The sun., 1909-05-04
INCOME TAX DISCUSSED
SENATOR BORAH DEFENDS
THAT FORM or TAXATION.

tutional-Dispute as to Whether Cor
- VoratiOns Pay Their Just Taxes.
-..WAsH1NoToN, May s.-The Senate
jumped promptly to-day from the con-
sideration Of the lumber duties to q dis
cussion Of the proposed income tax. After
Senator Piles Of Washing gton had talked
formore than three hours infavoIo main
tanning the Dingley law rate on humber to
protect the industry Of numbering in the
Pacific Coast States Senator Borah OF
Idaho. one OF the ablest Of the @progree-
sive' Republicans. devoted two hours to
discussing the income tax. He defended
that form Of taxation and raised a ques-
ton not only as to the soundness Of the
decision Of the Supreme Court in the Pol
lock case. holding the income tax law OF
1854 Unconstitutional. but characterized
the case as moot and questioned the
jurisdiction of the Supreme Court to
hear it.
In the course OF his speech Senator
Borah was questioned by Senator Root Of
New York, Senator Lodge Of Massaohu-
setts and Senator Beveridge OF Indiana.
Senator Lodge did not agree with MIR.
Borah's contention that the property OF
tbs country did not pay its just share Of
taxes. He insisted. that as u rule the
property Of the country bore the burden
oftaxation, especially Of State and munici-
pal taxes. He cited as an illustration the
city Of Boston. which had approximately
10000 legal voters and only 1900 tax
payers. -
Senator Borah retorted that the cor
porate wealth OF Boston was about 81 ,ooo,-
00aOoO. but that only $5oO,0oO OF it was
taxed Senator Lodge expressed much
surprise at this statement and later Sem
ator Borah corrected himself. saying that
he meant to say that s5oplopOooo worth
Of corporate property in Boston instead
OF $500 900 wass retained for taxation.
7 his sa tisfled Senator Lodge apparently
after S enator Borah had said that he got
hid figure from the report OF a Massachu-
setts State tax commission.
Senator Root interrupted to offer an
explanation of the apparent disparity
between the estimated corporate wealth
OF the States and the amount actually
returned for taxation. He said that cor
porations paid taxes on all their property
as corporations and that 1t would hardly
befair to subject the shareholders in such
corporations to taxation. again on the
shAres held in the aforesaid corpora tons.
To do 30 would be to impose double taxa
ton.
Il think that as rule the property Of
corporations does not escape taxauon.
said Mr.. Root
Senator Lodge confirmed Sena tor Roots
suggestions in regard to double taxation"
and expressed the opinion that in Massa-
chusetts the corporations paid their full
share Of the taxes. Under the laws OF
that State. he said, they could not well
escape making returns OF all kinds OF
property Of which they were possessed
and he added that Massachusetts, also
had An Inheritance tax and an income tax.
sSenator Borah retorted that the argu-'
nient' against an income tax, based on
the suggestion of double taxation" on
corporation wealth, was ancient. 1T is
the same argument which Massachusetts,
and New York have always employed
against an income tax" said Mr.. Borsh,
and he quoted from Charles Sumner and
Roscoe Conkling.
Replying to the suggestion that, the
wealth of the country represented by
ptoperty interests paid it's proportionate
ny Root that the records showed that
several estates in New York which were
probated had aggregated for purposes OF
probate $215 600 900, but for several years
Just prior to their admission to probate
had been taxed for only ss.0Oo,0Oo in the
aggregate.
The' Senator from Idaho was assisted
from time to time by Senator La Toilette
of Wisconsin. another progressive, who
sat directly in front OF him and who fire.
quentfy passed over columns OF references
and other information for Senator Borah's
use. ---
IN: the. early part Of his speech Sem
ator Borah quoted from a speech OF
the late Benjamin Harrison, in which he
made a general condemnation OF wealthy
persons who sought to evade their taxes
The citation apparently lnteres.ed re senator pnuah
as to the date OF the speech.
Senator Beyeridge then reminded his
colleague that the context OF the speech
showed that Gen. Harrison had en-
ployed the argument not to justify an
income tax law but to condemn persons
Senator Beveridge then read from the
speech made by Gen. Harrison at Carnegie
Hall in New YORK city in the campaign
Of 1895. in which lhe apparently con-
demned the Wilson-Gorman income tax
law.
Senator Bailey of Texas at this point !
ipterposed the suggestion that Oliver P.
Morton had advocated the retention OF
the income tax law after the close OF the
civil war while occupying seat in the
Senate from the State Of Indiana.
Senator Borah added the suggestion.
t0dt lie eAptCptu W NuOtc HUN pch
Harrison to show that he had questioned
the constitutional reasoning of the
Supreme Court Justices who declared
the income tax law unconstitutional.
Senator Borah. concluding his argu-
ment. said that he regarded it as unfor-
tunate that the United States Govern
ment played such relatively unimpor-
tant part in the hearing OF the arguments
on the constitutionality OF the income tax
law OF 1894. He recalled that the first case
was brought by former Senator Edmunds
OF Vermont in the courts Of the District
OF Columbia and that that able lawyer
had said in his brief that the United
States Supreme Court in the Hilton case
cited by Senator Bailey few days ago,
upholding the carriage tax law, had really
laid down the proposition that tax on
personal property was not direct tax.
The Senator read the names OF twenty
one Justices of the Supreme Court OF the
United States who had in successive de-
cisions by that court adopted the opinion
in the early case involving the carriage
tax.
Senator Borah said that the case in
volving the copstitutionality OF the law
OF 1894 finally got into the Supreme Court
in the form OF an application for injunc-
tfon brought by stockholders Of a cor
poration to enjoin the corporation from
paying the tax. Thus both parties to the
suit desired the court TO decide that the
law was unconstitutional. He said that
the part which the Government played
in the case was purely incidental and
that many OF the best lawyers in the
country had held to the view that the