The Morris County chronicle. [volume] (Morristown, N.J.) 1877-1915, 1909-06-22

of President Taft on the subject OF
taxing incomes Of corporations was
received in the Senate and read imme-
diately. It is as follows.
cit is the constitutional duty Of the
President from time to time to recon-
mend to the consideration of Congress
such measures as he shall Judge neces-
sary and expedient In my inaugural
address, Immediately preceding this
extraordinary session of Congress,
invited attention to the necessity for
a revision of the tariff at this session,
and stated the principles upon which
/ thought the revision should be eff
fected.
az referred to the then rapidly in
creasing deficit and pointed out the
obligation on the part of the trainers
of the tariff bill to arrange the duty so
as to secure an adequate income, and
suggested that If it was not possible
to do so by import duties. new kinds
of taxation must be adopted, and
among them | recommended grad
uated inheritance tax as correct in
principle and as certain and easy of
collection.
"The House of Representatives
adopted the suggestion and has pro-
vided in the bill 1t passed for the col
lection of such a tax. In the Senate
the action of its Finance Committee
and the course of the debate indicate
that it may not agree to this provision
and it is now proposed to make up the
deficit by the imposition of general
income tax in form and substance of
almost exactly the same character as
that which n the case of Pollock
vs. Farmers Loan & Trust Company
(157 U. s. 429) was held by the SUI
preme Court to be direct tax and
therefore not within the power of the
Federal Government to impose unless
apportioned among the several States
according to population. This new
proposal, which did not discuss
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.
Amend Constitution.
"The decision of the Supreme Court
In the income tax cases deprived the
National Government of a power
which, by reason of previous decisions
of the court, it was generally sup
posed that Government had. 1t is un-
doubtedly a power the National Gov
eminent ought to have. 1t might be
indispensable to the Nations life in
great crises. Although / have not
considered constitutional amend
ment as necessary to the exercise of
certain phases Of this power, ma
ture consideration has satisfied me
that an amendment is the only proper
course for its establishment to its
full extent.
II therefore recommend to the Con-
gress that both Houses, by two
thirds vote, shall propose an amend
ment to the Constitution comforting
the power to levy an income tax upon
the National Government without APP
portionment among the States IN pro-
portion to population.
"This course is much to be pre-
ferred to the one proposed of re-en-
acting law once judicially declared
to be unconstitutional. For the Con-
gress to assume that the court will
reverse itself, and to enact legislation
on such assumption, will not strength
en- popular confidence in the stability
of judicial construction of the Con-
stitution 1t is much wiser policy to
accept the decision and remedy the
defect by amendment in duesand reg
ular course.
again, 1t is clear that by the en-
actment of the proposed law the Con-
gress will not be bringing money into
the treasury to meet the present de-
ficiency, but by putting on the statute
books law already there and never
repealed, will simply be suggesting to
the executive officers of the Govern
ment their possible duty to invoke
litigation. If the court should main
tain it's former view, no tax would be
collected at all. If 1t should ultimate
ly reverse itself, still no taxes would
have been collected until after pro-
tracted delay.
People Favor 1t.
at 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 GER
tainty upon this point, but have be-
come convinced that 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, If proposed to them.
Second, the decision in the Pollock
case left power in the National Gov
eminent to levy an excise tax which
accomplishes the same purpose as a
corporation income tax, and is free
from certain objections urged to the
proposed income tax measure.
II therefore recommend an amend
ment 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 associa-
tions, an excise tax measured by two
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 general partnership liability
enjoyed by those who own the stock.
/ am informed that two per cent.
tax of this character would bring into
the Treasury of the United States not
less than $25,000,00O.
The decision of the Supreme Court
in the case of the. Spreckels Sugar
Refining Company against McClain