[Page 1868]]
in the House text, the amendment was in order.
After debate, and other proceedings, the following occurred:
(l6)
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16. 79 Cong. Rec. 4613, 74th Cong. 1st Sess.
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Mr. Harrison: Mr. President, I ask for a vote on the point of
order raised by me.
The Presiding Officer: (17) The question is, Shall
the Senate sustain the point of order raised by the Senator from
Mississippi [Mr. Harrison] against the amendment proposed by the
Senator from Wisconsin [Mr. La Follette] on the ground that it
contravenes the constitutional provision? [Putting the question.]
The ``ayes'' have it, and the point of order is sustained.
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17. Harry S Truman (Mo.).
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Committee Jurisdiction of Bill Incidentally Producing Revenue
Sec. 19.2 The Presiding Officer of the Senate held that the Senate
Committee on Banking and Currency did not exceed its jurisdiction
in reporting an original bill with a revenue-producing measure to
amend the Internal Revenue Code therein, because that measure was
incidental to the main purpose Of the bill, making equity capital
and long-term credit more readily available for small business
concerns.
On June 9, 1958, (18) the Presiding Officer, William
Proxmire, of Wisconsin, held that the Senate Committee on Banking and
Currency did not exceed its jurisdiction in reporting S. 3651 with a
revenue producing measure to amend the Internal Revenue Code, because
that measure was incidental to the main purpose of the bill.
(19~)
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18. See the proceedings at 104 Cong. Rec. 10522-25, 85th Cong. 2cl
Sess.
19. Id. at pp. 10524, 10525.
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Mr. [John J.] Williams [of Delaware]: Mr. President, I should
like to have the attention of the chairman of the committee. The
text of the bill, beginning on page 50, line 10, and extending to
page 52, through line 17, embraces a proposed amendment to the
Internal Revenue Code. I am wondering if the committee did not make
a mistake when it placed this provision in the bill, because, in
the first place, measures of such nature should be considered by
the Senate Finance Committee. Secondly, revenue measures should
originate in the House. . . .
Mr. President, I call attention to the fact that, under
paragraph (d) of rule XXV, the Committee on Banking and Currency
may not deal with any revenue-producing measure. . . .
I next invite the attention of the Senate to the fact that in
this bill the attempt is not made to amend an ordinary House bill;
nor even a bill which deals with a revenue-raising provision; nor a
bill which had been reported by the Committee on Finance; nor one
[[Page 1869]]
which had been considered by the Committee on Ways and Means of the
House. What is attempted is an amendment of the Revenue Code on a
Senate bill which has been considered only by the Banking and
Currency Committee. I shall make the point of order that the
Committee on Banking and Currency has exceeded its jurisdiction,
and this section of the bill should be stricken. . . .
Mr. [Francis H.] Case of South Dakota: Mr. President the
distinguished Senator from Delaware has raised a very important
question. He has raised two questions, in fact. He has raised the
question of a possible violation of the rule of the Senate with
respect to the jurisdiction of the Committee on Banking and
Currency in reporting the pending bill. He has also raised the
constitutional question as to whether a bill carrying tax
provisions must originate in the House of Representatives.
I should like to have the attention of the Parliamentarian
while I am speaking on this point. The question first came up in
1955, when the Committee on Public Works was considering the
interstate highway bill.
At that time I consulted the Parliamentarian as to whether the
Committee on Public Works could report a bill which would raise
revenue for the purpose of defraying the cost of the highway
program, particularly the standard interstate program. The
Parliamentarian called my attention to a decision [Hubbard v Lowe
226 F 135 (S.D.N.Y.), appeal dismissed, 242 U.S. 654 (1916)] in the
so-called Cotton Futures Act, which held that a bill which had
originated in the Senate, but which had a revenue item added to it
in the House of Representatives.
