Taxing Municipal Water Works Employes

Issue 13 and Volume 77.

Taxing Municipal Water Works Employes A case now pending in the United States Supreme Court on a writ of error—that of Metcalf vs. Mitchell— again brings to the fore the ruling of the solicitor of the internal revenue bureau that employees of a municipally owned water works are liable to the income tax, in spite of the fact that other municipal employees are exempt. The ruling is based on the assumption that the water works in supplying water to consumers for compensation ceases to be a governmental function of a city. This ruling is apparently retroactive and applies to all incomes of municipal employees engaged on nongovernmental functions earned back to the year 1918. The Metcalf & Eddy case has only an indirect bearing on the ruling of the solicitor as regards employees of water works. In fact the solicitor, in his opinion cites the decision of the United States…

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