The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-03-08
IT HAS NO UNIFORMITY.
Lawyer Guthrie So Argues Be-
fore the Supreme
Court.
CERTAIN CONCERNS FAVORED.
Companies in New York Exempted
Purposely by the Wording Of
the Act.

WASHINGTON, March THE Supreme
Court did not reach the income-tax cases
until o'clock to-day, when w. D. Guthrie
was recognized to open the case for the ap-
pellants. He appeared especially for
Messrs. Pollock and Hyde, who appealed
their cases against the Farmers and Cont
mental Trust companies of New York from
the decision of the United States Court of
Appeals for the southern district of New
York. Mr.. Guthrie devoted himself to an
outline of the argument proposed to be
made by the counsel for the appellants and
had not concluded when the court at
o'clock adjourned for the day. He stated
they would depend principally upon show
ing that the present income-taX law was
unconstitutional because of its want of uni
formity, and quoted at length from the
provision OF the law to show that the tax
is not uniform, contending that Congress
had no right under the constitution to
levy tax for the duty, excise or import,
which was variable or lacking in uniform
ity as TO individuals and corporations, be-
cause it was the fundamental rule that
burdens in these respects should be equal
upon all.
Guthrie said the two cases against the
trust companies were very similar, but that
he would devote himself principally to the
Pollock case, because in that case the in
terests involved were greater than in the
other, but while this company conducts an
immense business its business is one which
might be carried on as we'll by private
partnership as by stock company, in
which case it would be exempt under the
laws from the income tax.
He said Pollock was a shareholder in
this company, the net income or profits of
which during the past year, subject to the
income tax. exceeds $780, 900, of which
$4,000 represents rents of real estate and
about 100000 investments in municipal
bonds, which latter investment could not
he claimed, be taxed under a former de-
cision of the Supreme Court. Guthrie
asserted that the provision of the law ex-
empting all incomes under $1,000 would
cause 1t to fall upon less than 2 per cent of
the population of the United States and
the law was therefore class legislation. He
also showed that the tax was not uniform
as regards corporations, of which favored
class were exempted, as, for instance,
mutual insurance companies and building
associations, as well as partnerships and
religious and benevolent institutions.
As to the exemption of churches, benev-
olent concerns, ETC., counsel would have
nothing to say, as there was enough in the
other exemptions in cases where the ex-
emptions were in the interest of share
holders, though called by another name
to afford sufficient text for all they could
say. AS illustrative of the effect of the
operation of the law he pointed out that an
individual owning real estate bringing an
income of $4,000 would pay $50 in taxes.
while a corporation would be required to
pay double that amount. He also in
stanced the case of a partnership of five
persons doing a business amounting to
$4,000 year which would be required to
pay no tax, while corporation composed
of the same persons would be compelled to
pay $500. In word, he said, the applica-
ton of the law would vary according to
ownership.
The corporation was only an aggregation
of individuals, and in most corporations
part at least, of the stock, was owned by
the middle classes. Guthrie dwelt upon
the exemption in the interest of the build
ing and loan associations, who were, he
said, relieved of the annual payment of
5000 900, and whose assets, it has been
ton of all the national banks. All men
would have TO do to evade the operations
of the law would be to organize building
and loan associations. He argued if the
present law should be held to be constitu-
tional, Congress could levy duty of 25 per
cent on the imports of individuals and of
so per cent of those of corporations, or if
the sentiment in Congress should change
it could as easily reverse the process and
favor the corporations. The principle
would be the same.
Referring TO the exemption made in the
interests OF mutual insurance companies
he asserted that in the United States there
were 1900 such companies and that of
these 1900 were doing business on the mu-
tual plan, and he said in New York alone
the wording of the act exempting such
companies would relieve thousand mil
lion dollars worth of property from.its op-
GRAFTON. The leading mutual insurance
company would secure the benefit of an
exemption on its income amounting to
100000 per year, while its rival, organized
on the stock plan, would have to pay its
income tax. This advantage was given in
the law, he asserted, simply because some
one wanted to favor some particular mu-
tual company.
Taking up the provision of the constltu-
ton requiring uniformity in levying i'm
ports, taxes, ETC., he refuted the argument
that the word uniformity was meant TO
have only geographical application to
prevent discriminating in favor of one
State as against another, but contended it
was meant to secure equality of taxation.
Guthrie will resume his argument at II
O'Clock tomorrow.