New-York tribune., 1899-07-26
TAXATION FOR "TRTSTS."


While watching with judicial mind to see
proof whether this or that great corporation
does IN fact abuse it's power to the injury Of
the public thoughtful men are considering
with much care the remedies and the restraints
which it is possible 10 apply. They recognize
first that It is essential to avoid steps which
would harm all business, TO an extent tar IN
excess Of any injury done by some corpora
tIons. in the effort to stop them from doing
harm This throws out of all sober consldera
tion the various methods which make war on
all combinations of capital for industrial OF
trading purposes as if it were crime against
society to do such work for the public with the
lower cost and greater economy when large
capital makes possible. The power to cheapen
the cost TO consumers is by itself a blessing TO
all. The abuse Of power by increasing charges
while reducing cost is the precise offence Of
which society has a right to complain But 1t
&c the nrecise offence which 1t is at present
most difficult to prove.
The pover Of the Government to regulate all
corporations whose operations affect the con-
dltjons of life and of industry In different
States Is contained within the power TO regu-
late interstate commerce. On this ground alone
the Government has the clear right to require
verified returns of the business or all such
corporatiOns, as it does of the business OF rail-
roads. no matter by what State they may ne
chartered But there is greater ana more
far reaching power springing from the right 10
tax corporations which enjoy protecuon III
yauable franchises. The franchise gives
mowers which affect the people of various
States. so that the taxation may with proprlety
be by the General Government for the benefit
Of ol the people A tax not sufficient TO be op-
nressiye 10 any legitimate industry or trade
reasonably conducted, and covering only frac-
ton Of the benefits which a corporation claims
to derive from the use Of large capital under
its franchise, would be IN the hghesl sehSe
Just and reasonable
When the Government taxes II rightly re-
ouires returns showing the character and ex-
tent of the business subject TO taxation. If II
imposes a small tax upon the capital stock of
a corporation whose net earnings DO not eA-
Good n moderate percentage of the business
done and a higher tax on the capital or on the
business done in proportion as the ratio OF net
earnings increases It can practically tax ont
Of existence concerns which extort from the
nnblic unreasonable sums for the services rem
dered under franchises comforting highly val
liable powers To determine what taxation
is applicable in any case the Government may
REQUIRE regular verified statements of the bust
ness done, with all necessary fulness or detail.
If returns are refused or upon investigation
are found fraudulent higher tax can be i'm
posed as n penalty. The power to investigate
anv case of dispute can be conferred upon
nroner officials Of the Government, with as
strict obligations OF secrecy as in bank eXaml-
nations to prevent improper disclosure or pri-
yate business The returns could be as safely
guarded from disclosure or public Inspection
as returns under the internal revenue law or
the banking act. 1t should be the object to
nrotect completely every taxpayer making
honest returns from disclosure Of his affairs to
any rival.
The first effect Of such legislation would be
n determine what corporations are actually
abusing powers granted by their franchises.
Tho publication Of general results shown by
INV CORPORATION doing a highly profitable but
MT ovtortionate business would give its secur-
tiles a positive value which they could not
otherwise attain and the requirement Of regu-
lar sworn returns would go far to put an end
to the swndlng Of the public by false reports
about business done and dividends to he paid
because such misleading reports would at once
attract the notice of official examiners. The
next benefit. and one of Importance. would he
the raising Of a considerable revenue in return
for franchises granted by the people and pro-
tected by the Government Finally. In any
case OF continued extortionate use Of fran
chlses the Government would then have at
command all evidence necessary for voiding the
franchise But because the power would then
axist holders Of valuable franchises would be-
ware Of imperilling them by abuse.