The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1909-06-17

IdluCy upon IulS point, anu / nave Oc-
come convinced that a great majority
of the people of this country are In
favor of vesting the national govern
ment with power to levy an income tax
and that they will secure the adoption
of the amendment in the states il pro-
posed to them.
THE decision in the Pollock case
left power in the national government
to levy an excise tax which accom-
plishes the same purpose as a corpora.
ton income tax and is free from Ger.
tain objections urged to the proposed
income tax measure.
Il therefore recommend an amend
mcnt to the tariff bill imposing upon
all corporations and joint stock COM
panies for profit, except national
banks otherwise taxed savings banks
and building and loan associations, an
excise tax measured by 2 per cent on
the net income of such corporations
This is an excise tax upon the privilege
OF doing business as an artificial en-
tity and OF freedom from general part
nership liability enjoyed by those who
own the stock.
Il am informed that per cent
tax of this character would bring into
the treasury Of the United States not
less than $25,O0O,OOO.
THE decision of the supreme court
in the case of Spreckles Sugar REIN.
ing Company against McClain l9o U.
S. 397) seems clearly to establish the
principle that such a tax as this is an
excise tax upon privilege and not a
direct tax on property, and is within
the federal power without apportion-
nlent according to population. The tax
on net income is preferable to one pro-
portionate to q percentage OF the gross
receipts, because it is a tax on success
and not failure. It imposes a burden
at the source Of the income at a time
when the corporation Is we'll able to
pay and when collection is easy.
Another merit Of this tax is the fed
eral supervision which must be ex.
ercised in order to make the law ef
fective over the annual accounts and
business tr ansactions of all corpora
lions. While the faculty Of assuming
q corporate form has been OF the ut
most utility in the business world. II
is also true that substantially all Of
the abuses and all Of the evils which
have aroused the public to the neces-
sity Of reform were made possible by
the use Of this very faculty.
III now by perfectly legitimate
and effective system OF taxation We
are incidentally able to possess the
government and stockholders and the
public with knowledge Of the real bus
mess transactions and the gains and
profits of every corporation In the
country, we have made a long step TO-
ward that supervisory control of cor
porations which may prevent further
abuse Of power.
II recommend then first, the adop-
ton Of joint resolution by two-tAivts
OF both houses, proposing to the states
an amendment to the constitution
granting to the federal government
the right to levy and collect an in.
come tar without apportionmeut
among the states according to popuia-
ton; second. the enactment as part Of
the pending revenue measure. either as
q substitute for or in addition to the
inheritance tax Of an excise tax upon
all corporations, measured by ? per
cent Of their net income.
WILLIAM HI. TAFT"
The White House, June 16, 1909. 7