Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1911-03-14
Unanimous Opinion of Court Holds
TaftS Tax Law Valid
Case has been Hard Fought in the
Court Ever Since 1909
(Ry Associated Press.)

10y Associated Press)
Washington, D. c., Mar. 13.-ln an
unanimous opinion the supreme court
of the United States today held that
the corporation tax provisions Of the
Payne.A1drich tariff act were consti'
tutional. Thus ended controversy
waged almost continuously since Pres
ident Taft first suggested their enact
ment to congress.
The opinion was announced by JUS
tice Day. 1t was an elaborate treat
ment of the subject, containing ap.
proximately 10000 words. About half
an hour was spent by the justice in
explaining the position of the court
orally to the bar, printed opinion
being used as basis for the remarks.
The justice first determined that the
tax was Just what it claimed to be in
the act, namely an excise tax on the
doing of corporate business and no:
a direct tax on the ownership of prop
erty. With that point decided, the
justice took up at more or less length
the various objections urged against
the tax as an excise and disposed Of
them to the satisfaction of the deci-
sion. Finally he interpreted the law
so as to apply to real estate compan-
les and so-called public service cor.
porations, but not to real estate
trusts"
Practically all of more than $27, 000,-
900 assessed for the fiscal year ending
June 30, 1910, on corporations in the
United States has been paid into the
treasury. The exact amount received
to February l, 1911, the latest date
for which precise figures are available,
was $27, 1O8,189. The amount assessed
last year was $27,130,904. Added to
this were penalties amounting to
about 100000 for failure to pay the
tax when due. What the tax will
amount to this year, the commissioner
of international revenue who has
charge of the collection, is not yet
able to determine, even approximate
ly. All reports from corporations were
due March l, and it is thought that
practically all Of them have been re.
ceived. But work has just begun on
few days since this task has begun,
have totaled only $1,500,000, small
fractional part of the whole. On or
before June 1, these figures will be in
the hands of 67 International revenue
collectors throughout the country, who
will Immediately notify the corpora
lions in their districts of the amount
they owe to the government for the
privilege of doing business. Taxes
not paid by July 1 will have added a
penalty of 5 per cent, and interest at
the rate of one per cent per month for
each month they remain unpaid.
Story Of the Case.
The fight against the constitution.
atty of the corporation tax began al.
most Immediately after the enactment
of the Payne-Aldrich tariff law in
1909, of which it is q part. During
the long days Of wrangling in congress
over that measure, President Taft or.
iginated plan to raise a part Of the
revenue necessary for the running of
the government by imposing corpor-
alton 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 had declared unconsti-
tutional the income tax measure en-.
acted by congress. In order to have
a valid tax, the errors of that law
had to be avoided. Finally the at
tention Of members of the house and
senate were called to the proposed
corporation tax as constitutional
measure. 1t was urged as preferable
to another income tax, which, it was
argued, probably would be declared
unconstitutional, and as under the cir
cumstances better legislation than an
inheritance tax. When the tariff bill
was in the senate, the corporation
tax provisions were inserted as an
amendment to the Payne bill passed
by the house. They remained there
and became part of the tariff act,
The provision 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 "ey.
cry corporation, joint stock company
or association, organized for profit
and having a capital stock represent
ed by shares, and every insurance
company organized under the laws of
the United 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 $1,000 received from
all sources" exclusive of amounts re.
ceived as dividends upon stock of 9th.
er corporations, joint stock companies
or associations, or insurance compan-
les. 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