The Supreme Court held that that act was not valid, because
they could not go behind the number of the bill. Even though in
that instance the revenue feature was added by the House of
Representatives, the Supreme Court held that the origin of the bill
was determined by the number it carried. That bill carried a Senate
number. So the Supreme Court invalidated the Cotton Futures Act
because section 7 of the Constitution provides that all bills for
raising revenue shall originate in the House of Representatives.
On the basis of that Supreme Court ruling, which the
Parliamentarian called to my attention, the Committee on Public
Works decided that it should not risk the validity of the highway
bill by reporting revenue features. In fact, in 1956, when the
question of a highway act again was before the Senate, because the
House had failed to pass a highway bill in 1955, the Committee on
Public Works decided it would defer to the action of the House, and
wait until a bill could come over from the House carrying revenue
features or carrying a House bill number, so that we would not run
into danger. The Committee on Public Works did not want to risk
invalidating the proposed legislation by placing a Senate number on
a bill which included revenue features.
Under that decision of the Supreme Court, cited to me by the
Parliamentarian, I cannot understand why members of the Committee
on Banking and Currency would want to risk the fate of this bill by
having it continue to carry tax provisions. The Senator from
Delaware [Mr. Williams] has already pointed them out. For emphasis,
I invite the committee's attention to the
[[Page 1870]]
fact that section 308 specifically refers to the Internal Revenue
Code of 1954 and then, in parentheses, reads: ``relating to
deduction of losses.''It amends section 165 of the Internal Revenue
Code relating to the deduction of losses.
Further, in section 308, subparagraph (c), there is an
amendment of section 243 of the Internal Revenue Code, ``elating to
dividends received by corporations''
In other words, the language of the bill before us very clearly
changes the Revenue Code, by changing the provisions which raise
revenue and the provisions relating to deductions. Certainly it
must be considered a bill to raise revenue or a bill to change the
code relating to revenue. Based on the opinions which the
Parliamentarian gave in 1955 and 1956, I do not see how this bill,
S. 3651, could carry those provisions and still be considered a
valid bill. . . .
Mr. Williams. Mr. President, before I raise the question of
constitutionality, my first point of order is that the committee
exceeded its jurisdiction. It had no authority at all to report a
bill dealing with the Revenue Code. Therefore, I make the point of
order against that section of the bill on that basis.
The question is, Does the Senate Committee on Banking and
Currency have jurisdiction to report measures relating to the
Revenue Code? If they have such jurisdiction, other committees
likewise have the jurisdiction to report similar bills.
I confine my point of order, first, to that phase of the
question. . .
Mr. [J. William] Fulbright [of Arkansas]: Mr. President, in
regard to the point of order, it is my position and that of the
committee that the revenue provision of the bill is strictly of a
subsidiary and incidental nature to the main purpose of the bill
itself; that this is a very common practice; and that the point of
order is invalid.
The. Presiding Officer: The Chair has been informed by the
Parliamentarian that in the case of Millard v. Roberts (202 U.S.
429) decided in 1906, the Supreme Court of the United States made a
decision which has a bearing on the present situation.
In that case, a bill which had originated in the Senate
provided for the construction of a Union Station in the District of
Columbia, and contained a small incidental tax provision. The
constitutionality of the bill was attacked on the ground that
revenue bills must originate in the House.
The Court, after citing the case of Twin City Bank v. Nebeker
(167 U.S. 203) [1897], which quoted Mr. Justice Story as holding
that ``revenue bills are those that levy taxes in the strict sense
of the word, and are not bills for other purposes, which may
incidentally create revenue,'' said, ``here was no purpose, by the
act or any of its provisions, to raise revenue to be applied in
meeting the expenses or obligations of the Government.''
That situation applies to the bill in question. The Committee
on Banking and Currency has jurisdiction over the pending bill and
may report some provisions incidental to carrying out the main
purposes of the bill.
There are numerous precedents for the establishment of the
Small Business Administration and the method of its financing,
against which no point of
[[Page 1871]]
order was made when bills establishing those corporations or
administrations similar in their financing were under consideration
in the Senate.
