The Birmingham age-herald., 1909-06-17
Recommendation Is Made For
 Tax on Corporations
TAX DISCUSSED
President Recommends That Amend n1ent Be Made to the Constitu-
 ton Providing For Tax On
 Incomes of the Wealthy.

sage upon the subject of a tax on net earnings of corporations and an income tax amendment to the constitution:
 "To the Senate and House of Represen-
 tatives:
 Tt is the constitutional duty of the President from time to time to recom- mend to the consideration of Congress such measures as he shall judge neces- sary and expedient. In my inaugural ad dress, immediately preceding this extra ordinary session of Congress. I invited at tention to the necessity for revision Of the tariff at this session and stated the principles upon which l thought the re- vision should be effected. I referred to the then rapidly increasing deficit and pointed out the obligation on the part of the framers of the tariff bill to arrange the duty so as to secure an adequate in ccme, and suggested that if it was not possible to do so by import duties new kinds of taxations must be adopted, and among them I recommended a graduated inheritance tax as correct in principle and as certain and easy of collection. The House of Representatives has adopted the suggestion and has provided in the bill it passed for the collection of such tax. In the Senate the action of it's finance committee and the course of the debate indicate that it may not agree to this provision, and 1t is now proposed to make up the deficit by the imposition of a gen. eral income tax in form and substance of almost exactly the same character as that which, in the case of Pollock vs. Farmers Loan and Trust company (L 57, U. s. 429) was held by the supreme court to be a direct tax and therefore not with in the power of the federal government to impose unless apportioned among the several states according to population. This new proposal, which I did not dis cuss in my inaugural address, or in my message at the opening of the present session, makes it appropriate for me to submit to the Congress certain additional recommendations.
 Income Tax Decision.
 'The decision of the supreme court in the income tax cases deprived the national government of power which by reason of previous decisions of the court it was generally supposed the government had. It is undoubtedly a power the national government ought to have. It might be indispensable to the nations life in a great crisis. Although I have not con- sidered constitutional amendment as necessary to the exercise of certain phases of this power, a mature consd eration has satisfied me that an amend ment is the only proper course for it's es- tablishment to its full extent. I therefore recommend to the Congress that both houses by two-thirds vote shall propose an amendment to the constitution confer ring the power to levy an income tax upon the national government without ap- portionment among the states in propor- ton according to population.
 This course is much to be preferred to the one proposed to enact a law once judicially declared to be unconstitutional. For the Congress to assume that the court will reverse itself and to enact legisla- ton on such grounds will not strengthen popular confidence in the stability of judicial construction of the constitution. It Is much wiser a policy to accept the decision and remedy the defect by amend ment in due and regular course
 Money For Deficiency.
 Again it is clear that by the enact ment of the proposed law the Congress will not be bringing money into the treas ury to meet the present deficiency, but by putting on the statute books a law al- ready there and never repealed. will sim ply be suggesting to the executive of cers of the government their possible duty to invoke litigation. If the court should maintain it's 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 de- lay.
 Tt 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 can speak with certainty upon this point, but l have become convinced that great majority of the people of this coun- try are in favor of yesting the national government with power to levy an income tax, and that they will secure the adop- ton of the amendment in the states if proposed to them.
 Excise Tax Levy.
 "1. The decision in the Pollock case left power in the national government to levy an excise tax which accomplished the same purpose as a corporation income tax and is free from certain objections urged to the proposed income tax meas ure.
 T therefore recommend an amendment to the tariff bill imposing upon all cor portatlons and joint stock companies for profit, except national banks Otherwise taxed) saving banks and building and loan association, an excise tax measured by per cent on the net income of such corporations. This is an excise tax upon the privilege of doing business as an arti- fcial entity and of freedom from a general partnership liability enjoyed by those who own the stock.
 q am informed that per cent tax of this character would bring into the treasury of the United States not less | than s25,000.000.
 "rhe decision of the supreme court in | the case of Spreckles Sugar Refining com l pany against McClain 092 U. s. 89D l seems clearly to establish the principle l that such a tax as this is an excise | tax upon privilege and not a direct tax I on property and Is within the federal power without apportionment according l to population. The tax on net income is 1 preferable to one proportionate to per- l centage of the gross receipts because it | imposes burden at the source of the in- | come at time when the corporation Is well able to pay and when collection is | easy.
 1 Merit of the Tax. | Another merit of this tax is the federal l supervision which must be exercised in order to make the law effective over the l annual accounts and business transactions l of all corporations. While the faculty of l assuming a corporate form has been of l the utmost utility in the business world l it is also true that substantially all of