New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-03-16
NEW TAX DEFENDED
Neither Direct TGTatiOH Nor
IRjHry TO States.

Washington. March 15-Ths governments
defanea % the constitutionslity q the cor
poratou tax provision OF the new tariff
law was submitted TO-DAY IN printed form
10 the supreme Court 81 the United States.
" u the work cf Lloyd ". Bowers, Solicit
tor General bur also bears the signatUTe
Of Attorney General Wiekersham.
The first point sought % ne made n that
the tax % rot a direct tax on property, but
Is an excise tax on "the carrying on or
doing business" The declarations Of the
statute. as we'll as decisions Of the courts,
are relied on 20 support this point
Mp. Bowers says that the statute shows
the transaction OF business 70 be the sub
ject o. the tax. and that he income 81
business Is used merely as measuring the
amount Of tax. which rests, not upon that
income. but upon the occupation from
which Il Is derived"
1lr. Bowers refers 20 the famous income
tax eases. and says these eases have been
interpreted. undoubtedly with the concur
renee Of the entire Supreme Court, as re-
ferTing 20 tar imposed on property sole
" 6y reason Of it's ownership.
The second point Mr. Bowers seeks TO
make is that the tax Is not a direct tax
on the shares 81 the stockholders nor on
income
tax not being a direct tax on property Is
held 20 apply % the claim that il Is not a
direct tax ON the shares or income Of stock
holders.
The third point is that the tax does not
become direct in the special case % a
company engaged ia The business Of hand
ling or dealing I'm real estate. Five % the
fifteen cases fee consideration by the court
involve such corporations. Dir. Bowers
SAYS they raise no constitutional question.
but only the query as 20 whether they are
engaged in carrying on or doing bust
ness II any corporation . not so engaged
il is not reached by the statute. he argues
The fourth point Mr.. Bowers seeks to
establish g. that the tax - not an IN
fraction OF the general power Of the states
70 authorize the formation Of corporations
AND stock companies Even il the tax
were on franchises Of a state corporation.
he says. instead Of being on the use Of
the franchises. il still would not he a
tax on the legislative power % the state.
Corporate franchises. he adds, grow out
90 an offer BY the state and the act Of
free choice OF election by the persons 20
whom the OFFER IL intended. Hence, ne
SAYS. franchises arc created. rot by the
state. but by the persons who accept
them.
No IRfrsotion Of State Powers.
No authority exists, HIr. R0Wers contin-
uss. that holds or even suggests that
the United States cannot tax the frau-
chises 81 state corporation. established
for ordinary business purposes. on the
theory that such federal tax will inter-
fsre With legislative Independence OF the
states in their own sphere.
It docs not follow. and Is not tTue.' he
contends. chat the United States may
not by taxation burden or hamper the Op-
GRAFTON Of "a state law. because a state
may not hv taxation burden ar hamper
the operation of a law of the United
states"
This statement rs explained on the
ground az the asserted supremacy of each
power Of the national government over
al powers OF a STATE whenever the TWO
meet.
The Solicitor General urges thar the tax
does not subject the corporations 70 un-
reasonable search or seizure by reason OF
its Rubiicitv featuTs. Neither the making
nor che publication OF the returns can by
any possible view be interpreted a. q
sssECh OF ssizuFe, he contends.
Finally. IL Is ccntended that the tax NAV
properly be collected IN 1910. This is
based en- the argument that the tax Is not
laid on the income which was received
before the law went iuto effect. on August
8. 1909, but - merely measured BY that