Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1911-03-13
$25,OOO,0OO Annual
Revenue Assured to the
Government.
SURREME COURT ACTS
Not Levied on Income, but
Measured by Income and
Therefore Valid.

Washington, March 13.-The Omitted
States supreme court today decided
the corporation tax constitutional.
At 1925 Justice Day began TO de
liver the decision of the supreme court
Day first announced 1t was within the
power of the senate to insert the cor
poration lax provisions in the tarifl
law. which originated in the house. and
of which the tax provisions are part
TAX ON .'DOING BUSINESS"
Day held the tax is "an excise tax on
doing business, which is exactly the
basis on which the government has de
Tended the law. He also held the tax
provisions are not an arbitrary exer-
else of a power. This was urged in
the argument as one reason why the
law should be held constitutional. By
regarding the tax as measured by in
come rather than being a tax on in
come. the opinion held that the law
was constitutional, notwithstanding the
law might reach incomes from non
taxable sources.
OPINION UNANIMOUS.
The courts decision in the corpora
tion tax case was unanimous. BY this
decision the source of income of ap-
proximately $25.OOOOO0 annually is as
sured 10 the government OF all oh
jections to the tax raised by suits in
all parts of the country none OF them
was found sufficient 10 nullify the law.
MADE SOME EXEMPTIONS.
The court did hold that the tax was
not applicable to a real estate trust
-,
DER any statute, but under the common
law
USE NOT CONSIDERED.
Near outset OF the opinion is the
statement the tax-''is imposed not
upon franchises Of corporations ir-
respective of their use in business,
nor upon the property of corpora
ton, but upon the doing of corpor-
ate or insurance business and with
respect to the carrying on thereof,
in a sum equivalent to one per cent
um of the entire net income over
and above $4,000 received from all
sources during the year; that is,
when imposed in this manner il is
a tax upon doing business. with the
advantages which inhere in the pc
culiarities of corporate or joint
stock organization of the character
described. AS the latter organiza-
tions share many benefits of cor
porate organization it may be de-
scribed generally as a tax upon the
doing of business in a corporate ca
pacity.
MEASURE OF TAX EXPLICIT.
This tax, II is expressly stated is
TO be equivalent TO one per centum of
the entire net income over and above
$1,000 received from all sources
during the year This is the meas
ure of the tax explicitly adopted by
the statute The income is not linn
tied to such as is received from the
property used in the business, strict
" speaking. but is expressly deClar-
ed 70 be upon the entire net income
above $1,000 from all sources. ex-
Guiding the amounts received, as div
idends on stock in other corpora
tions. Joint stock companies or as
sociations, or insurance companies
are also subject TO the tax. In other
words. the tax is imposed upon the
doing of business of the character de-
sCribed and the measure OF tax IS 70
be the income. with the deduction
stated. received not only from the
property used in the business, but
from every source
VALUE STRENGTHENED
This view OF the measure Of the
tax is strengthened when we note
that as 10 organizations under the
laws of foreign countries the amount
of net income over and above $1,000
;,cira,s Tho. rarsiVaG from, buSiDpSs
transactions and capital invested in
the United States. territories. Alaska
and District OF Columbia"
ANSWERS OBJECTIONS.
After Justice Day had thus given
the Interpretation which the court
had put upon the provisions of the
act. he proceeded to answeg 'Tarious
objections urged against the c Istitu-
tions.ity of the tax
As TO the contention il was a direct
tax and unconstitutonal for the same
reasons the famous income tax law
was declared unconstitutional in 1895.
He point out the income tax was held
To be direct because imposed upon
property simply because Of its owner
ship In the present case. said Day the
tax is not payable unless there is
on or doing Of business in f.
a designated capacity and this is
made the occasion for the tax. meas 4
ured by the standard prescribed The
difference is between mere owner
ship and the actual doing of business
U.s.HAS POWER.
Discussing the objection that the