The evening world., 1911-03-13
CORPORATION TAX
DECLARED VALID
BY HIGH COURT
Is a Levy on Doing Business
and InSureS S2S,OOO,O 900 a
Year Revenue.
ATTACKED BY A n
marlborough and Coney Island
and Brooklyn Railroads
Must Pay the Tax.

ulid DippNigh 'N"i'' y
Must Pay the Tax.
WASHINGTON. March l3-The con-
stltutionality OF the corporation tax
provision Of the ra~ync-A ldrich tariff
law, one OF President Taft's pet meas
ures. was unanimously upheld to-day by
fhe supreme Court of the United states
IN a decision In fifteen cases arising in
various parts OF tho United states. The
decision = the Court insures approx
0natcly SS,Uo,00 revenue yearly to the
FEDERAL government.
Tine ca7os came to the supreme Court
bonn the Federal Courts of Vermont.
New York, Illinois. Ohio, Massachusetts
end Minnesota, and included corpora
Cons engaged In real estate business.
mining, manufacturing, transportation.
Bic Insurance and merchandising.
In each case one or more OF the stock
Soldiers applied Il the courts for an In
junction to restrain the officers OF the
corporation from paying the tax on the
ground that 1t was unconstitutional.
Tax on Doing Business.
First OF all. Justice Day declared that
the cun;cntion that the law was uncon-
Sltutioral because It originated In the
senate In the form OF an amendmen to
the Payne law was untenable. lie said
the Constitution provided for amend
fnantN Ia tho k,nusa IN ppNautIa Ia Ng
MoUGh they must originate In the
House.
Il; has been urged that this Is "A tax
On the ownership of business" he said.
fAs We construe the statute. II is n tax
on the doing OF business. not upon
ownership.
This is an excise tax upon the priyl-
lege Of doing business. The provision
for an excise tax In the constitution
makes only one stbpulation-that the
tax shall be equal-that is. geographic
ally the same all over the country.
1t Is next contended that the at
tempted taxation is void because It
levies n tax upon the right Of a state
20 grant corporate franchises, because
4 taxes franchises which are the crca-
ton OF a state in its sovereign right and
authority.
we think It Is the result OF cases
heretofore decided by this court that
such activities. although exercised he
cause OF Statc-createl franchises. are
not beyond the taxing power Of the
United states.
The Court hold that II was no part
Of the essential governmental functions
cf a state 70 provide means OF trans
portation, supply artificial light, water
and h like. Therefore, II was deter
mined that the Coney Island and
Brooklyn Railroad Company and tho
Interborough Rapid Transit Company
{ New York are subject to the tar.
Differs from lncom. Tax.
Justice Day took up the contention
that the corporation tax was II direct
lax. and unconstitutional for the same
reasons that the famous income tn {
law was declared unconstitutional In
kS. lie pointed out that the income
uax was held to be direct because I'M
posed upon property simply because Of
lis ownership.
lin the present case" said Justice
Dix. 'the tax Is not payable unles
there II a carrying On or doing OF
business In the designated caINcity, and
this Is made the occasion FOR the tax,
measured by the standard prescribed.
The difference between ting acts 10 not
merely nominal, but rests upon substan
ual differences between the mere own
ership OF property and the actual doina
Of business In a certain way"
Justice Day next addressed himself e
the objection that the tax was unsGuh
and arbitrary. lie first consider,
whether. as claimed the law mad, al
Unconstitutional distinction between cor
porations and partnerships or indlyidI
ais. lie said there was a substantial
difference between the carrying on o
business between corporations taxed an,
DE same business when conducted by
private firm or individual.
s"The thing taxed" said he. 'sl no
the mere dealing in merchandise. Il
which the actual transactions may b
he same. whether conducted ny nd
yduals or corporations, but the lax 1
laid upon the privileges which exist (
conducting business with the advar
tages which inhere IN the corporate CA
pacity OF these taxed. and which are NJ
enjoyed by private frns or Individual
These advantages are obvious and hay
LED to the formation of such companlo
ip nearly all branches OF trade.
ut Is this distnctice privilege whlc
y the subject OF taxation, not the MOI
Buying or selling or handling Of good
which nay be the same, whether dor
by corporations or individuals"
Measurement OF the tax hoy the n
Ncome Of the corporation or the cor
pany received by It from all sourc
gas next defended by Justice Day
bis opinion. as not being so unequ
and SO arbitrary and baseless as 10 II
outside Of the authority of the taxi
power.
Publicity Featurea.
Justice Day said It was especially o
Jected that certain OF tho corporatlo
whose stockholders challenged the val
Ity OF the tax were so called real est5
companies.
We think It clear said he, that q
,poratlOns organized for the purpose
doing business ana actually engaged
such activities as leasing property. ~
lecting rents, managing office building
making investments Of profits. or les
SytSan fsfss