New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-02-23
TA1ATION or COMPUTATIONS.
TO TEST A PENNSYLVANIA LAW.

tube OF THE INTERESTS INVOLVED.
fFRoM SPECIAL CORRESPONDENT OF THE TRIBUSE.l
U,RRIsBURG. Penn. Feb. pa test case
that ia looked forward TO with great deal OF interest
especially by persons owning stock in foreign corpora
tons doing business in Pennsylvania, comes up In the
Common Pleas Court here tomorrow The question at Is
sue is whether foreign corporations doing busneSsn this
State are taxable here ON the entire amount of their
capital stock irrespective of the fact to whether any
of it is owned permanently invested In the state
The law under which the suit Is brought by the Com
mon wealth il like that enacted by the Legislature of the
State OF New-YOrk I'm 1850 and amended in 1881 and
known MS the Corporation Tax law copy OF this act Is
now before the Legislature of New-Jersey, ana VIII
probably be passed this session, that tho decision
reached in this case will be OF equal interest in all three
States while It may affect less nearly All the
principal corporations in the country as well as those Oh
foreign nations doing business in the United States A
great many corporations have moved out OF THIS state TO
escape taxation because Of the injustice and inequality
OF the tax laws Camden, N j., and Wilmington
Del, have largely been built up in this way. A
commission appointed in part by the last Legislature
md in part by the Governor Is in session here TO
revise the tax laws OF the State in order to modify the
burdens imposed on manufacturing companies and
Others
In speaking on this subject to-day Attorncy-General
Palmer said that the Singer Sewing Machine Company
had ceased to business in the State, because 1t would
not pay it's entire capital stock Of F6OOOOoo
asserting that It was already taxed in the State from
which it its franchise. The law under which the
tax sought imposed passed in 1865 and the
section under which all the trouble has arisen IA FOL
lows
"The capital stock of all dompanies whatever
incorporated by OF under any law OF this
Commonwealth or inccrpora ted by any other State and
lawfully doing business in this Commonwealth, shall be
subject to pay tax into the treasury OF the Common
wealth annually at the OF one-haf mill for each
per cent of dividend made declared by such company
and in case Of no dividend being made declared by
sucb company then three mills upon valuation Of the
same made in accordance with the second section Of this
act"
IL was the uniform custom until last year to tax
only properly within The jurisdiction Of the State and
for eleven years the authorities construed tie
act Last year. just before the close of his term Audi
torGeaera Sche took the ground that the entire capt
ta stock OF foreign corporation doing business in this
state was taxable and not simply that portion used
in business i'm the and which the State had
Jurisdiction. Under this construction he made what Is
technically callod settlement" against number Of
corporations Of other states, claiming for the Common
wealth back taxes with interest and penalties on the eli
tire amount Of the capital stock of such companies SINCE
tho passage Of tie act in 1868. OF course the companies
resisted hence the great interest which centres in the
test case which comes up for trial at this term OF tie
court. This case against the standard Oil Company,
an Ohio corporation. and the amount claimed by Audlor
schel "a due to the Commonwealth from this one com
pany was s. 1911, with interest from the time he
made this "setileIuent" or computation.
