The Ogden standard. [volume] (Ogden City, Utah) 1902-1910, 1910-03-15

such corporations MIR. Bowen claims
they raise no constitutional question.
but only the query as Tor whether they
arc engaged In carrying on or do
ing business" Ii any corporation Is
not SO engaged. II Is not reached by
the statute. he argues.
The fourth point MI Bowers seeks
10 establish is that the tax is no an
infraction of the general power of the
states TO authorize the formation OF
corporations and stock companies.
Even If the tax we're on franchises, 1t
still would not be tax on the legis-
latiye power OF the state. Corporate
franchises. he adds, grow out of ar
offer by tho state and an act OF free
choice of election by the persons to
whom the offer is extended. Hence.
he concludes. franchises are created
not by III state but by the person
which accept them.
No authority exists, Mr.. Bowers
continues. that holds or even sug.
gests' that the United States can
not tax the franchises OF n state cor.
, porauou. established for ordinary
business purposes on the theory that
I.s,rch- federal tax VIII interfere With
Legislative Independence of the states
In their own sphere
1t does not follow and is not true"
| he contends. that the United States
may not By taxation burden OF hamper
! the operations OF stale law because
Z Il state may not by taxation burden or
! hobper the operation or d law OF the
| United States
This statement is explained on the
| ground of the asserted supremacy of
| each power of the national govern
ment over all powers of a state, when
over the two meet.
| The several objections To tue law
] a san excise tax. because of its al
| legged lack of uniformity, are consid
| cred by Mr. Bowers The constiti
| tional requirements. he claims. are
met If the tax is geographically uni
| form, In this connection be proceedt
To explain several features of the law
and to cite cases 10 substantiate ths
| claim that an excise tax is given the
! greatest freedom of classification of
any taxes imposed by congress.
One reason assigned for eXempting
| individuals and partnerships is that
they are without the aid of legal rules
applicable 10 corporations and joint
| stock companies Both reason and au-
thority. it is claimed justify the eN-
emption of corporations whose net in.
come is not over $1,000.
Exemptions from taxation OF q lin.
| tied amount OF individual property
| arc we'll nigh universal. says Mr.,
| Bowers, and they rest. doubtless.
upon the just and necessary policy
OF leaving a living opportunity uabur.
dened by government
Labor agricultural and horticul.
/ tural organizations are exempted, he
says, because they seem hardly 10
be organized for profit He adds that
! II II is necessary, The statute could
we'll be construed as not cXemptiul
! such associations. II the primary pur-
poses in business profit
The exception OF societies operating
under the lodge system. he contends,
| justIiies Itself Such. Mr. Bowers
! says. are the knights OF Pythias,
| knights Of Labor. certain Masonic
! orders, the Red Men OF America and
| the Woodmcn Of the World
1T Is almost humorous" he says.
! ito urge that sucL organizations must
DC considered Insurance companies
having purely OF chiefly pccuniary
| functions"
He then named a fcT OF the great
! American mutual insurance companies
whose financial power and operations,
J he declared, are not surpassed in the
entire business world.
Reply is made to the objection IN
| the Limitation to the amount OF inter
| est deduction in arriving at the lie!
income
without the Limitation" says Mr..
! Bowers, corporations and Joint CON-
| panles. by issuing bonds for all or
| most of their capital-either With or
without an accompanying issue OF
! stock-could distribute the business
profits. however large. in the form OF
interest payments; and the tax IN
that way could be entirely or largely
| avoided
The solicitor general urges that the
tax does not subject the corporations
TO unreasonable search or seizure oy
reason OF its publicity feature. Neither
| the making nor the publication OF the
returns can by any possible Wow DO
| interpreted as a search or seizure, he
| contends.
| Finally. il is contcnded that the tax
| NAV properly be collected In 1910
| This is based on the argument that
| the tax Is not laid on the income which
Was received before the law went into
effect, August 5. 1909. but IS merely
measured by that income.