Omaha daily bee., 1910-03-19
CORPORATION TAX IN COURT
Arguments Are Being Heard on Both
Side of Payne Tariff ACT.
VALIDITY OF LAW ATTACKED
Maxwell Eynrts Declares Provision IL
Arbitrary aud Oppressive Because
IL Takes Property with
out Compensation,

WASHINGTON, March 1S.-For four
hours yesterday the supreme court Of the
United States listened to conflicting argu-
ments on the constitutionality OF the cor
p~oration tax provisions Of the Payne
Aldrlch tariff act. After another days
argument the court will take the statute
under its consideration with a view to
arriving at a decision.
Constitutional lawyers from various
sections Of the country took part In the
argument. They were connected with the
$50 cases in which the validity Of the tax
is attacked and which had been CONSOLE
dated into one cause for the purpose OF
the hearing. In each Of these suits stock
holders or policyholders had brought action
to prevent corporations from paying the
tax. Without exception the lower courts
held the tax constitutional and dismissed
the suits.
The Home Life Insurance company and
the Coney Island g. Brooklyn Railroad com
pany had counsel present to insist that
these corporations themselves be required
to pay the tax.
Maxwell Evarts Of New York opened the
argument. He declared the tax unconsti-
tutional, because, as he argued, it Inter
fered with the powers OF the state by
taxing a franchise; that 1t was arbitrary
and oppressive because it's publicity clause
took private property for public use with
out compensation. He was followed by
Charles H. Williams and Richard r..
Rogers of New York and E. o. Brown Of
Chicago, who argued the unconstitutionality
of the law as applied to various individual
cases.
Fifteen Cases Now Up.
Fifteen cases involving the validity Of
~ t,- Aa.v, 49,, ,a,.al g. Nl, a1ttVf fnP
final judgment. All were advanced for an
early hearing and were consolidated.
In all the suits, except one, stockholders
brought the action in the lower federal
courts in various parts of the country to
enjoin the corporation In which they held
stock from paying the tax in conformity
with the law. In the other case policy
holders Of the New York Life Insurance
company brought suit.
In each proceeding the lower court up
held the validity of the law and ordered
the suits dismissed. Appeals were then
taken to the United States supreme court.
Mr.. Evarts devoted much OF his time to
arguing the point that the law invaded the
sovereignty Of a state,
He said the tax was arbitrary and OPP
pressive and in violation of the fifth
amendment Of the constitution. His third
attack was on the publicity feature of the
law. which, he said, had nothing to do
with taxation.
when the return is made and the tax
ascertained thereby and possibly the tax
paid,' said Mr.. Evarts, the return is
made a public record, open to inspection.
BY what power Of congress is that done?
Perhaps it is a part Of a general scheme
Of regulation of corporations. But, 1 ask,
where is the power?"
Justice Lurton wanted to know what
section of the constitution he claimed was
violated thereby. Mr.. Evarts said 1t was
that section which prohibited the taking
of private property for public purposes
without compensation.
Calls Law Unconstitutional.
E. o, Brown argued that the law was
unconstitutional as applid to the Northern
Trust company and the Corn Exchange
National bank Of Chicago, principally on
the ground that the tax was on bonds ex-
empted from taxation and on the power
Of a state to authorize trusts
Solicitor General Bowers began his argu-
ment in defense Of the law about half an
hour before the court adjourned. His time
was devoted to an endeavor to prove tina
the tax was levied on the carrying on or
doing business, and was merely meas
ured by and was not on the net income"
He argued that legislators never would
have selected net income as a measure, if
the tax was to be on property, as he said
some Of the opposition had commended.
Net income and even gross income"
said he, has no usual relation to the
amount of property employed in the bust
ness. whether different sorts of business
or the same business at different times be
considered. In prosperous times, when the
amount Of business done with a given
plant is large, net income from the bust
ness will be much higher than in dull
times, though the size of the plant with
which the business done remains the
same"