one case Of the kind has already been tried, that
against the Gloucester Ferry Company, NewJersoy
cornorati,n In the lower cOurt II decided against
the State but upon appeal TO the supreme Court, two OF
the three judges sitting decidedn favor OF the Ommon
wcalth which recovered back and penalties from
the ear 1868 to 1851. That was stated case now
ever only one point being submitted to the decision OF
the couIas TO whether Che company did business in the
ConmonyCath received for the years loG5, 1866
end 1867 under "a law that not passed until 1865
the ass, ,suents made for those three years
but as the amount had been agreed upon
i'm the stated case" il bad no data with which 10 make
IA mod iication As the circumstances were uhielehl
and all tie points not submitted To the decision or
Court in that case 1t is N no wise regarded as test
''' The suit against the Standard Oh Company
With unusual interest. Attorney General Pal
mcr aided by two assistants, will appear
eminent counsel have been engaged on the other SIDE
Testimony to be offered by the defence from exGoy-
eruor Uaitranft eX-COntrolcr WadswOrrh OF NewN1ra
x-Auditu-tieneral Harrison Allen, Insurance Commits
sioucr Forster and Otnrrs, As showing the c0nsucton
Ry tine States of PennsS lvania and New
York. If the cour,s sustain the new
A. VIZ MN az t Golfer. of ire STATE for back r. yes
yding IT can be collected The Western III ION Tee-
graph Company, for instance, would nave o. pay TAX
here On IFS entire capital stock OF FSOOOOOOO the New
cpitdl of s6OOOOJ0; tn Delaware ana Hudson cana
Company on its capital Of Tl0OOOCOO; the Newton
CruTol ard Hudson River Railroad Company on its en-
tire capital stock IA its cars run through the state the
Wagner and Pullman Car Companies, the express com
companies in the country All the great manu-
featuring companies TINT come TO rfnmsy wanna W. VA
liable on their entire capital stock IN" tommonwe1th
80 Tsnnsiyauiq mi ht thus be kcned the Giant Grim
i'm Runyan5 dream, prcyiug upon passing pilgrims III
rctaaory conditions were imposed by other States upon
corpora ions chartered b. TINS STATE thty "Oula nave 10
fI,.fr ,faly a
York coustrue the law the same way, there would be
music among the dry bones Of the mining companies ana
tbc hundreds Of corporations that escape taxation
altogrIileI, Stnte n ia moi known how Coptrnller
i,oenl art will cOnstrue The law, but letter from
controller WadswOrtn, which is among the printed eyi-
ece in the shows that he construed ne law Ia me
came XnV that the Pennsylvania authorities did for
loyen years or up the last day of Auditor Scheus
term when, democratic candidate for Governor he
attempted 10 nuke p"rty caP'u ~ Colh5 ou' "o1'S'
In order to save long delay and bruS this to
ATTORNEY Geueral with ali the data concerning its bust
ness and with verified copies Of its important books, al
~ which are kept In Cleveland. Ohio, and NewI YORK
I'm this way agreement as to facts las been reached,
from which appears that should the courts sus,
tain the ate authorities the amount due from the OH
cnuuauy should he less than tl,OO0OO0 and not, rs
claimed by the state Auditor than three times that
m c submit cd the decision of two judges vii uout me
Intervention Of jury. From the agreement OF facts II
Ter from the state OF OHIO, whore IL is taxed and II mas
never received any authority from The STATE Of Pens
Tor tlir tAuhraClloh VI my w iNo'
owns reneTics III Ohio and New-Jersey, but purchases
large quantities u crude oil IN Pennsy wanna Iol snip
ment 10 s renucres. Nearly the entire stock OF tAe
company Is owned outside OF the state of Pennsy ANA
The capital stock was originally Tl,OOOOOO but "
was increased IN 1872 10 @2,5OO,O0O ana III
iST5 To $50 100000 The nominal capital on which Giyi
drnds have been declared has remained at S3,5OCOOO
nut lie actual capital a. measured by the dividends and
on NJ Inch tie state scek6 10 recover tax, amounts TO up
ward Of S25OO0OOO The holders OF the shares 81 Tn,
: nudard Company also holders 10 large extent 81
ue sLures of assO,iaors aud joint stock partntrahP
JI busuess Pcunsy lyguia and IN other states and
by virtue these purchases the business ol thtsS
companies Wua, 30 80 admitted, LaitHOul4ed Viii
f,, bu.ileH4 Of the defendant, and Was Is
som, At.ut managed and controlled by those cOutohhs
mo standard O Company Tue property Of thc-e cor
unriiru- however, hn- be taxed clch year as othe
ti ar rop, ry taxed Ia thu state, and during th
Lt covered by the suit 100000 paid 10 the Stat
ia taAtr in This way. ,
Tie hamounns " business explains how 10 was IA