This is the opinion of the Parliamentarian as given to the
Chair. The Chair makes it his own opinion and, therefore, the Chair
overrules the point of order.(20)
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20. See Sec. 19.6, infra, for a discussion of withdrawing revenue
amendments from this bill.
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Amendment to Senate Bill as Infringement
Sec. 19.3 The Senate rejected a committee amendment to a Senate bill
granting independence to the Philippines, on the ground that the
amendment invaded the prerogative of the House to originate bills
to raise revenue.
On May 31, 1939,(21) the Senate by a vote of yeas 8,
nays 54, decided that a committee amendment to S. 2390 was out of order
because it invaded the prerogative of the House to originate bills to
raise revenue.
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21. 84 Cong. Rec. 6331, 6339, 6348-50, 76th Cong. 1st Sess.
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Mr. [Millard E.] Tydings [of Maryland]: Mr. President, I ask
unanimous consent for the immediate consideration of Senate bill
2390, to amend an act entitled ``An act to provide for the complete
independence of the Philippine Islands, to provide for the adoption
of a constitution and a form of government for the Philippine
Islands, and for other purposes.'' . . .
The next amendment was, on page 19, after line 23, to insert a
new paragraph, as follows:
``(f) Subsection (a)(1) of section 2470 of the Internal
Revenue Code (I.R.C., ch. 21, sec. 2470(a)(1)), is hereby
amended by striking out the comma after the words `coconut
oil,' and inserting in lieu thereof the following: `(except
coconut oil rendered unfit for use as food or for any but
mechanical or manufacturing purposes as provided in paragraph
1732 of the Tariff Act of 1930), and upon the first domestic
processing of.' ''
Mr. [Tom T.] Connally [of Texas]: Mr. President, I make a point
of order against the amendment.
The Presiding Officer: (22) The Senator from Texas
will state his point of order.
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22. Edwin C. Johnson (Colo.).
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Mr. Connally: I make the point of order that the amendment
proposed is a revenue measure, and, under the Constitution, must
originate in the House of Representatives. If the Chair desires
argument, I can make an argument; but it is so patent that I feel
no argument is necessary.
The Presiding Officer: The Chair will state to the Senator from
Texas that the present occupant of the chair is always delighted to
hear arguments from the Senator from Texas, but, under the long-
established usage, practice and precedents of the Senate, a
constitutional point is not decided by the Chair, but is submitted
to the Senate, and the present occupant of the chair will follow
that practice. . . .(1)
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1. See Sec. 19.1, supra, for a discussion of authorities supporting
the principle that the Senate and not the Chair decides the
constitutional question relating to the prerogative of the
House.
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[[Page 1872]]
Mr. [Hiram W.] Johnson of California: Mr. President, I wish to
fortify, if I can, the position of the Senator from Arizona. . . .
The latest edition of the Constitution of the United States of
America, annotated--oh, it is a presumptuous thing to be referring
to the Constitution here--contains notes under the various
headings. I will read the notes for what they are worth. I shall
not attempt to comment upon them in any way, shape, form, or
manner. Other Senators can understand them as well as I can,
although they may understand them differently:
Sec. 7. All bills for raising revenue shall originate in
the House of Representatives; but the Senate may propose or
concur with amendments as on other bills.
The note says:
All bills for raising revenue: The construction of this
limitation is practically settled by the uniform action of
Congress confining it to bills to levy taxes in the strict
sense of the word, and it has not been understood to extend to
bills having some other legitimate and well defined general
purpose but which incidentally create revenue.
Under that particular text the following cases are cited:
United States v. Norton (91 U.S. 566) [1875], Twin City National
Bank v. Nebeker (167 U.S. 196) [1897], Millard v. Roberts (202 U.S.
429) [1906].
Amendments by Senate: It has been held within the power of
the Senate to remove from a revenue collection bill originating
in the House a plan of inheritance taxation and substitute
therefor a corporation tax.
The following cases are cited: Flint v. Stone Tracy Co. (220
U.S. 107) [1911], Rainey v. United States (232 U.S. 310) [1914].
That is all.
