Santa Fe new Mexican. [volume] (Santa Fe, N.M.) 1898-1951, 1910-06-01
TESTING VALIDITY OF THE
CORPORATION TAX
Fifteen Cases Brought to Question
ConsttutionaIity of Law and At
torneys Make Arguments.

Washington, June president
Taft is regarded as the father of the
corporation tax idea as represented
the discussion of tariff legislation and
income and inheritance taxes in 1908
1909. AS a result, congress inserted
the Corporation Tax Law into the
Payne-Aldrich tariff act passed by
congress last summer. 1t became sec
ton 3S of that statute.
The law subjected to the tax in a
general way every corporation, joint
stock company or association, organ
lied for profit and having a capital
stock represented by shares, and ey-
cry insurance company. The tax was
designated as a special excise tax
with respect to the carrying on or do
ing business" and it was provided that
it should be equivalent to one per
centum upon the entire net income"
over and above $4,000 received from
all sources" during the year. There
were to be excluded from the income,
however. amounts received as diyi-
dends upon stock of other Organiza-
tions, subjected to the tax. Exempt
ed from the tax were certain Organi-
cations, such as labor, agricultural,
horticultural and fraternal beneficiary
societies.
One paragraph of the law provided
for the publicity of the returns re-
Quired as a basis of fixing the tax.
The tax was to be paid on or before
June 80 of each year and the returns
for each year were to be made by
March 1. 1t was provided that the
tax should be paid for the year end
ing June 80, 1910, although the law
was not passed until August 5, 1909.
Not until shortly before the eXpira
ton of the time for the making of the
returns was the first move made tC
test the validity of the tax. This
movement to test the great question
about corporation law started in the
little town of Windsor, Vermont.
There Maxwell Evarts, a New York
lawyer, son of the late William M
Evarts, has a summer home. He had
often noticed the keen competition be-
tween the two general merchandise
stores in the town, the Stone Tracy
, Company, corporation, and Dwight
, TuXbury & Sons a partnership con
Germ. He saw what he believed was
discrimination against the corpora.
ton if it were compelled to pay the
tax and make public its business ar
rangements, and so accepted the po
sition of counsel for Stella P. Flint
as general guardian Of the property
for Samuel n. Stone, Jr.. a minor, who
owned stock in the Stone-Tracy Co
Suit was brought in the federal court
by Mr.. Evarts to enjoin the corpora
ton from making the returns and pay
ing the tax, on the ground that the
law was unconstitutional The cor
poration filed a demurrer, which wa
sustained and the bill dismissed. Al
appeal was taken to the supreme
court.
The institution of the Flint-Stone
Tracy case was the signal for thu
bringing of suits in many sections O
the United States. All were decidet
in exactly the same way, and almos
invariably appeals were taken to tn,
supreme court. The government wa
allowed to intervene. Fifteen cases
headed by the Flint-Stone Tracy suit
were set for argument on March A.
Besides the Vermont case, thos,
heard were:
Wyckoff Van Derhoef VS.. The Cone,
Island and Brooklyn Railroad Com
pany.
Francis L. Hine VS. Home Life In
surance Company, of New York
Fred w. Smith VS.. The Northern
Trust Company, of Chicago.
J. William H. Miner VS.. The Corn ES
: change National Bank, of Chicago
3 Cedar Street Company vs. Parl
I