The Salt Lake herald-Republican. [volume] (Salt Lake City, Utah) 1909-1918, 1910-03-19
Last Word on Constitutional
ity of Corporation Tax Is
Spoken by Lawyers, and Su-
preme Court Has It in Hand.
SPIRITED DEBATE HEARD
BY HIGHEST TRIBUNAL
Taxation of Net Income From
All Sources Obtained by a
Corporation Seems to Be
Chief Bone of Contention.
LAWS PUBLICITY FEATURE

Washington, March 1S.-Phe last
word, by the lawyers, on the con-
sutut1onaiity of the corporation y
tax was spoken this afternoon. and =
the supreme court of the United y
states took under consideration +
the Ifteen cases in which the y
question arose. The day was con- =
sunied largely by the presentation \
= of the governments defense of the !
= law by solicitor General bowers, =
John }. johnson of Philadelphia
= closed the attack on the tax Just )
= before court adjourned.
One of the biggest side fights in
connection with the contest was laid
bare when Mr.. Bowers insisted that
the net income from all sources" mem
TONED in the law as the basis of meas
uring the tax, included all the property
of corporation.
William ID. Guthrie and his asso-
crates, Victor Morawetz and Howard
van Sindefan, counsel for the Home
Life Insurance company. insisted the
law did not mean to include the in
come derived directly from federal
state or municipal securities. or from
real or personal property not used or
employed in business They advanced
this doctrine on the theory that If the
tax were not levied on such property
the law would become clearly constitu-
ti0nal.
AS TO Corporation Property.
Mr.. Bowers argued that corporations
cannot hold property that was not de-
voted to corporate business, either ac-
lively or passively. He cited the de-
clslon of the supreme court, holding the
United states could levy an internal
revenue tax on the dispensary of South
Carolina, as showing that the United
S,lates may tax public utility corpora
lions. In closing, the attorney said the
puhIlcity feature of the law was not
raised in the cases which involved only
private individuals as parties to them.
MT. Guthrie, counsel for the Home
LIE insurance company, followed Mr..
Bowers, arguing that federal. state and
municipal bonds and property not ac-
lively engaged in business are not sub
Ject 10 the tax. He also spoke for the
conStitutiOnality of the law as Applied
purely to a corporations property ac-
lively used in business
IN beginning his argument, Mr.. john
son said the argument of the solicitor
general was one he would have been
glad TO listen to had it not been on the
other side. As to Mr.. Guthrie, Mr.. John
son said he was wolf in sheep's
clothing whom he did not want on his
side What made the law so obnoxious,
Mr.. Johnson explained, was the pub
licity feature, whereby 1t was proposed
10 "embalm" the returns as a public
record. However" he added, 1.-THE act
must be cut off little higher up" His
pi4hOipdl arg uucuC was to prove the
tax was an income, and therefore not
an excise tax, according to the famous
income tax decisions.
Mark Twain's Wine.
The wine given to- Mark Twain to
drink on the Rhine, did not satisfy his
palate any more, the counsel explained,
because they changed the label on the
bottle from which it was poured.
children in making pictures of COWS
and horses" said Mr.. Johnson, have
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 label is"
Mr.. Johnson urged that the tax was
on the power of a state to create"
franchises, claiming a state does Gre
ate" them instead of authorizing"
them, as Mr.. Bowers argued. IF this
law Is upheld" he said, "and federal
Incorporation law is passed (and 1 dom
know to what extent the fads now
running wild Will become a law, the
federal government may see fit to tax
ct a a ffr.r7r - srr4r