Mr. Connally: Mr. President, I have not had the opportunity to
read the decisions cited by the Senator from California; but there
is no difficulty in that regard. As I understand the rule and the
precedents, the language of the Constitution provides that all
bills for raising revenue shall originate in the House. However,
the Senate, of course, may amend them. When a revenue bill comes to
the Senate, the Senate is at liberty, if it desires, to adopt a new
tax which is not even contained in the House bill, because it has
complete legislative powers, except for the prohibition that it
shall not originate the bill.
If the doctrine asserted by Senators on the floor is sound,
then the Senate need never pay attention to the constitutional
provision about revenue measures, because when any bill comes over
from the House a Senator may offer on the floor of the Senate an
amendment cutting down the taxation, as this bill does, and say
that it does not raise any revenue, and is therefore in order. The
bill immediately becomes subject to amendment, and another Senator
may offer an amendment raising the revenue, or adding a new tax,
thus rendering absolutely nugatory the constitutional provision.
There was a reason for the constitutional provision that
revenue bills
[[Page 1873]]
should originate in the House. The theory was that the Members of
the House of Representatives are representatives of the people, and
that Senators are representatives of the States, formerly being
elected by the legislatures of the States. The old theory, upon
which the Revolution itself was founded, was that taxation without
representation was cause for revolution. Therefore, the makers of
the Constitution wisely provided that no tax should be laid upon
the backs of the people unless their Representatives in the House
of Representatives should propose the bill seeking to levy the tax;
but the Constitution says that when that bill comes to the Senate
the Senate may amend it, or change it, or do what it pleases with
it, once the House has opened the door.
We have before us a bill which did not even originate in the
House. The whole bill originated in the Senate. It is now proposed
to take off a tax. It does not make any difference whether the bill
raises or lowers the tax; it is still a revenue measure. It still
relates to the revenue. I could offer in a moment an amendment
raising the tax, instead of repealing the 3-cent tax, as is
proposed. I could offer an amendment to make it 5 cents. Such an
amendment would be in order. Then we should unquestionably have a
bill raising revenue.
Mr. President, we ought not to adopt the pending amendment. I
think everyone ought to know that it is violative of the spirit of
comity, good will, and respect for the prerogatives of the two
Houses. We ought not to add a revenue measure by a committee
amendment. . . .
The Presiding Officer: To the committee amendment the Senator
from Texas raised the point of order that the committee amendment
is itself a revenue measure and may not originate in the Senate.
The question now occurs, Is the committee amendment in order? Those
Senators who think it is in order will vote ``aye''; those who
think the point of order is well taken will vote ``no.''
Mr. [Alben W.] Barkley [of Kentucky]: Mr. President, a
parliamentary inquiry.
The Presiding Officer: The Senator will state it.
Mr. Barkley: Is not the question whether the point of order is
well taken, on which those who believe it well taken will vote
``aye''?
The Presiding Officer: The present occupant of the chair will
say that he entertains the same idea as that of the Senator from
Kentucky, but he submitted the question to the Parliamentarian, and
the Parliamentarian advised the occupant of the chair that the
better practice is to submit the question, ``Is the committee
amendment in order?'' Therefore, so that it may be understood, the
Chair will repeat the question, Is the committee amendment in
order? Those who think it is in order will vote ``aye,'' and those
who think it is not in order will vote ``no''. [Putting the
question.] By the sound, the ``noes'' appear to have it.
Mr. [Carl] Hayden [of Arizona]: Mr. President, I ask for a
division.
Mr. Harrison, Mr. Barkley, and Mr. La Follette called for the
yeas and nays.
The yeas and nays were ordered. . . .
The result was announced--yeas 8, nays 54, as follows: . . .
[[Page 1874]]
So the Senate decided the committee amendment to be out of
order.
Amendment to House Bill as Infringement
Sec. 19.4 The Senate sustained a point of order that a Senate amendment
to a House bill to repeal certain provisions relating to publicity
of certain statements of income invaded the constitutional
prerogative of the House to originate revenue-raising bills.
