The Roswell daily record. [volume] (Roswell, N.M.) 1903-current, 1910-06-01
FEDERAL TAX
LAW GASES

Washington. May 3l.-President
TAFT is regarded as the father of the
corporation tax idea as represented
in this statute. He evolved it during
the discussion of tariff legislation and
income and inheritance taxes in 1905
1909. AS result, Congress inserted
the Corporation Tax Law into the
Payne, Aldrich tariff act passed by
Congress last summer. 1t became
section 80 of that statute.
The law subjected to the tax in a
general way every corporation, joint
stock company, or association, organ
ICED for profit and having a capital
stock represented by shares. and ev
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 in
come over and above $4,000 received
from all sources" during the year.
There were to be excluded from the
income however. amounts received as
dividends upon the stock of other or
ganiZations, subjected to the tax. Ex-
empted from the tax were certain or
ganizations, such as labor agricultu-
RAJ. horticultural and fraternal bene
ficiary societies.
One paragi aph of the law provided
for the publicity of the returns re-
quired as basis of fixing the tax.
The tax was TO be paid on or before
June 30 of each year and the returns
for eacn year were to he made By
March 1. IL was provided that the
tax should be paid for the year end
ing June 30. 1910. although the law
was not passed until August 5, 1909.
Not until shortly before the expira-
tion of the time for the making of the
returns was the first move made to
test tne 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 NJ.
Evarts. has a summer home. He had
often noticed the keen composition
between the two general merchandise
stores IN the town, the Stone Tracy
Company, a corporation, and Dwight
Tuxbury & Sons, a partnership con-
Germ. He saw wnat he believed was
a discrimination against the corpor-
alton If it were compelled To pay the
tax and make public it's business ar
rangements, and 50 accepted the po-
sition of counsel for Stella p. Flint
is general guardian of the property
for Samuel ~. Stone, Jr., a minor.
who owned stock i'm the Stone-Tracy
Co. Suit was brought in the federal
court by Mr.. Evarts to enjoin the cor
poration from maiSing the returns and
paying the tax. on the ground that the
law was unconstitutional. TIE cor
poration filed a demurrer which was
sustained and the bill dismissed. An
appeal was taken to the Supreme
Court.
The Institution of the Flint Stone.
Trac- case was the signal for the
bringing of suits In many sections of
the United States. All were decided
in exactly the same way, and almos.
invariably appeals were taken to the
Supreme Court The government was
allowed to intervene. Fifteen cases.
headed by the Flint-Stone Tracv suit.
were set for argument on Marcn Il.
Besides the Vermont case. those
heard were:
wyckoff Van Derhoef VS. The Con
ey Island and Brooklyn Railroad Co.
Francis L. Hine VS.. Home Life In
surance Company. of New York.
Fred w. Smith va. The Northern
Trust Company of Chicago.
willia-r II. Miner VS.. Tie Corn Ex
change National Bank, of Chicago.
Cedar Street Company VS.. Parf
Realty Company, of New York.
Lewis w. Jared VS.. the American
Marlrirrauh CoYnnanv of Cyleveland
Joseph +. Gay VS.. The Baltic Min
ing Company, a Michigan corporation
Percy III. Brundage VS.. Broadwa,
Realty Company. of New York.
Paul I.acroix VS.. Motor Taxinete
Cab Company of New York.
Arthur Lyman VS.. Interborougl
Rapid Transit Co., of N. Y.
George Wendell Phillips VS.. Fift!