Watertown leader. [volume] (Watertown, Jefferson County, Wis.) 1909-1911, 1911-03-17
CORPORATION TAX
LAW SUSTAINED
United States Supreme Court Up
holds Its Constitutiona!ity.
BENCH UNANIMOUS IN VIEW
Right of Senate to Insert Revenue
Provisions in Tariff Act Origina-
ting in the House Also Is
Approved.

OultSu SIdt0S QauQ0Q GOWN us
decision holding that the corporation
tax provisions of the Payne-Aldrich
| tariff act were constitutional. Thus
ended controversy waged almost
| continuously since President Taft first
suggested their enactment to congress-
Justice Day read the decision in the
corporation tax case suits testing the
law having been brought from every
section of the country. By it's affirma-
ton the revenues of the national treas
ury are increased annually more than
| $25,OOO,0O0 from the tax on the net in
comes Of corporations doing business
for profit, in addition to which the
principle of the right to levy such a
tax is vindicated and, the most of all,
that for which the government has
been striving, access to the books OF
the big corporations and full publicity
with regard to their affairs is abso-
| lutely assured
The main points Of the opinion, as
read by Justice Day, are:
! 1t was within the power of the SEN
| ate to insert the corporation pro-
| visions in tariff law which origina-
ted in the house.
The tax is an Excise tax on the do
ing of business" which is exactly the
basis on which the government de-
Tended the law.
| The provisions of the law are not
| the arbitrary exercise of a power.
| This was urged in argument as one
reason why the law should be held un-
constitutional
The tax is regarded as measured by
| income rather than being a tax on in
come
Of all the objections to the tax
raised by suits in all parts of the
country none of them was found suf-
f1cient to nullify the law.
Near the outset of the opinion is
the staten nt that the tax SIS i'm
posed not upon the franchises Of the
corporation, irrespective of their use
in business, nor upon the property Of
| the corporation, but upon the doing of
corporate or insurance business, and
with respect to the carrying on there
OF in a sum equivalent to one per
centum Of the entire net income over
and above $4,000 received from all
sources during the year-that is, when
| imposed in this manner, it is a tax
upon the doing of business with the
advantages which inhere in the Pc
culiarities of corporate Or joint stock
organizations of the character de-.
scribed. AS the latter organizatio
share many benefits of corporate in
| terests it may be described generally
as tax upon doing business in cor
porate capacity.
THE tax is one per cent. Of the en-
tire net income over and above $4,000
received from ali sources
"The incOme," said Justice Day, lis
! not limited to such as is received from
property used in the business strictly
speaking, but is expressly declared to
| be upon the entire net income above
$4,000 from all sources excluding the
amounts received as dividends on
stocks in other corporations, joint
stock com panies or associations, or in
surance companies also subject to the
| tax. In other words, the tax is i'm
posed upon the doing of business of
the character described and the meas
ure Of the tax is to be the income with
the deduction stated, received not
Only from property used in business
but from every source"
Justice Day drew the distinction be-
tween the corporation tax and the for
mer income tax law, which was de-
clared unconstitutional, in answering
| objections that had been raised
against the corporation tax. He said
the income tax was held to be direct
because imposed on property simply
because OF it's ownership
'f1n the present case," said Justice
| Day, "the tax is not payable unless
there is carrying on or doing of bust
ness in the designated capacity and
this is made the occasion for the tax,
measured by the standard prescribed
| The difference between mere owner
ship of property and the actual doing
of business in certain way"
Justice Day dismissed the objection
that the tax was unequal and ar
bitrary. He first considered whether,
as claimed, the law made an unconsti-
tutional distinction between the cor
porations and partnerships or indi-
viduals. He said there was a sub
stantial difference between the carry
ing on OF business between corpora
lions taxed and the same business
when conducted by a private firm or
Individual.
| r,.o g.. A,,.J..