The morning call., 1894-12-23
L lNS 4 OlNE FlLEO.
Suits to Test the Income
Tax.
JOHN c. MOORE'S PLANT.
Corporations, of Course, Do Not
Relish Paying
THEIR DOUBLE ASSESSMENTS.
Allegations That the Unpopular
Law Is Unjust and Not
Constitutional.
DOUBLE ASSESSMENTS.

of the New York banking firm of Moore &
Schley, applied to Judge Cole of the equity
branch OF the Supreme Court OF the Dis
trict of Columbia for an order restraining
John S. Miller. Commissioner of Internal
Revenue, from assessing and collecting the
Iax upon his income. This is only one of
a number OF legal attacks which will soon
be made upon the income tax. each suit
based on different grounds.
Mr.. Moors's complaint in detail sets out
his case under six heads and his prayers
under four. He represents:
First-That he is citizen of the United
States and of the State of New York. and
residing and doing business in the city of
New York. and brings this suit in his own
right.
Second-That the defendant, joseph S.
Miller, is also a citizen of the United
States. occupying and discharging the
duties of the Office of Commissioner of In
terpal Revenue, aud as such is sued.
Third-Tbat the complainant is share
holder in divers corporations existing and
doing business in the United States under
and by virtue of their respective acts of
incorporation, and which said corporations
have net earnings from which they pay
other stock holders. from which net earnings
there will be paid the complainant during
the year 1895 divers sums of money as
dividends.
Fourth-That independent Of and in
addition to these dividends the complain
ant has an income derived from the
gains and profits of his business and
embraced within sections q and IS of an
sct of Congress entitled Gan act to re-
ouce taxation, to provide for the Govern
ment and for other purposes" Che present
tariff act. which became law without
the approval of the President of the
United States, largely in excess of the
sum OF $4,000 per annum, and upon which
income, including the dividends before
mentioned, the present Commissioner of
Internal Revenue has threatened to and
unless restrained will proceed TO assess
the sum of 2 per cent on the amount of
the compliments income In excess of
$4,000 per anuum.
FIfth-The complainant further shows
by reference to section 30 of said act of
Congress that these corporations are also
required to pay tax of per cent ON their
net earnings without regard to any diVi-
dends paid out of said net earnings and by
sections 27 and IS of said act the COM
plainant is required to pay like tax upon
the said moneys sc paid to him as divi-
dends. thereby wrongfully duplicating the
tax on the complainant, and by reference
to section 81 of the act the complainant
shows to the court that said taxation is I'M
just and unequal, In that it discriminates
against complainant for the purpose of
taxation between persons who are citizens
of the United States and wholly sxempts
such persons from taxation as aforesaid
who have an income to any amount up tn
and in excess of the sum of $4,000 per
annum, and thereby your complainant and
all others in the same condition are denied
equal protection of the law.
Further, by reference to sections 81 and
28 it is shown to the court that there are
associated with the taxation of the citi-
Zens of the United States and subject to
the proposed taxation, and not seuarable
therefrom. the provisions that the persons
who are aliens, but who reside in the
United States, whether permanently or
only temporarily, shall likewise be subject
to the payment of the income tax, al
though such income is derived wholly
from rents, interests. dividends, salaries,
or vocation. carried on elsewhere than in
the United States. thus undertaking un-
lawfully and without authority to tax the
incomes of citizens of foreign countries
alien to the United States who have with
in the United States a temporary resi-
dence for temporary purposes, although in-
comes are derived wholly from sources not
within the jurisdiction of the United
States.
No exemption Is made 10 the act from
taxation of the incomes of corporations
within the United States. Of which there
are many, which although carried on for
profit are created, owned and operated by
the several States as Government instru-
ments in the promo ton of the police and
other public functions, which CORPORA
tions are not subject to taxation by the
United States. IL is also shown that
assessments are to be made upon the in
come of the complainant and others that
had been earned and received prior to the
time the provisions of the act took effect.
and that the said taxes are not within the
constitutional jurisdiction of Congress TO
impose.
Sixth-It is also alleged that the Com
missioner is taking steps to make an assess
ment against the complainant under the
act, and collect not only for the first years
income subjected to taxation, but also by
the requirements of the act for incomes
hereafter to arise yearly and con tinuously
until 1900. The Commissioner and his
subordinates are now taking necessary
steps TO make the assessments and collec-
tons of the income taxes. It is ayerred
that If the taxes are collected, although un-
lawful and unjust, the complainant would
have no remedy TO recover from the
United States. or only by long litigation.
rendering the remedy useless. The act. 1t
is charged. is invalid in the provisions so
imposing the income tax aud in such pro-
visions Is Institutional, imperative
and void; II the taxes are collected he
would be without adequate legal remedy
for redress of the Illegal collections In
view of the continuousness of the taxes
as provided, until January 1, 1900. Unless
restrained by the court, the complainant
as to the Illegal assessments will be sub
jected sto the harassment, expenses and