Watertown leader. [volume] (Watertown, Jefferson County, Wis.) 1909-1911, 1909-06-18

treasury to meet the present deficiency,
but by putting on the statute books a
law already there and never repealed,
Will simply be suggesting to the eXecu-
tive officers of the government their pos
sible 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 III
securing the approval of three-fourth Of
the states will destroy all chance OF
adopting the amendments, Of cOurses
no one can speak with certainty upon
this point, but | have become convinced
that great majority Of the people Of
this country are in favor of vesting the
naucna! government with power to levy
an income tax, and that they Will Sc
cure the adoption of the amendment in
the states, if proposed to them.
Second. the decision in the Pollock
case left power in the national govern
ment to levy an excise tax which accom-
plISheS the same purpose as a corpora
ton income tax. and is free from certain
objections urged to the proposed income
tax measure.
Recommends 2 Per Cent. Tax
Il therefore recommend an amendment
to the tariff bill imposing upon all cor
porati0ns and joint stock companies for
proht, except NATIONAL banks otherwise
taxed, savings banks, and building and
lodD associations, an excise tax meas
ured by per cent. on the net income of
such corporations. This is an excise tax
upon the privilege of doing business as
an artificial entity and of freedom from
a general partnership liability enjoyed
by those who own the stock.
am Informed that , per cent tax
OF tins character would bring into the
treasury of the United States not less
than $25.O00,000.
The decision of the supreme court in
the case of Spreckles Sugar Refining
company against McLain 092 Z. S. 800
seems clearly to establish the principle
that such Il tax as this is an excise tax
upon privilege and not direct tax on
property, and is within the federal power
without apportlonment according to pop
ulauon. The tax on net income is pref
cradle to one proportionate to a percent
age OF the gross receipts because it is a
tax upon success and not failure. 1t inn
poses a burden at the source of the in
come at time when the corporation is
We'll able to pay and when collection is
easy.
Means Federal Supervision.
Another merit of this tax is the fed
eral supervision which must be exercised
i'll order to make the law effective over
actions of all corporations. While the
faculty of assuming a corporate form
has been Of the utmost utility in the
business world, it is also true that sub
stantially all of the abuses and all of
the evils which have aroused the public
to the necessity of reform were made
possible by the use of this very faculty
If now by perfectly legitimate andt
effective system of taxation, we are in,
cidentally able to possess the govern-t
ment and the stockholders and the publics
of the knowledge of the real business
transactions and the gains and profits
of every corporation in the country. we
have made a long step toward that SUI,
pervisory control of corporations which,
may prevent a further abuse of power.
Il recommend, then first, the adoptiOn.
of a joint resolution by two-thirds OF
both houses, proposing to the states am
amendment to the constitution granting
to the federal government the right to-
levy and collect an income tax without
appOrtionment among the states accordt
ing to populations and, second, the eni
actments, as part of the pending revenueI
measure, either as substitute for OrI
i'll addition to, the inheritance tax, off
an excise tax upon all corporations;
measured by , per cent. of their net in
come
civilian II. TAFT