Iowa state bystander. [volume] (Des Moines, Iowa) 1894-1916, 1911-03-17
TAX LAW IS upheld
uNlTED STATES SUPREME couRr
HOLDS CORPORATION TAX
is CONSTITUTIONAL. 5
LONG CONTEST At AN Emu

LONG CONTEST At AN Emo
Justice Day Reads Declslon--Law Pro.
vides That All Incorporated Bodies
shall Pay TAX on Net lncomi
Above 5000.
Washington.-Without dissenting
opinion the Supreme court of the Uni
ted States Monday handed down Ito
decision holding the corporation tad
law constitutional Thus ended con.
troversy waged almost continuously
since President Taft suggested Ito
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 its afirma,
ton the revenues Of the national treas.
ury are increased annually more than
$4,000, 900 from the tax on the net In.
comes of corporations doing bushes,
for profit, in addition to which the
principle of the right to levy such 4
tax is INDICATED and. the most of all.
that for which the government has
been striving, access to the books o1
the big corporations and full publicity
with regard to their affairs is absoi
lutely assured.
The main points of the opinion, a
read by Justice Day. are:
1t was within the power of the sen!
ate to insert the corporation pro-
visions in a tariff law which origina!
ted in the house.
The tax Is an Excise tax on the do!
ing of business" which is exactly thd
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 I'm,
constitutional (.
The tax is regarded as measured by
income rather than being tax on mi
come.
OF all the objections to the tar
raised by suits in all parts Of tho
country none OF them was found SUI
ficient to nullify the law. &
Near the outset OF tho opinion il
the statement that the tax 'is 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 sum equivalent to one per
centum of the entire net income over
and above $4,000 received from all
Eources 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 organizations
share many benefits Of corporate, In
terests 1t may be described generally
as a tax upon doing business, in cor.
porate capacity"
: AO t0A 40 oAOH POA SOASs ~ SAAS 49,
tire net income over and above $1,000
received from all sources.
THE income" said Justice Day, "is
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 companies 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, its ownership.
In the present case" said Justice
Day, the tax is not payable unless
there is a carrying on or doing of busi.
mes in the designated capacity and
this is made the occasion for tho 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 first considered whether.
as claimed, the law made an unconstt
tutional distinction between the cor
porations and partnerships or indt
viduals. He said there was q sub
stantial difference between the carry.
ing on of business between corpora.
tons taxed and the same business
when conducted by private firm Of
Individual
Measurement Of the tax by the net
income Of the corporation or the com
pany received by it from all sources
was defended by Justice Day in hlc
opinion as not being SO unequal ana
SO arbitrary and baseless as to fall
outside Of the taxing power. Y I. a
ssS5 NJ PIX
j Charles II. Bennington % Dead, 5
Watertown, N. Y.--Chaltes H. Rem
lngton, treasurer 81 the Remingtor
Martin Paper company. died Wednees.