The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1910-03-19
CORPORATION TAX
CASES WITH COURT
Final Word Is Spoken in Long,
but Interesting Discussion
of Question.
BIGGEST LEGAL MINDS
OF THE NATION EMPLOYED
Government Attorney Declares
Net Income Clause includes
All Property of Corporation.

WASHINGTON. March IS.-Thc last
word. by the lawyers on the constitu-
I iionaliiy OF the corporation tax was
spoken this afternoon and the supreme
court Of the United States tool; under
consideration the fifteen cases In which
the question arose.
The day was consumed largely by the
1rcsenia ton % the governments defense
OF TN" law by Solicitor General Bowers.
John j. Johnson OF Philadelphia closed
me attack on the tax just before court
aGiourncd.
one of the biggest side fights In con-
ncction WITH the great contest was laid
oare when Mr.. Bowers insisted that the
ne net income from all sources" mentioned
In the law as the basis OF measuring the
taN included all the property OF a cor
poration.
Widely Divergent Views.
William ID. Guthrie and his associates.
Victor Morawetz and Howard Van Sudc-
ran, counsel for the Home Life Insurance
mean 10 include the income derived di-
rectly from federal. state or municipal
securities or from real or personal prop
elrty not used or employed in business.
theory that If the tax were not levied on
such property the law would become
clearly constitutional
Mr. Bowers agreed that corporations
cannot hold property that was not de-
voted 10 corporate business, either ac-
lively or passivcly. lie cited the decision
OF the supreme court, holding the United
states could levy an internal revenue tax
on the dtspensary OF South Carolina, as
showing that the United states may tax
public utility corporations,
IN closing, the attorney said the pub
iicity feature OF the law was not raised
in the cases. which involved only private
,RdtVlouals as parties To them,
Mr.. Guthrie. counsel for the Home Life
Insurance company, followed Mr.. Bowers
arguing that federal, state and municipal
bonds and property not actively engaged
III business are not subject to the tax
He also spoke for the constitutonality of
the law applied purely 10 a corpora
tlon's property actively used in business
Objection to Publicity.
In beginning his argument Mr. John
son said the argument OF the solicitor
general WAS enc he would have been glad
,Ian to listen to had IL not been on the other
said ne was q wolf in sleeps clothing"
whom he did not want on his side. What
made the law so obnoxious. Mr.. Johnson
explained, was the publicity feature.
whereby it was proposed TO "embalm''
the returns as public record "How-
ever" he added "tbe act must be cut
Off n little higher up"
His principal argument was to prove
the tax was an income and therefore
not an excise tax according 10 the IA
nous income tax decisions.
on the Rhine did not satisfy his palate
any the more, the counsel explained. be-
cause they changed the label on the bot
tie from which II was poured
Children i'm making pictures OF cows
and horses said Mr., Johnson "haye
habit OF writing below them Cow and
Horse, so YOU will know what they were
drawing. So congress. for fear if you
were left To your own Judgment you
would not decide what the excise tax is.
labels il"
Mr.. Johnson urged that the tax was
on the power o. a state TO create" fran
chiScS. claiming state does create
them Instead of authorizing them, as
Mr.. Bowers argued.
''lf this law is upheld" he said land
2 federal Incorporation law is passed (and
] don know to what extent the fads
now running wild will become a law, the
federal government may sec fit to tax
state corpora tionS cut OF existence"