The Montgomery advertiser., 1909-06-17
'TAFT'S VIEWS
ON INCOME TAX
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repealed. win simply be suggesting to
the executive officers of the govern
ment their possible duty to invoke liti-
cation. II the court should maintain
its former view, no tax would be col
lected at all. II 1t should ultimately
reverse itself still no taxes would have
been collected until after protracted de-
lay.
1T is said the difficulty and delay in
securing the approval Of three-fourths
OF the states. will destroy all chance
of adopting the amendment. OF course
no one ban speak with the certainty on
his proposition. but have become con-
WINGED that a great majority of the
people of this country are in favor OF
vesting the government with power to
levy an income tax and that they will
secure the adoption Of the amendment
in the states II proposed to them.
''Second-The decision in the Pol
lock case left power in the national
government to levy an excise tax which
accomplishes the same purpose as
corporation income tax and Is free from
certain objections urged to the pro-
posed income tax measure.
81 therefore recommend an amend
ment to the tariff bill imposing upon
Gil COIQOIhllOnb anu JVAut SSoCA Will
panies for profit, except national banks
otherwise taxed) savings banks and
building end loan associations. an
excise tax measured by two per cent on
the net income Of such corporations.
This is an excise tax upon the privi-
lege of doing business as an artificial
entity and Of freedom from q general
partnership liability enjoyed by those
who own the stock.
&,.A4 kAAA n t~rrA Aw.N
tax of this character will bring into
the treasury of the United States not
less than s25.oo0,0o0.
'The decision of the Supreme Court
In the case OF the Spreckess Sugar Re
filming Company against Mclean 192
u. s. s97) seems clearly to establish the
principle that such tar as this is an
excise tax upon privilege. and not
direct tax on property and is within the
Federal power without apportionment
according to population. The tax on
net income Is preferable to one pro-
portionate to q percentage of the gross
receipts because Ii Is a tax upon sue
cess and not failure. II imposes q
burden at the source OF the income at
time when the corporation Is well
able to pay and when collection 10 easy.
Another merit Of this. tax 10 the
Federal supervision which must be
exercised in order to make the law eff
fective over the annna1 accounts and
business transactiona OF all corpora
tions. While the faculty Of assuming
la corporate form has been OF the utmost
utility In the business world, IT is also
true that substantially all of the abuses
and all of the evils which have aroused
the pubic to the necessity OF reform
were made possible by the use OF this
very faculty. II now, by a perfectly
legitimate and effective system of taxa
tion we are Incidentally able to pos
sess the government and the stock
holders and the public OF the knowledge
of the real business transactions and
the gains and profits of every corpora
ton in the country, We have made q
long step toward that supervisory
control of corporations which may pre-
vent a further abuse of power.
IT recommend then, first the adoption
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 income tax
without apportionment among the
states according to population; and
second, the enactment as part of the
pending revenue measure. either as
substitute for, or in addition to the In
heritance tax of an excise tax upon all
corporations measured by two per cent
of the net income.
(Signed) Wflliam H. Taft"
'The white House. June 1s, 1909"