The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1911-03-14
Provisions Of P avn e.
Aldrich Act Declared
Constitutional.
OPINION GIVEN
BY JUSTICE DAY
Il Is Held that Tax Is Imposed,
Not on Ownership, but on
Doing Of Corporate Bust
ness"-Decision Brings End
to Long and Heated
Controversy.

e W dsHIHStOT MirCn lin Il unan
lmous opinion, the Supreme Court cf
the United States to-day held that tho
corporation tax provisions Of the
PayncAldrich tariff act we're consti-
tutonal. This ended controversy
waged almost continuously since Pres
ident Taft first suggested their enact
nient TO Congress.
The opinion was announced by Jus-
ticc Day. appointed TO the Supreme
Court bench from Ohio. in 1903 IT
was an elaborate treatment OF the sub
Jet, containing approximately 10000
words. About half an hour was spent
by tho Justice orally explaining TO the
bar the position CT the court, tho print
cd opinion being used as a basis for
the remarks
An Excise Tax.
The justice first determined that the
tax was Just what il claimed to be in
inc act. merely an excise tax on the
doing OF corporate business, and not
direct tax on the ownership of prop
2rty. With that point decided tho jus.
ice took UP at more or less length
the various objections urged against
the tax as an excise tax and disposed
or them to the satisfaction Of the
court. Finally he interpreted the law
80 as to apply to real estate COM
panies. and the so-callcd public ser
vice corporations but not to real estate
& trusts"
# The opinion prcdcates that the tax
Is Imposed not upon the franchises
o. the corporation irrespective OF their
use in business. nor upon the property
OF the corporation. but upon tic doing
n 81 corporate or insurance business and
Win respect 10 the CARRYING on thereof
IN "A SUM equivalent 10 / per ccntum
or the entire net income over anu
above $1,000 received from all sources
during the year; that is. when imposed
In this manner il is &, tax upon the
doing Of business With tile advantages
which nhcrc III the rcculari,ics Of
corporate or Joint stock organization
or the character described AS the lat
Ter organizations share many benefits
OF corporate organization 1t may he
described generally as a tax upon the
doing Of business IN corporate ca
pacity.
This View OF the measure OF the
tax is strengthening when we note
that as 70 organizations under the laws
OF foreign countries the amount az
net income over and above $4,000 in
Guides that received from business
transactions and capital invested in
the United States. the Territories
A!aska ana District Of Columbia"
Not Direct Tn1.
Answering The various obicctiore
raised against the tax, Justice Day first
took UP the contention That II vas a
diect tax and uncons itutionaI ;or the
same reasons that the famous income
tax law was declared Unconstitutional
In 1898. He pointed out that The in
come tax was held to be dircc. because
imposed upon property simply beca use
of its ownership.
"In the present case. said Just;oo
Day, the tax Is not payable unless
there is q carrying on OF business in the
designated capacity and this is made
the occasion for the taX, measured nv
the standard prescribed"
Justice Day next took up the oh
lection that the provisions in question
ieVled lax upon the exclusive right
or State to grant corporate
franchises. III that it taxed franchises
which are the creation OF a State in its
sovereign right and authority
we think says The opinion sit &c
the result OF the cases heretofore de-
cided in this court. that suck business
activities though exercised Because of
state created franchises, ara not be-
yohd inc taxing power OF tlit United
States. I'm 4
II cannot he supposed that Il
was intended that it should he within
the power OF individuals acting undr,.
state authority to thus impair and
unit INC eNertion Of authority which
may be essential TO national existence ;.
Justice Day next addressed himself
TO The objection that the tax was I'M
cqual ana arbitrary. The thing tan
ed said he lis not The moro do.,in,-
In merchandise. in which The actual
transactions may be the same, whether
conducted by individuals or corpora
lions, but the taX Is laid upon Tho
( privileges which exist in conductinn
business with the advantages which
inherc IN the corporate capacity or
those taxed, and which arc not en-
1oyed by private firms or indiyjdua1s
These advantages arc obvious and
have led to tic formation OF such
companies in nearly all branches Of
trade The continuity Of the bust
ness without interruption by death or
dissolution, the transfer OF propertv.
interests by the disposition OF shares
OF stock. the advantages of business
cohtroilcd ana managed by corpora e
directors, the general absence OF in
diNidua liability, these and other
things inhcrc in the advantages inns
conducted, which do not exist when
"a tho same business is conducted b,.
private individuals or partncrsbins
Measurement Of the tax BY the ne,
INCOME from all sources, according 70
inc opinion, is not so unequal aud
arbiirary as TO be outsidc2 of the au-
8 thority OF the taxing power.
DcyoIvcs Upon Congress.
we must not forget that the right
70 select the measure and objects Of
"a tho taxation devolycS. upon the Con-
Ercss and not upon the courts. and
j such selections arc valid unless con-
stitutional limitations are over
stepped" i|>.
The court was able 10 ind no s,cb
L ~