The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-03-06
TESTING STOCK TRANSFER TAN.
Arguments for and Against Its Constitu.
tIouality Before the Court OF Appeals.
The 6howing is a translafion Of a Letter from
Pref Ltsehthzky jinn rtenivsd at ArSHan'HaH

ALBANY. March 5.-The Court Of Appeals
to-day heard arguments for and against
the constitutionality of the law taxing the
sale OF shares Of stock. 1t came before the
court on an appeal Of Albert Hatch Of Con-
necticut. arrested on June S last in New
York city for selling shares without the
required revenue stamp. He e~ndeavored
to secure release on a writ Of habeas corpus,
holding that the law was unconstitutional,
but the Supreme Court and the Appellate
Division decided in favor Of the validity
of the law,
JOHN q. Milburn and Judge John F. Dillon
appeared for Hatch, and Attorney General
Mayer, John r. Dos Passos and Assistant
District Attorney +. Crosby ~Kindelberger
for the people.
Five reasons we're presented by Mr..
Milburn and Judge Dillon why, in their
opinion, the law is unconstitutional.
First-That vi It selects from all OF the personal
property OF the State one species and taxes
its sales. this being an arbitrary dlscrlmina-
ton, the taking of property without due
process of law and in violation Of the equality
clause of the Fourteenth Amendment to the
Federal Constitution.
S~econd-Because the tax liz arbitrary
being two cents on each 500 OF the face
value Of the stock and does not take into its
consideration It's market or actual value.
Third-That II Ia q tax on property situated
without the State In 80 far as ii taxes the sale
| OF the stock of foreign corporations.
Fourth-That IL violates the Interstate
Commerce act In taking the sale of stock
| of non idle sent into this State TO be sold.
Flfth-That the bill being passed on April
8, 1904, and passed in the Assembly on April
5, IL was net en- the desks of the members of
.--, la tie Anal t-N f--x-
| before PAL sing the latter house.
Counsel then argued that the power Of
the Legislature to impose taxation is not
o~mnipotent, but is restricted by the State
| and the Federal Constitutions The bill is
discriminating in taking only the sale of
shares Of stock while the sale OF bonds and
| other instruments go untaxed. While Con-
gress might have the power to tax the sale
of shares OF stock, 1t is not possessed by the
| Legislature OF a State. The right of the
| living person to sell his property without
restriction is inherent. II the principle OF
this legislation we're TO hold, a tax could
be imposed on oil. cotton, grain and other
commod tiles, although the property was
never within the jurisdiction Of the State.
Attornev-Ge General Mayer made the areu-
ment in chief in support Of the law, urging
that the st OCk TRANSFER TAX law was con-
stitutional. He contended hat i was not
a property tax, but a transfer or excise tax,
and that the United States Supreme Court
in upholding the stock transfer tax Of the
war revenue act Of 1893 had settled the con-
s~titutionality of this tax upon this point.
In answer to the contention that the tax
singled out a special class OF transactions
and was confscatory, the Attorney General
showed that the predicted exodus Of stock
business from New York to other States
had not taken place, but that, on the CON
trary, the month Of January, 1905, showed
the largest dealings in stocks since the act
vent into effect. and had produced revenues
to the State OF over sell 900, and that the
total amount received by the State since
June last was over "a. $50, 900.
Hefurther argued that, under the modern
development of corporate business, shares of
stock had become a distinctive class of prop
erty, and that the State was entitled to tax
transfers of shares in order to raise revenue
for the support OF education. charities and
insane asylums, as we'll as for the general
expenses Of the State. He said that no
system OF taxation could be perfect, and
every tax must rest on some cldss OF prop
erty, but that this was probably the least
burdensome tax yet devised.
Assistant District Attorney Kindelberger
argued that the constitutional provision
that the bill must lie three days upon the
desks Of members had been fully complied
with, m John II. Dos Passes argued that
the act did not in any way violate the inter-
state commerce provision Of the Federal
Constitution.