The Vinita daily chieftain. [volume] (Vinita, Indian Territory [Okla.]) 1902-1913, 1911-03-13
BY Associated Press.


Washington, d. c., Mar. 13.-The
corporation tax provisions of the
Payne-Aldrich tariff act was sustained
today as constitutional, by the supreme
court of the United States. The court
was unanimous in the decision, and
thereby a source Of income of approx
imately twenty-five million dollars an
nually is assured to the government.
| The fight against the constitutional
ity of the corporation tax began almost
Immediately after the enactment of
the Payne-Aldrich tariff law of 1909,
of which it is a part. During the long
days of wrangling in congress over
that measure, President Taft originat-
ed plan to raise part of the revenue
necessary for the running of the gov
ernment by imposing corporation tax.
He is said to have made the first rough
draft of the proposed law and to have
asked the department of justice to
perfect it.
Scarcely fifteen years before, the
supreme court of the United States
had declared unconstitutional the in
come tax measure enacted by congress.
In order to have valid tax, the err
rors of that law had to be avoided.
Finally the attention of members of
the house and senare were called to
the proposed corporation tax as a con-
stitutional measure. 1t was urged as
preferable to another income tax which
it was argued, probably would be de-
clared unconstitutional and as under
the circumstances better legislation
than an inheritance tax. When the
tariff bill was in the senate, the cor
poration tax provisions were inserted
as an amendment to the Payne bill
passed by the house. They remained
there and became a part of the tariff
act.
The provisions of the law stated that
the tax was special excise tax with
respect to the carrying on or doing
business" 1t was to be paid by "every
corporation, joint stock company or as
sociation, organized for profit and hav-
ing a capital stock represented by
shares, and every insurance company.
organized under the laws of the Unit
ed States or of any state or territory.
1t was provided that the tax should be
equivalent to one per centum upon
the entire net income over and above
$4,000 received from all sources" ex-
elusive of amounts received as divi-
dends upon stock of other corporations,
Joint stock companies, or associations.
or insurance companies, subject to the
tax.
The law provided also that returns
should be made by those taxed to the
treasury department, to be used as a
basis for assessing the tax. These
were open to inspection, but in 1910
congress enacted legislation providing
that the returns should be open to in
spection only upon rules and regula-
tions approved by the president.
The first action in the courts to test
the constitutionality of the law was
begun in the United States circuit
court for the district of Vermont. A
woman began it. Stella P. Flint, guar
dian of the property of Samuel N.
Stone, Jr, stockholder in the Stone
Tracy company, of Windsor, VT, be-
gan an action to have the company
restrained from paying the tax. She
claimed that the tax was unconstitu-
tional. Her attorney, Maxwell Evarts.
brought the case to the supreme court,
after the circuit court had declined to
hold the tax unconstitutional.
When the Stone Tracy case came up
for argument before the supreme court
in March, 1910, fourteen other cases
likewise raising the validity of the law