On Mar. 28, 1935,(2) the Senate by voice vote sustained
a point of order that a Senate amendment to H.R. 6359 invaded the
constitutional prerogative of the House to originate revenue-raising
bills.
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2. 79 Cong. Rec. 4583-87, 4613, 74th Cong. 1st Sess.
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The Senate resumed the consideration of the bill (H.R. 6359) to
repeal certain provisions relating to publicity of certain
statements of income.
The Vice President:(3) The question is on the
amendment offered by the Senator from Wisconsin [Mr. La Follette].
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3. John N. Garner (Tex.).
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The amendment offered by Mr. La Follette is after line 5 insert
a new section reading as follows:
Sec. 2. (a) Section 11 of the Revenue Act of 1934, relating
to the normal tax on individuals, is amended by striking out
``4 percent'' and inserting in lieu thereof ``6 percent.''
(b) Section 12(b) of the Revenue Act of 1934, relating to
rates of surtax, is amended to read as follows:
``(b) Rates of surtax: There shall be levied, collected,
and paid for each taxable year upon the surtax net income of
every individual a surtax as follows:
``Upon a surtax net income of $4,000 there shall be no
surtax; upon surtax net incomes in excess of $4,000 and not in
excess of $8,000, 6 percent of such excess. . . .''
Mr. [Pat] Harrison [of Mississippi]: Mr. President, I make a
point of order against the amendment offered by the Senator from
Wisconsin. I do not think I normally made it yesterday, because the
Senator from Wisconsin said he desired to make a brief statement.
He made that statement yesterday afternoon, and I now make the
point of order that the pending bill is not, in a strict sense, a
revenue bill, and that for the Senate to attach a tax proposal to
the bill at this time would be contrary to that provision of the
Constitution requiring all bills for raising revenue to originate
in the House of Representatives. . . .
Mr. President, I was of the opinion that perhaps the question
was so clear upon its face that it would require no argument to
convince anyone that we would be violating precedents and not
acting in accordance with the Constitution if we should attempt to
write a revenue amendment upon a bill which seeks merely to repeal
the ``pink slip'' provision of the law.
It will be noted that the title of House bill 6359 is ``To
repeal certain provisions relating to publicity of certain
statements of income.'' Those provisions deal solely with
administrative purposes and features of the existing
[[Page 1875]]
law; in no way, not by the wildest stretch of the imagination, can
they be construed to affect the raising of revenue.
Mr. Story, in section 880 of his works on the Constitution,
makes this statement with reference to the constitutional
provision:
What bills are properly ``bills for raising revenue'', in
the sense of the Constitution, has been matter of some
discussion. A learned commentator supposes that every bill
which indirectly or consequently may raise revenue is, within
the sense of the Constitution, a revenue bill. He therefore
thinks that the bills for establishing the post office and the
mint, and regulating the value of foreign coin, belong to this
class, and ought not to have originated--as in fact they did--
in the Senate. But the principal construction of the
Constitution has been against his opinion. And, indeed, the
history of the origin of the power already suggested abundantly
proves that it has been confined to bills to levy taxes in the
strict sense of the words, and has not been understood to
extend to bills for other purposes, which may incidentally
create revenue. No one supposes that a bill to sell any of the
public lands, or to sell public stock, is a bill to raise
revenue, in the sense of the Constitution. Much less would a
bill be so deemed which merely regulated the value of foreign
or domestic coins, or authorized a discharge of insolvent
debtors upon assignments of their estates to the United States,
giving a priority of payment to the United States in cases of
insolvency, although all of them might incidentally bring
revenue into the Treasury.
