Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1911-01-18
CORPORATION TAX ASSAILED
Final Attack Upon New Act in United
States Supreme Court
warts pECLAREs law is vOID
New York Lawyer says II - Detective
because 20 Fails Jpou Cor
porntc Franchise uT Conn
I,Rt

WASHINGTON. Jan. i7-The final as
sault on the constitutionality Of the cor
poratlon tax provisions OF the PAYNE.
Aldrich tariff act OF 1909 began today I'm
the supreme court Of the United states.
For two hours Maxwell Evarts Of Now
York. argued that the law was void Julien
T Davies Also Of New York continued tho
assault
Tomorrow Frederick W Lehman.
solicitor general for the Department ~
Justice will defend the law.
Mr. Evarts appeared as counsel Tor stella
p Flint general guardian of Samuel \.
stone ir. owner Of stock In the stone
Tracy company Of Windsor, VI She
sought to prevent the corporation from
paying the tax.
The attorney contended that the tax
was unconstitutional principally because
it fell on the corporate franchise Of th"
company. In SO doing Il invaded the
sovereignty Of the state he urged
Tax on Doing business.
While the law on its face said It was
tax on the doing Of business" Mr.. Evarts
told the court that "thc burdens falling
on the defendant corporation because IT
has corporate charter and because q
acts in a corporate capacity are, burdens
upon the right to be corporation and to
act as such
"Thc decision which We ask this court
to make involves no diminutiou of the
potential resources Of tho national govern
mcnt." said Mr.. Evarts,
~ result OF that nature harrasscd the
thoughts Of some members Of this court
when the income gases we're pending. This
is no such case.
a., At
eminent may reach the business Of the de
PENDANT corporation for per cent, for
10 per cent, for 50 per cent II necessary
II It will but seek out all who are engaged
in the same business and not attempt to
tax the corporate franchise. 1t is that at
tempt by congress to TAX a franchise
created by the state and not the general
power to tax that makes this argument
Woman started Fight
A woman began the fight on the con-
stitutlonality OF the corporation taN inn
posed by provisions of the Payne ldrich
act of 1909.
Even before the time, when the law went
In effect. Stella r. Flint as general
guardian of the property of Samuel ~
Stone jr., minor and owner Of stock
In the stOne-Tracy company, doing "A gen
eral merchandise business at Windsor VT
started proceedings to test the consttu-
tonality of the law She protested against
the Stone-Tracy company making the re
turn and paying the tax. because she
claimed that the law was unconstitutional
The circuit court Of the United states for
the district of Vermont could not take
that view Of the law. and since directed
that her petition be dismissed, She APP
pealed to the supreme court.
Other similar Suits.
The course pursued i'm the Vermont case
was followed i'm seventeen other suits
brought i'm almost as many circuit courts.
In all the law was upheld, but without
extended consideration. The theory was
that the supreme court would conduct an
investigation into the constitutionality of
the law and that the conclusions of the
lower court would aid but little while 1t
would delay the final determination.
The major part of these cases were
argued before the supreme court last
March, but all were restored to the docket
for reargument before a full bench.
The legal contest is conferred largely over
the consideration OF few words In the
extended provisions, relating to the tax,
The words are these:
THAT every corporation, joint stock com
panv or association, organized for profit
and having a capital stock represented by
shares, and every insurance company
shall be subject to pay annually
special excise tax with respect to the
carrying on or doing business by such cor
poration, joint stock company or associ-
alton or insurance company equivalent
10 1 per centum upon the entire net in
come over and above 5000 received by 1t
from all sources during such year, eX-
elusive of amounts received by 1t as
dividends upon stock of other corporations,
Joint stock companies or associations, or
insurance companies. subject TO the tax
hereby imposed"
Bring big Revenue.
These words would bring $25OOoOOo an
nualIy into the federal treasury.
The law was attacked in the first argu-
ment before the court from various points
OF view Maxwell Evarts of New York
laid stress on the point that the law was
unconstitutional because 1t invaded the
sovereignty of the state by laying burdens
upon the corporate franchise granted by a
state to a corporation. Former Senator
Foraker of Ohio contended that despite
the name given 10 the tax that II was a
corporation income tax" such as were
pronounced unconstitutional by the de-
cisons of the court fifteen years ago. Be
sides these two conflicting arguments many
others have been advanced by the long list
of counsel engaged in the various cases
The government insisted that the law
was Just what it said 1t was on It's face,
an excise tax assessed upon doing bust
ness" rather than on franchises" and
not upon income, but merely measured by