Los Angeles herald., 1909-06-17
TAFT SUGGESTS
AMEND MENT FOR
TAV 0AI IAH0kAE
Ian yin HlVNVIvEL
PRESIDENT SENDS MESSAGE
TO CONGRESS
SPEAKS OF INABILITY OF soLoNs
TO AGREE
Reconnends Two Per Cent Assess
ment on Net Earnings of corpor-
ations and Joint Stock
Companies for Profits
,oont,nued from Page ono,

IN the lICQIl6 ldA CelSC9 0oRAANN0 49,
national government of a power which,
by reason of previous decisions of the
court, it was generally supposed the
government had. 1t is undoubtedly
power the national government ought
to have. 1t might be indispensable to
the nations life in great crises.
although / have not considered a
constitutional amendment as necessary
to the exercise Of certain phases of this
rover, a mature consideration has sat
isfied me that an amendment is the
only proper course for it's establishment
to it's full extent. I therefore recon-
mend to the congress that both houses,
by a two-thirds vote, shall propose an
amendment to the constitution confer
ring the power to levy an income tax
on the national government without
apportionment among the states In pro-
portion to population.
This course is much to. be preferred
to the one proposed of re-enactlng
law once iudicially declared to be un-
constitutional. For congress to assume
that the court will reverse itself, and
to enact legislation on such assumption,
will not strengthen popular confidence
in the stability of the judicial constitute
ton of the constitution. 1t is much
wiser policy to accept the constitution
and remedy the defect in due and regu-
lar course.
No Money to Be Brought In
again, it is clear that by the enact
ment of the proposed law the congress
will not be bringing money into the
treasury to meet the present deficiency,
hut by putting on the statute books
law already there and never repealed
will simply be suggesting to the execu-
tive officers of the government their
possible duty to invoke litigation.
IF the court should maintain its
former view, no tax would be collected
at all. If it should ultimately reverse
itself still no taxes would have been
collected until after protracted delay
1T is said the difficulty and delay i'll
securing the approval of three-fourths
of the states will destroy all chance of
ADOPTING the amendment. OF course
no one can speak with certainty on this
point, but have become convinced that
a great majority of the people of this
country are in favor of vesting the ma
tional government with power to levy
an income tax.
"Second-The decision in the Pollock
| case left power in the national govern
ment to levy an excise tax which ac-
| complshes the same purpose as a cor
poration income tax, and Is free from
| certain objections urged to the pro-
posed income measure.
Recommends Amendment
| az therefore recommend an amend
roent to the tariff bill imposing on all
corporations and joint stock companies
for profit, except national banks (other-
wise taxed savings banks and build
ing and loan societies, an income tax
measured by 2 per cent of the net IN
| come of such incomes. This is an ex-
| else tax on the privilege of doing BUSH
ress as an artificial entity and of free
dom from a general partnership napil-
.ty enjoyed by those who own inc
! stock
II am informed that a 2 per cent tax
of this character would bring into the
| treasury of the United States not less
! than $25, 100000
s'The decision Of the supreme court
in the case of the Spreckels Sugar Re-
fining company against McClalnn
! seems clearly to establish the fact that
| such a tax as this is an excise tax
/ on privilege and not direct tax on
property, and is within the federal
| power without apportionnent accord
| ing to population.
"The tax on net income is prefer
able to one proportionate to percent
age of the gross receipts, because 1t is
a tax on success and not failure. It
imposes a burden at the source of the
| income at a time when the corpora
ton is we'll able to pay and when
collection is easy.
To Make Law Effective
another merit of this tax is the
| federal supervision which must be ex-
ercised in order to make the law eff
fective over the annual accounts and
business transactions of all corpora
| lions. While the faculty of assuming a
| corporate form has been of the ut
most utility in the business world 1t
is also true, that substantially all of
the abuses and all of the evils which
| have aroused the public to the neces-
sity of reform were made possible by
the use of this faculty.
IF now, by a perfectly legitimate
and effective system of taxation, we
are incidentally able to possess the
| government and the stockholders, and
| the stockholders and the public
| knowledge of real business transactions
and the gains and profits of every
corporation in the country, we have
made a long step toward that super
visory control of corporations which
may prevent a further abuse of power.
81 recommend then, first, the adop-
tion of a Joint resolution by two-thirds
of both houses, proposing to the states
! an amendment to the constitution
granting to the federal government
| the right to levy and collect an in
come tax without apportionment
among the states according to popula
ton; and, second the enactment as
part of the pending revenue measure,
either as a substitute for or an addi-
ton to, the Inheritance tax, of an ex-
else tax upon all corporations, meas
ured by per cent of their net in
come. WILLIAM H. TAFT:
"The White House, June 16, 1909"
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One Body Not Recovered