The daily telegram. [volume] (Clarksburg, W. Va.) 1901-1926, 1911-03-13
CORPORATION
TAX LAW IS
Sustained
BY the Supreme Court Of the
United States in a De
cision To-day.
SOURCE OF INCOME
of Twenty-Five Million Dol
lars Annually is There
by Assured.
SOURCE OF INCOME

WASHINGTON. D. c., March 10
The corporation rax provisions Il the
PayneaAldrlch tariff act we're sus-
TUNED today as constitutional by the
Supreme Count of the United states.
Thereby source OF income Of ap-
proximately twenty-five million dol
lars annually was assured to the gov
crn.rcnt The court was unanlmors
in Its decision.
The fight against the constitutional
ity Of the corporation tax began al.
most Immediately after the enactment
of the Payne4Aldr.ch tariff law OF
1909, u which 1t is a. part. During
the long days of wrangllng in Con.
gross over that measure. President
Taft originated a plan to raise part CT
the revenue necessary for the running
of the governments by imposing cor.
poratlon tax. He Is said to have
made the first rough draft of. the
proposed law and u have asked the
Department of Justice to perfect it.
Scarcely fifteen years before, the
Supreme Court CT the United States
had derlared unconstitutional the in.
come tax measure enacted by Con-
gress. In, order to have a valid tax.
the errors q: that law had to he avoid.
cd. FINALLY the attention of mem.
bers NJ the House and Senate were
called ito the proposed corporation ia,
as a constitutional measure. 1t was
urged as preferable to another in.
come tax which, 1t was argued, prob.
molly would be declared unc6nstltu-
tIonal and as under the circumstances
better legislation than an inherltanc
tax. When the tariff bill was in tn
senate, the corporation tax provision
were inserted as an amendment e.,
tbs, Payne hill passed by the House
They remained there and became
part of the tariff act.
The provisions Of the law state,
that the tax was special excise Ia
with respect to the carrying on or dc
ing business" 1t was to he paid h
every corporation, joint STOCK Goa
pany or association, organized fc
profit and having a capital stock ror
resented by shares. and every in,a
ance company. organ ized under y
laws CT the United States or Of an
state or territory. 1t was provide
that the tax should lie equivalent
one per centum upon the entire n,
income over and above $4,000 receive
from all sources" exclusive
amounts received as dividends upo
stock of other corporations, ioir
stock companies; or associations.
insurance companies, subject to tn
tax.
The law provides also that return
should be made by these taxed TO thu
treasury department, to he used as
basis for assessing the tax These wer'
open to inspection, but in 1910 Con
gress enacted legislation providing
that the returns should be open to In
spection only upon rules and regula-
tons approved by the President.
The first action in the courts to test
the cunst;tutionality 81 the law was
begun in the UnitS3 states circuit
court for the d.striSt3of Vermont A
woman began ii. Stella p. Flint
guardian of the property of samue'
y. Stone. Jr., II stakeholder in the
Stone Tracy Company. of Windsor
VT. @egan an action to have the com
pany restrained from paying the tax
She claimed that the tax was uncon-
stituuonal. Her attorney, MAXWELL
Evarts, brought the case to the SUI
preme court, after the circuit court
had declined to hold the tax uncon.
stitutlonal.
When the stone Tracy case came
up for argument before the suprere
court N March. 1910. fourteen other
cases likewise raising the validity OF
the XIV and decisions likewise sus-
tanning the constituttonality of the
tax, had reached the court. They
were advanced and heard with the
original case. Because presumably OF
vacancies on the bench, the cases were
restored to the docket for rcargu-
mcnt. This reargument occurred cir
January 1911.
The constitutional:ty OF the tax was
attacked from all the points from
which any tax possible OF enactment
by Congress could he attacked. Prom
incnt among the objections to the law
was the argument that the tax wa.
d:rcct tax, not apportioned, according
to the constitution. some dubbed tn:
tax "a corporation income tax ant
invalid for the same reasons that tht
income tax was declared unconstitu
tionai in 1895. Others claimed tha5 /
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