The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1911-03-22


nous opinion the supreme court OF
the United States today held the. ;he
corporation tax provisions of the
Payne-Aldrich tariff act are consti-
tutional. Thus ended controversy
waged almost continuously since
President Taft first suggested their
enactment TO congress. The opinion
was announced by Justice Day. who
was appointed to the supreme court
bench from Ohio I'm 1903. Vt was an
elaborate treatment OF the subject.
containing approximately 10000
words. About half an hour was spent
by the justice orally explaining to the
bar the position of the court. the
printed opinion being used as basis
for the remarks.
The Justice frs,t determined that
the tax was just what 1t claimed to
be In the'act. namely. and excise tax
on the doing OF CORPORATE business.
and not direct tax on the ownership
of property. With that point decided
the justice tooL up at more or less
length the various objections urged
against the TAX as an excise tax and
disposed OF them TO the satisfaction
OF thu court. Finally he interpreted
the law so as to apply 20 real estate
companies and the so-called public
service corpora Ions, but not to real
estate trusts"
The opinion predicates that the
tax Is imposed not upon the fran
chise OF the corporation irrespective
OF their use IN bus ess, nor upon the
property OF the corporation. but upon
the doing OF corporate or insurance
business and with resoect to the car
rytng on thereof. I'm a sum equivalent
TO per cent. OF the the entire net in
come over and above $4,000 received
from all sources during the year; that
Is. when imposed In this manner Ii
Is a tax upon the doing OF business
with the advantages which inhere in
the peculiarities OF corporate or joint
stock organization OF the character
described. Al tho latter organiza-
tions share many benefits OF corpor-
ations II may De recognized generally
as tax on doiug OF business in cor
porate capacity"
"%sa view OF the measure of the
tax isNrengthened when we note that
as In organizations under the laws OF
foreign countries the amount OF net
income over and above $1,000 in
cludes that received from business
transactions and capital invested in
Alaska and District of Columbia"
Answering tho various objections
raised against the tax. Justice Day
first took up the contention that it
was direct tax. and. unconstitutional
for the same reason that the famous
income tax law was declared uncon-
sttutlonal In 1895. He pointed out
that the income tax was held TO be
direct because imposed upon prop
erty."
In the present case" said Justice
Day. "the tax is not payable unless
there Is a carrying on or doing Of
business In the designated capacity.
and this Is made tho occasion for the
tax. measured by the standard pre-
scribed."
Justice Day next took up the OBJ
lection that the provisions in ques-
tiou levied a tax upon the exclusiv.
right OF State to grant corporate
franchises In that IL taxed franchises.
which are the creation OF a State in
It's sovereign right and authority.
I'VE think says the opinion. 'It
is the result OF the cases heretofore
decided In this court. that such busi-
ness activities. though exercised fbe-
cause OF State created franchises. are
not beyond the taxing power of the
United States.
IL can not be supposed that
IL was intended that It should be with
I'm the power OF individuals acting un-
der State authority TO thus impair
and limit the e.ertion OF authority
which may be csst ntlal 20 national ex. .
istence."
Justice Day next addressed him
self To the objection that the tax was
unequal and arbitrary.
The thing taxed" said ne. "is not
the mere dealing In merchandise. in
which the actual transactions may I've
the same. whether conducted 10y indl-
viduals or corporations. but the tax
Il laid upon thr privileges which cN-
ist in conducting business with tho
advantages which inhcrc iu the cor
porato capacity of those uxcd and