The Washington herald., 1909-06-26
Corporate Taxation and Supervision.

/ Corporate Taxation and Supervision.
President Tafts plan Of employing a
tax on corporations as a means Of en-
forcing certain requirements relating 10
lpublcity OF corporate affairs. thus taking
tine first step toward Federal supervision
of corporations. recalls the recOmmenda-
tons Of the Industrial Commission on the
taxation OF corporations. wherein the sub
Iject of taxation was considered in con-
nection with regulation OF corporations
and the mitigation Of monopolistic evils.
That 10 two objects might very well be
sought in cc1junction had been suggest
ed by students of public finance. notably
( by Henry c. Adams. the statistician
Of the Interstate Commerce Commission,
who long ago pointed out that the con-
! troll Of corporations and their taxation
might be reasonably expected TO work to-
gether. The idea is, Of course. simply a
development Of the commonly accepted
doctrine that the taxing power OF govern
ments may be used not only for fiscal
purposes. but also to attain any othsr
desirable end within governmental corn
petence. II corporations may be taxed.
the tax may be made the means Of regu-
lation or control so far as that may be
necessary equitably TO levy the impost.
This is what Mr.. Taft proposes. and
there is no doubt that the proposal is both
hscally and economically sound.
The members Of the Industrial Comnis-
sion thought it would be competent for
Congress. in the exercise Of its undoubt-
ed power over interstate commerce. TO
levy a franchise tax on corporations en-
gagged in interstate commerce. It is clear.
they say. that the power TO regulate in
terstate commerce may be used for the
purpose Of raising revenue. and incident
ally for the purpose Of preventing any
injury TO the public" Congress may,
therefore. in addition 70 levying tax.
impose conditions which would prevent
many corporate abuses. In the collection
Of information requisite for the impo-
sition Of the tax, the government would
Of necessity be compelled TO demand de-
tailed annual reports showing the nature
and extent Of corporate business. as well
as the capital stock. bonded al other
Indebtedness, and the profits and losses.
Of the corporations taxed That this en-
forced disclosure OF affairs heretofore
shrouded in secrecy. even though the re-
ports should not be made public. would
exercise a deterrent effect upon corpo- /
rate rascality was the judgment Of the
Mr.. Taft evidently holds a
Ike view as 10 the efficacy Of corporate
reports 20 the government
The Presidents plan differs in an i'm /
Portant particular from that Of the In
dustrial Commission. Mr.. Taft includes
in his excise tax on net incomes all cor
porations, whereas the commissions idea
was to impose tax only on corporations
doing an interstate business. It may be /
added that. in this respect. Mr.. Tafts /
plan differs from all that have hereto I
fore been brought forward looking 10 the 4
Federal supervision OF corporations. IF /
now. By q perfectly legitimate and eRec- /
tive system Of taxation" says the Presi- I
dent in his recent message, I'VE are Incl (
dentally able 10 possess the government /
and the stockholders and the public OF
the knowledge Of the real business trans
actions and the gains and profits Of every
in the country. we have made
a long step toward that supervisory con-
troll Of corporations which may prevent
a further abuse OF power" Federal su-
Of corporations. then. so far as
necessary for the purposes OF taxation.
10 the Taft plan. will extend
to every corporation IN the United States.
doing business wholly within the
Of a State or engaging In in
teTstate commerce.
Mr. Tafts plan is thus the most COM
prehensive scheme for corporation reru-
lation hitherto presented. and in adoptlnq
it the Finance Committee Of the Senate
puts itself In accord with the progress
sive. not TO say radical, sentiment Of
the land.