In one of the most important cases decided by the courts of the
United States, the case of Twin City Bank v. Nebeker (167 U.S. 202)
[1897], the court said:
The case is not one that requires either an extended
examination of precedents, or a full discussion as to the
meaning of the words in the Constitution, ``bills for raising
revenue.'' What bills belong to that class is a question of
such magnitude and importance that it is the part of wisdom not
to attempt, by any general statement, to cover every possible
phase of the subject. It is sufficient in the present case to
say that an act of Congress providing a national currency
secured by a pledge of bonds of the United States and which, in
the furtherance of that object, and also to meet the expenses
attending the execution of the act, imposed a tax on the notes
in circulation of the banking associations organized under the
statute, is clearly not a revenue bill which the Constitution
declares must orginate in the House of Representatives. Mr.
Justice Story has well said that the practical construction of
the Constitution and the history of the origin of the
constitutional provision in question proves that revenue bills
are those that levy taxes in the strict sense of the word, and
are not bills for other purposes which may incidentally create
revenue (1 Story on Constitution, sec. 880). The main purpose
that Congress had in view was to provide a national currency
based upon United States bonds, and to that end it was deemed
wise to impose the tax in question.
Throughout the decisions the same construction of the
constitutional provision has been given by the courts.
I desire to cite a few precedents relative to what has been
done with reference to bills which originated in the House which
were not revenue bills, upon which some revenue amendment was
tacked by the Senate, and the House later refused to accept the
amendment, returning the bill to the Senate.
[[Page 1876]]
In the Sixty-fourth Congress, second session, February, March
1917, the Senate added an amendment to the naval appropriation bill
(H.R. 20632) authorizing the Secretary of the Treasury to borrow
certain sums on the credit of the United States and to prepare and
issue bonds therefor (proposed by Mr. Swanson).
The House, on March 2, 1917, returned the bill and amendment to
the Senate with the statement that it contravened the first clause
of section 7 of article I of the Constitution and was an
infringement of the privileges of the House.
The Senate subsequently reconsidered the vote on the passage
and engrossment of the bill and amendments, and a motion was agreed
to whereby the amendment providing for the bond issue was stricken
from the bill. . . .
On June 30, 1864,(4) the bill (H.R. 549) further to
regulate and provide for the enrolling and calling out of the
national forces was passed by the Senate with an amendment, among
others, providing for a 5-percent duty on incomes. The House
ordered the bill returned to the Senate with the statement that the
amendment in question contravened the first clause of section 7 of
article I of the Constitution and was an infringement of the
privileges of the House.
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4. This instance is discussed at 2 Hinds' Precedents Sec. 1486.
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The Senate on the same day reconsidered the bill and eliminated
the objectionable amendment.
Mr. President, so it goes on down the line. I submit that the
bill now before us, which deals solely with the repeal of an
administrative provision of law, namely, the pink-slip provision,
affects in no way the revenues of the Government.
Mr. Justice Story and the courts say a bill must go further
than incidentally to affect the revenues of the Government and must
deal directly with the revenues before the Senate may take
cognizance to the extent of adding revenue provisions.
It seems to me it is without question that the Senate ought to
sustain the point of order, if submitted, or, if the Chair desires
to rule without submitting the question to the Senate, he should
sustain the point of order. Certainly the Senate of the United
States ought not to assume, in view of the provision of the
Constitution to which I have invited attention, the privilege and
the right of writing a revenue bill in this way.
Sooner or later at the present session of Congress we may be
forced to consider a revenue bill which might have a tendency to
increase taxes or to extend the application of those taxes which by
operation of law would otherwise lapse on June 30. Certainly, when
that time comes the House ought to be given its privilege and
right, which it has always exercised, to construct its own revenue
bill without the Senate assuming in the beginning to write a
revenue bill and send it to the House. I think the House would have
just cause to feel it was an abuse of their privilege, and, so far
as I am concerned, I am not willing to go that far. Therefore, I
have made the point of order. . . .
The Vice President: The point of order is well taken. The Chair
is ready to rule.
[[Page 1877]]
The present occupant of the chair has at no time declined to
construe the rules of the Senate; and if this were a matter of the
rules of the Senate, he would not hesitate for a moment to express
his opinion about it and make a ruling. . . .(5)
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5. See Sec. 19.1, supra, for the full text of the ruling regarding the
submission of the question for decision by the Senate on
constitutional issues.
