The Daily Missoulian. [volume] (Missoula, Mont.) 1904-1961, 1909-09-22


their incomes by services. either by
making the rate less OF by not taking
the earned incomes at all. The latter
is the effect of the corporation tax.
Weak Point.
Another criticism of the corporation
tax i'm the present bill is that only
shares Of stock in corporate enter
prises are thus taxed. and that those
who own bonds secured by mortgage
upon the entire property or plant of
the corporation do not pay any tax
At ALL This is true and the defect
was fully recognized by those who
drafted tho corporation tax. They
would have been glad, II possible. to
impose tax upon the bondholders.
who are only less interested in the
earnings and success of the corpora
tons than are stockholders: but the
difficulty of including them and Of
collecting from the corporation before
the payment Of interest on the bonds
an income tax proportional TO "A per-
ccntage of the interest to be paid on
the bonds. was that congress could
not authorize Il corporation to recoup
itself i'm the payment of such tax
from the interest tn be paid. because
thus to impose a tax on the bond
holders proportional to the interest he
received would be i'm violation of the
constitution as interpreted by the SUI
preme court, As an income tax not
apportioned among the states. Now.
if the proposed amendment to the
constitution authorizing the imposi-
ton of an income tax without appor-
tioning ii among the states according
to population passes, il viii be posi-
BILE to add to our corporation tax the
feature of imposing a tax on the
bonded interests in that corporation
by a percentage tax upon interest to
be paid, thus reducing the amount of
/ interest which the corporation would
pay to the bondholders to the extent
of the tax collected. This would make
the corporation tax Il more beneficial
measure. and one reaching interests
that ought to be reached. because I'M
der modern systems of financing cor
porations the bondhoiders and stock
holders are all of them in sense
joint investors. and a corporation-in-
| come tax ought to include them all
Under the conditions that existed
with reference to the constitution it
seems to me clear that the corpora
ton tax is an equitable burden one
reaching active business. not SO heavy
as to retard 1t. but enough to collect
substantial revenue from those who
are successful in business.
/ Easily Collected.
fS Ia l,n
/ no corporation can escape-one I'm
! which perjury cannot play any i'm
| portant part at all in an effort to es-
/ cape 1t. Another feature of II is that.
/ incidentally, II will give the federal
/ government an opportunity to secure
/ most valuable information in respect
/ to the conduct of corporations. their
actual financial conditions. which they
/ are required to show in general terms
/ in Il public return. In addition, TIL.
! law provides that means under proper
/ limitations of investigating fully and
/ in detail their course of business.
/ This is to be done only after the
commissioner of internal revenue shall
have ascertained from evidence that
! their returns required by law are not
correct. Then the evidence which he
secures by his Investigations of books
/ and papers and examination of wit
! nesses is not to be made public, but
/ to be held i'm the secret archives of
I the government until the president
shall deem ii of public interest and
/ according to justice to make the facts
known.
! Up to this time we have no ade-
4 sfa tfS.tt.
| porations. Even the stockholders.
whatever their right may be to know
the course of business of corporations.
are generally in IA state of complete
i ignorance, and any instrumentality by
! which corporations shall be compelled
/ to disclose with accuracy general
statement of their conditions certainly
makes for the public good. Indirectly
! II would help very much In another
! revision, whenever that shall come.
] because corporations engaged in bust
ness said to be affected by the tariff
/ Will have upon record i'm Washington
their exact financial condition from
! year to year in the matter of their in
come, their expenditures and their
debts.
The Amendment.
Having said this much with respect
to the corporation tax as ii is. | wan,
to say few words in favor of the
passage OF the ineome-tax amendment
as proposed by congress to the states.
Assuming the constitutional authority
to have been given. | am opposed to a
general NEUTRALITY-SUSPICIOUS. tax law. ex-
! eept in times of great national stress.
i am opposed to ii because of the diff
ficulty already referred to, that IL
puts premium on perjury as to have
led other governments 10 abandon,
that method of leyying an income tax
and of imposing the tax whenever
possible ON the sources of income i'm
/ the hands Of those who are not ulti-
mately to pay it. The instance | have
already given of an increase of 100
per cent in the proceeds of the tax