The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1884-01-09

sition would not have been q regulation OF
commerce with her sister states Yet 1t Is diff
cult to see any substantial difference between
the supposed case and the one In hand. Z.
We notice the position taken by the
defendants that the tax levied by this act,
instead OF being regulation OF commerce, Is
compensation for the use OF works constructed
under the authority Of the state and by virtue
Of franchises granted by the state.
We concede the right and power Of the state
to tax the franchises Of its corporations.
But this tax is not laid upon the franchises
G Ss n act y o Inc fhe tss way Dy
imposed upon freight carried by steamboat
companies whether incorporated by the state
or not, and whether exercising privileges
granted by the state or not . =. II then
| this Is q tax upon freight carried between the
| states, and n tax because OF Its transportation.
| and II such tax Is in effect regulation OF
| interstate commerce. the conclusion seems to
| be inevitable that II Is In conflict with the
constitution Of the United States"
In 1865 the legislature of Pennsylvania
passed an "Act to amend the revenue
laws of the commonwealth" imposing a
tax of threefourths of one per cent on the
gross receipts of certain corporations.
The Reading railroad company refused to
pay the tax assessed under this act, upon
that portion of the gross receipts derived
from transportation to or from points out.
| side the state, or through the state, al
leging that the act was in conflict with
those provisions of the national constitu-
ton relating to the regulation of inter-
state commerce. The state sued the com.
pany and the case came, Ultimately, be-
fore the United States supreme court
The court held that:
"U) A statute of a state imposing tax
upon gross receipts Is not repugnant to the
| constitution OF the United States, though the
| gross receipts are made up In part from freight
| received for transportation of merchandise
| from the state to another state, or into the
| state from another. (2) Such a; ak is not reg
ulation of interstate commerce. (3) Nor is it
| a tax upon imports or exports (4) Nor Is 1t a
| tax upon interstate commerce. (6) distinc-
ton is made between tax upon freghts car
| ried between states because of their carriage,
and tax upon the fruits of such transporta-
ton after they have become interminged with
the other property of the carrier"
In delivering the opinion of the court,
Justice Strong said:
"We have recently decided in another case
freight transported from state to state is not
subject to state taxation, because thus trans
ported. If, then, tax upon the gross receipts
of railroad is to be regarded as a
| tax upon interstate transportation, the ques-
| ton before us is already decided. The answer
which must be given to 1t depends upon the
prior question, whether tax upon gross re-
ceipts of transportation company is a tax
upon commerce, so far as that commerce con-
sists in moving goods or passengers across state
| In nuarx 'tav al
property, or upon occupations, business or fran
chses, affects more or less the subjects, and the
operations of commerce Yet it is not every
thing that affects commerce that amounts to a
regulation Of it, within the meaning of the
constitution. . We think 1t may safely be
asserted that the states have authority to tax
the estate, real and personal, of all the corpo-
ratons, including carrying companies, precisely
as they may tax similar property when belong
ing to natural persons, and to the same ex-
tent. We think also that such taxation may
be laid upon valuation, or may be an excise,
and that in exacting an excise tax from their
corporations, the states are not obliged to i'm.
pose fixed sum upon the franchises or upon
the value of them, but they may demand q
graduated contribution, proportioned either to
the value OF the privileges granted or to the
extent OF their exercise, or to the results OF
such exercise. No mode Of effecting this, and
no form of expression which has not a meaning
beyond this, can be regarded as violating the
CO0StlJuLlOn. power 10 TAX TO tnlS extent
may be essential to the healthy existence OF
the state governments, and the Federal const
tuition ought not to be so construed as tC
impair, much less destroy, anything that Ia
necessary to their efficient existence :. . Is
then, this tax upon gross receipts tax upor
freight transported into or out of, the state, OIL
upon the owner of freight, for the right of thus
transporting it? Certainly it is not directly
Very manifestly it is a tax upon the railroad
company, measured in amount by the extent
OF its business, or the degree to which its fran
chise Is exercised. That its ultimate effec
must be to increase the cost OF transportation
must be admitted. So 1t must be admitted tina
tax upon any article of personal property
that may become subject OF commerce, OF
upon any instrument of commerce, affects
commerce ITSELF . Still it liz not a tai
upon transportation, or upon commerce, and |
has never been seriously doubted that such
tax may be laid. . . The tax is not levied
, and, indeed such tax cannot be, until the ex
pration of each half year, and until the none,
received for freights, and from other sources o
income, has actually come into the company
hands. Then 1t has lost its distinctive charac
ter as freight earned, by having become incor
, porated into the general mass of the company
property While it must be conceded that
: tax upon interstate transportation is invalid
there seems to be no stronger reason for deny
ing the power of state to tax the fruits of suc
transportation after they have become inter
mingled with the general property of the car
rier, than there is for denying her power t.
3 tax goods which have been imported, afte
t their original packages have been broken, an
, after they have been mixed with the mass O
: personal property in the country. That such
3 tax Is not unwarranted is plain.
] Is not to be questioned that states may tax tn
! franchises of corporations created by them
l and that the tax may be proportional either t.
= the value Of the franchise granted or to the ex
3 tent Of its exercise. Nor Is it deniable that tn
I gross receipts may be measure of proximat
value, Or II not at least Of the extent of enjoy
ment. If the tax be, in fact, laid upon tn
, companies, adopting such measure impose
no greater burden upon any freight or bushes
from which the receipts come than woul
be an equal tax laid upon direct valuation @
the franchise. In both cases. the necessity o
( higher charges to meet the exaction is tn
1 same. Influenced by these considerations, W
q hold that the act Of the legislature of the stat
imposingia tax upon the plaintiffs in error equs
Q to three-fourths of one per cent of their gros
i receipts is not invalid because in conflict wit
Q the power OF congress to regulate commerce
among the states"
, These decisions were both rendered il
December, 1872. They are in harmon!
: with previous decisions in cases involvin
I : similar principles. The position of tn
I court on the question of state taxation O
5 corporations doubtless explains the acqui
. escenoe of the public carriers of the stat
. in the revenue law enacted in 1882. 1t