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The . . . Chair is going to follow a long line of precedents
and submit to the Senate the question whether or not it is
constitutional for the Senate to propose this amendment; and it
occurs to the Chair that the only question involved is, Is this a
bill to raise revenue? . . .
Mr. [William E.] Borah [of Idaho]: Mr. President, must that
question be determined without debate?
Mr. [Huey P.] Long [of Louisiana]: No; it is subject to debate.
After debate, and other proceedings, the following occurred:
Mr. Harrison: Mr. President, I ask for a vote on the point of
order raised by me.
The Presiding Officer: (6) The question is, Shall
the Senate sustain the point of order raised by the Senator from
Mississippi [Mr. Harrison] against the amendment proposed by the
Senator from Wisconsin [Mr. La Follette] on the ground that it
contravenes the constitutional provision? [Putting the question.]
The ``ayes'' have it, and the point of order is sustained.
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6. Harry S Truman (Mo.).
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Deletion of Tariff Schedule Amendments
Sec. 19.5 After the House returned a Senate bill containing a provision
which infringed upon the constitutional power of the House to
originate revenue measures, the Senate, by unanimous consent,
reconsidered the vote by which the bill had passed, adopted an
amendment deleting the objectionable provision, and then passed the
bill as so amended.
On May 4, 1971,(7) the Senate reconsidered the vote
on S. 860, deleted title 4, a tariff schedule which contravened the
prerogatives of the House, and passed the bill as so amended.
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7. 117 Cong. Rec. 13273, 92d Cong 1st Sess.
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Mr. [Michael J.] Mansfield [of Montana]: Mr. President, I ask
that the Chair lay before the Senate a message from the House on S.
860.
The President pro tempore laid before the Senate a message from
the House of Representatives that the bill of the Senate (S. 860)
relating to the Trust Territory of the Pacific Islands in the
opinion of this House contravenes the first clause of the seventh
section of the first article of the Constitution of the United
States, and is an infringement of the privileges of this House, and
that the said bill be respectfully returned to the Senate with a
message communicating this resolution.(8)
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8. See Sec. 15.6, supra, for House disposition of this matter.
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Mr. Mansfield: Mr. President, I ask unanimous consent that the
Senate re
[[Page 1878]]
consider the vote by which S. 860 was passed, together with third
reading.
The President Pro Tempore: (9~) Is there objection?
Without objection, it is so ordered. The bill is open to amendment.
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9. Allen J. Ellender (La.).
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Mr. Mansfield: Mr. President, I send to the desk an amendment
to strike title 4 of the bill.
The President Pro Tempore: The amendment will be stated.
The amendment was read, as follows:
Beginning on page 15, line 1, strike all language through
line 10, page 17.
The President Pro Tempore: The question is on agreeing to the
amendment of the Senator from Montana (Mr. Mansfield).
The amendment was agreed to.
The President Pro Tempore: The bill is open to further
amendment. If there be no further amendment to be proposed, the
question is on the engrossment and third reading of the bill.
The bill (S. 860) was ordered to be engrossed for a third
reading, was read the third time, and passed.
Withdrawal of Internal Revenue Code Amendments
Sec. 19.6 Amendments to the Internal Revenue Code, incorporated in a
Senate bill designed to make equity capital and long-term credit
more readily available for small business concerns, were on motion
deleted from the bill during debate.
On June 9, 1958,(10) the Chairman of the Committee
on Banking and Currency, J. William Fulbright, of Arkansas, moved
to delete proposed amendments to the Internal Revenue Code from S.
3651, a bill to make equity capital and long-term credit more
readily available for small business concerns.
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10. 104 Cong. Rec. 10525-27, 85th Cong. 2d Sess. See also Sec. 19.2,
supra, for a precedent relating to committee jurisdiction of
this bill.
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Mr. [John J.] Williams [of Delaware]: I now make the point of
order on the ground that it is not constitutional for the Senate to
originate revenue measures. Certainly this point of order should be
sustained. I suggest the absence of a quorum.
