Omaha daily bee., 1910-03-19
ARGUMENTS COMPLETED
Lawyers Fling Last Retorts and Case
Goes to Supreme Court.
JOHNSON CALLS TAX AN INCOME
Philadelphia Attorney In Attacking
Law Says it Aims to ''EmbaIm"
the Returns as a Pub
lie Record.

WASHINGTON, March 1s.-The last word
by the lawyers was said this afternoon on
the constitutionallty of the corporation tax
provisions Of the Pa~yne-Aldrlch tariff law
and the supreme court of the United states
then took the fifteen cases in which the
question under consideration arose.
The second day Of the argument on the
tax was consumed largely by the presenta-
ton of the governments defense of the
law by Solicitor General Bowers.
William d. Guthrie OF New York led a
flank movement with the object OF proour-
ing a decision from the court holding that
the tax is not to be collected on income
from national, state and municipal bonds
and property Of corporations not actively
employed In business.
To John @. Johnson of Philadelphia fell
the task OF closing the attack on the tax,
just before the court adjourned.
One Of the biggest side fights in addition
to the great contest over the constitution
ality of the tax was laid bare when Mr..
Bowers insisted to the court that the net
income from all sources mentioned in the
law as the basis Of measuring the tax in
cluded all the property of a corporation.
Insurance Attorneys Present.
William b, Guthrie and his associates,
Victor Marawetz and Howard Van Sim
deren, counsel for the Home Life Insur-
nee company, were present to insist that
the law did not mean to include the in
come derived directly from United States,
state or municipal securities or from real
or personal property not used or employed
in business. They advanced this on the
theory hat If the tax was not levied on
such property the law would become
clearly constitutional.
Mr.. Bowers argued tina corporations
cannot hold property that was not devoted
to the corporate business, either actively
or passiyely. He cited the decision Of
the supreme court holding that the United
states could levy an internal revenue tax
on a southe Carolina concern as showing
that the United States may tax public
utility service corporations.
In closing the solicitor said the pub
heity feature of the law was not raised
In the cases., which involved only private
individuals as parties to them,
Mr.. Guthrie as counsel for the Home
Life Insurance company followed Mr..
Bowers by arguing that federal, state and
municipal bonds and property not actively
engaged in business are not subject to
the tax, Heslso spoke 70 rthe consti-
%tutionalIty o fthe law as applied purely
10 corporations property actively used in
business.
In beginning his argument Mr.. Johnson
said that argument of the solicitor gem
eral was one he would have been glad TO
listen to had 1t not been on the other
side. An TO Mr., Guthrie. Mr.. johnson
said, he was a wolf in sleeps clothing"
whom he did not want on his side. What
made the law so obnoxious. as johnson
explained. was the DuhIicitV featura
whereby 1t was proposedto "embalm" the
returns a sa public record. However, he
added, the "act must be cut off a little
higher up"
Calls Tax an Income.
His principal argument was 10 prove that
the tax was an income and therefore not
an excise tax according to the famous in
come tax decisions. The wines given TO
Mark Twai 20 drink on the Rhine did not
satisfy his palate sny the more. the coun-
sci explained, because they changed the
label on the bottle from which II was
poured.
children In making pictures Of cows and
horses" said Mr.. Johnson, have a habit
OF writing below them cow and horse so
you will know what they were drawing"
So congress-, for fear II you were left to
your own judgment would not decide that
It was an excise tax. they labelled H."
Mr.. johnson urged hat the tax was on
the power OF a state TO create" fran
ehises, claiming that states Greats" them
instead Of authorizing them as argued by
Mr., overs.
III this law is upheld. he claimed. ana a
federal incorporation law is passed and /
don't know 10 what extent the fads now