The Marion daily mirror. (Marion, Ohio) 1892-1912, 1909-09-22
CRITIzISES WORK OF CONGRESS
Says the New Law is Full
of Defects.
Favors, However, an Income
Tax. a''5
Noted Authority on Taxation In New
York Addresses the International
Tax Conference Which Is I'm Session
I'm Louisville Income Tax law
Should be n Federal Law.
BY limited Press Wire.


today's session of the International
Tax Conference centered on paper
presented by Hon. Lawson Purdy,
President of the department of tax
assessments of New York City, and
a tax authority of wide reputation.
Mr.. Purdy's paper developed that he
agreed with the attitude of President
Foote, of the Association, in his stand
against the Federal corporation tax
but that he was not in sympathy with
him in his objection to the proposed
Federal income, tax. ya- n
The situation is decidedly interesting
to the tax experts gathered here be-
cause of the standing OF the opposing
forces on the income tax matter. Pres
ident Foote expects to lead move
ment to have the association go on re-
cord against the Federal income tax.
In the matter of the corporation tax
he will have the help of Mr.. Purdy,
who Is vice-president of the Internat-
ional Tax Association, but he will
have his vigorous opposition on the
plan to adopt resolutions against the
income tax.
In his address Mr.. Purdy said:
while the tax based on corporation
income is called an excise tax in the
apparent hope that the phrase will
1t when it is presented to the
Supreme Court, 1t is in reality a par
tial income tax. Congress has endeav-
ored to follow tho latest decisions of
the Supreme Court, and in so doing
has enacted a law which has all the
defects of the most poorly devised in
come tax ana other defects peculiar
to itself 1t interferes with a source
OF revenue universally employed by
the States and vital to many of them
For twenty-five years the States have
been advancing toward a
complete separation of state and local
revenues. One of the most important
sources of State revenue, and in some
States the most important is the tax
on corporations. In some states these
taxes on corporations are moderate
and easily enforced, and do not i'm
pose unnecessary burdens upon the
corporations; in others, they are ill
devised, unequal and require peculiar
and troublesome systems of account
ing, The reports required by the Fed
eral Government have no relation to
the tax reports required by the States
and therefore will compel additional
accounting expense.
The form OF this tax on corpora
tion income renders necessary most
inquisitorial procedure. The States
have the power to tax corporations
without prying into their business
secrets, and some of them do this.
now. with marked success, 80 far as
revenue is concerned. n5 ~
1T Is contended that this taxing
act can be used to aid in the proper
regulation of corporation activity.
How this can be done does not an
pear, nor why 1t should be done. The
United States Government has power
to regulate interstate commerce and
exercises the power through the In
terstate Commerce Commission and
che Sherman act. 1t has no constitu-
uonal power to regulate business cor
porations These corporations are
creatures of the States. The States
prescribe the rules TO rtheir creation
and have power to prescribe the rules
for their conduct. II the United Stat
es proposes to regulate these corpora
tions 1t is exceeding its constitutional
power and trenching on the power of
the States.
1T has been suggested that the
power to tax income should be reserv-
ed to the States. This suggestion
must be made in derision or In pro-
found ignorance. Several States have
tried to impose income taxes and fail
ed utterly as they must fail. The only
income tax law which has a chance
of success must be patterned after
the British Income Tax, which taxes
all incomes and uses corporations as
tax collectors. This requires nation
wide jurisdiction.
From, whatever point of view the
Federal corporation tax Is studied il
is unavoidable and unjust; it enroach-
es upon the powers OF the States: II
is not productive of revenue; II is
needless by inquisitorial; the publicity
required is rash and dangerous in
the extreme. Its name Is a subter-
fuge. IL is an income tax and not an
excise tax. II has the vices OF income
taxes without the merits OF an in
come tax law scientifically framed.
The states can not frome income tax
laws that are workable because they
lack Jurisdiction of the sources OF
income and incomes must be reached
at source to be taxed effectively. II
incomes are to be taxed the United
States must tax them In an any event
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