Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1911-03-24
MOST IMPORTANT
Corporation Tax Decision Has
Bearing Upon Proposed
Amendme nt.
TO ALLOW INCOME TAX
May Be Precedent of Far Reaching
Consequences-Much Authority
Conceded Congress.

One Of the most important infer
ences 10 be deducted from the corpo-
ration tax decision is the apparent
sympathy Of the court as at present
organized with the decision that threw
out the income tax of 1894 as uncon-
stitutional. This expression. of course.
is indirect, but IL leaves scarcely 4
doubt AS the proposed constitutional
amendment expressly conveying 10
congress the power to levy an income
tax without regard TO population *
having rough road through the state
legislature. it is likely that when next
the subject of an income tax is agi-
tated in congress this decision viii be
extensively quoted from. The distinc-
ton is pointed ont sharply that where
the old tax was a levy on property
merely because of It's ownership this
levy is an excise tax upon the prlvi-
iege of doing business in a particular
way. On thls poi1t the court says:
THE tax under consideration as we
have construed the statute may be de-
scribed as an excise upon the particu-
lar privilege Of doing business IN a
corporate capacity. e., with the ad-
or quasi corporate orga niZation or
when applied TO insurance companies
for doing the business of such compa-
MES. The requirement to pay such
taxes involves the exercise of prlvi-
leges. and the element of absolute and
unequivocal demand is lackiug II
business is not done in the manner de-
scribed in the statute no tax is pay
able
That is the heart Of the courts an
swer TO the plea that the tax is in eff
feet direct tax and therefore uncon-
stitutionaL
No cogency IS allowed by the court
TO the argument against the right Of
congress 70 impose an excise tax upon
franchises granted By the states.
''The constitution contains orleSnop,,
limitations on the right of congrt so,,rce
icy i', excise ta@e5' says the ueqed him
IneE mus. De leFled TOT the Inc hid
welfare and are required to baned ir
iorhi .LIous 'ne IHlteu S'a1s length
In affirming the federal power cIance
state corporations the court soolon
enaI 'he rev enue o. Tue I hlted utterly
90 roret I1a co,fe. y.o.' <,.or, 80 picked
,c.f1-,tto., a., ,,l. 81, -.eo,,,.s : form q
stotos &, 3D. q, ,.,,-,,,,rt +s,o,uI flled
c,,,.o,-,,r,o,,+., tld and
,,r,,,,o,, ,,,,,,-,, rose 49, es and
" and
The Plea that the tax IS not Uni . north
because IL uiScrlhlHateS SO 81 plainly
against corporations In favor OF
ness done by partnerships or psn with
persons the court answers simpott and
stating that uniformity. ia the z Reau-
used by the constitution, meonsa r,uca
geographical uniformity. The prtTn viii
has always been to levy on some tmbrsce
patio1S and to omit others. ana the true
true of both the states aud tie fa
government. Besides this. the q
tages to be derived from Corpl lave!
existence are such as TO make 10 "o'
distinction very real and reasOnatHs
The thing taxed" said Justice Day, :
SIS not the mere dealing IN merchan-
disc in which the actual transactions
may be the same. whether conducted
by individuals or corporations, but the
tax IS laid upon the privileges which
exist I'm conducting business with the
advantages which inhere in the cor
porate capacity OF those taxed aud
which are not enjoyed by private firms
or individuals. These advantages are
obvious and have led to the forma ton
1t such companies in nearly all
branches or trade. The continuity Of
the business without interruption 10y
death or dissolution. the transfer Of
property interests by the disposition OF
shares OF stock. the advantages OF
business controlled and managed by
directors. the general eb- Z
sence OF individual liability, these and
other things inkere in the advantages
II business thus conducted. which 10
not exist when the same business is
Conducted by private individuals or /,
IL IS this distinctive
<,v2Iege which * the subject OF taxa
ION. not the mere buying or selling or.