The clerk proceeded to call the roll. . . .
The Presiding Officer:(11) A quorum is present. The
Senator from Delaware has raised a point of order that the bill is
not constitutional in its tax provision at page 50. . . .
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11. William Proxmire (Wis.).
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. . . Does the Senator from Delaware wish to make an
observation?
Mr. Williams: I understand the Committee on Banking and
Currency has decided that it will withdraw the disputed section of
the bill, and strike it out. With that understanding I withdraw my
point of order.
Mr. [Homer E.] Capehart [of Indiana]: Mr. President, will the
Senator yield?
Mr. Williams: I yield.
Mr. Capehart: As I understand, the Senator from Delaware is
withdrawing his point of order, with the under
[[Page 1879]]
standing that the complete section will be taken out. . . .
Mr. Williams: Mr. President, I withdraw the point of order. . .
.
The Presiding Officer: Will the Senator from Arkansas inform
the Chair how much of the language he wishes to have stricken? . .
.
Mr. Fulbright: All the tax provisions which are involved in
this matter are included in section 308, beginning at page 50, and
continuing to section 309. That is the part which, as the manager
of the bill, I ask to have stricken.
Mr. [Joseph S.] Clark [of Pennsylvania]: And that the
subsequent sections be renumbered.
Mr. Fulbright: Yes. . . .
The Presiding Officer: The question is on agreeing to the
motion of the Senator from Arkansas [Mr. Fulbright] to strike out
section 308, beginning in line 10, on page 50, and down to and
including line 17, on page 52.
The motion was agreed to.
Parliamentarian's Note: The portion of the bill, relating to the
Internal Revenue Code, which was stricken by the Senate, was as
follows:
Tax Provisions
Sec. 308. (a) Section 165 of the Internal Revenue Code of 1954
(relating to deduction for losses) is amended by adding at the end
of subsection (h) the following new paragraphs:
``(3) For special rule for losses on stock in a small business
investment company, see section 1242.
``(4) For special rule for losses of a small business
investment company, see section 1243.''
(b) Subchapter P of the Internal Revenue Code of 1954 is
amended by adding at the end thereof the following new sections:
``Sec. 1242. Losses on small business investment company stock.
``In the case of a taxpayer if--
``(1) A loss is on stock in a small business investment company
operating under the Small Business Investment Act of 1958, and
``(2) Such loss would (but for this section) be treated as a
loss from the sale or exchange of a capital asset, then such loss
shall be treated as a loss from the sale or exchange of an asset
which is not a capital asset.
``Sec. 1243. Loss of small business investment company.
``In the case of a small business investment company, if--
``(1) A loss is on convertible debentures (including stock
received pursuant to the conversion privilege) acquired pursuant to
section 304 of the Small Business Investment Act of 1958, and
``(2) Such loss would (but for this section) be treated as a
loss from the sale or exchange of a capital asset, then such loss
shall be treated as a loss from the sale or exchange of an asset
which is not a capital asset.''
(c) Section 243 of the Internal Revenue Code of 1954 (relating
to dividends received by corporations) is amended as follows:
(1) by striking from subsection (a) the following language ``In
the case of a corporation'' and inserting in lieu thereof the
following language ``In the case of a corporation (other than a
small business investment company operating under the Small
Business Investment Act of 1958)''.
[[Page 1880]]
(2) By adding at the end thereof the following new subsection:
``(c) Small business investment company. In the case of a small
business investment company, there shall be allowed as a deduction
an amount equal to 100 percent of the amount received as dividends
(other than dividends described in paragraph (1) of section 244,
relating to dividends on preferred stock of a public utility) from
a domestic corporation which is subject to taxation under this
chapter.''
(d) Section 246(b)(1) of the Internal Revenue Code of 1954
(relating to limitation on aggregate amount of deductions for
dividends received) is amended by striking ``243'' wherever
appearing and inserting in lieu thereof ``243 (a) and (b)''.