[Deschler's Precedents, Volume 3, Chapters 10 - 14]
[Chapter 13. Powers and Prerogatives of the House]
[C. House Prerogative to Originate Revenue Bills]
[Â§ 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.
---------------------------------------------------------------------------
 2. 79 Cong. Rec. 4583-87, 4613, 74th Cong. 1st Sess.
---------------------------------------------------------------------------

        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].
---------------------------------------------------------------------------
 3. John N. Garner (Tex.).
---------------------------------------------------------------------------

        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.
---------------------------------------------------------------------------
 4. This instance is discussed at 2 Hinds' Precedents Sec. 1486.
---------------------------------------------------------------------------

        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)
---------------------------------------------------------------------------
 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.
---------------------------------------------------------------------------

        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.
---------------------------------------------------------------------------
 6. Harry S Truman (Mo.).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------
 7. 117 Cong. Rec. 13273, 92d Cong 1st Sess.
---------------------------------------------------------------------------

        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)
---------------------------------------------------------------------------
 8. See Sec. 15.6, supra, for House disposition of this matter.
---------------------------------------------------------------------------

        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.
---------------------------------------------------------------------------
 9. Allen J. Ellender (La.).
---------------------------------------------------------------------------

        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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------

        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. . . .
---------------------------------------------------------------------------
11. William Proxmire (Wis.).
---------------------------------------------------------------------------

        . . . 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)''.