Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1911-01-19
TAX
CASE IS REARGUED
Fourteen Suits Bunched with the
Vermont One That Blazed
the Way.

Washington, Jan. H.--Rcargument of
| the constitutlonality of the corporation
tax provisions of the Payne Aldrich tariff
act OF 1909 began to-day before the SUI
preme Court of the United States Fiji
teen Of the Is cases raising the question
Wero taken up for consideration as one
case, tho other three being postponed be-
| cause or peculiar questions involved in
each for separate consideration later
Maxwell Evarts of New York made tho
open argument, attacking the validity of
| the tax.
A woman began the lgnt on the con.
stitutionality of the corporation tax i'm
posed by provisions OF the Payne AIdrich
tariff act of 1863
Even before the time, when tho Lave
went In effect. Stella p. Flint. as genera,
guardian OF the property OF Samuel NJ.
/ stone, Jr.. a minor and owner Of stock in
tho Stone-Trecy company. doing a gem
eral merchandise business at Windsor.
VI, started proceedings to test the con-
| additionally of tho law. She protested
rainst the stone-Tracy company makinr
the return and plying the tax. because
she claimed that the law was unconstitu.
| tional.
The circuit court Of the United States
/ for the district OF Vermont could not take
that view Of the law. ana hence directed
that her petition be dismissed She ap-
| pealed to the Supreme Court.
SEVENTEEN FOLLOWED SUIT.
The course pursued in the Vermont
Ease was followed in seventeen other
suits brought IN almost rs many cir
cult courts. In all. the law was up-
held, but without extended considera-
ton. The theory was that the SUI
preme Court would conduct an inves-
LEGATION into the constitutionalitv OF
the law. and that the conclusions of
the lower court would aid but little
while 1T would delay the final deter
mination.
The major part OF these cases were
argued before tho supreme Court last
March. but all were restored to
tho docket for reargument before a
fun bench.
The legal contest Is conferred largely
over the consideration of q few words
in the extended provisions. relating to
the tax. The words are these
THAT every corporation, joint stock
company or association, organized for
profit and having a capital stock rep
resented by shares, and every in
surance company shall
be subject to pay annually d
to the carrying on or doing bust
ness by such corporation, joint stock
company or association. or insurance
company. equivalent to one per cen'tun
| upon the entire net income over and
G bove $4,000 received by it from all
sources during such year, exclusive Of
amounts received by 1t as dividends
upon stock of other corporations. joint
stock companies or associations, or in
surance companies, subject to the tax
| hereby imposed"
These words would bring s25, 900 900 an.
nually into the federal treasury.
The law was attacked in the first argu-
ment before the court from various points
of view. Maxwell Evarts of New York
! laid stress on the point that the la" was
| unconstitutional because il invaded the
| sovereignty of the State BY laying bur
dens upon the corporate franchise granted
by State to a corporation Former
| Senator Foraker of Ohio contended that
despite the name given to the tax that It
! was a Corporation income tax" such as
were pronounced unconstitutional BY the
| decisions Of the court Ii years ago Be-
! sides these two conflicting arguments,
many others have been advanced by the
long list Of counsel engaged IN the var.
| Gus cases.
| The government insisted that the law
was lust what it SAID 1t was on its face,
| an excise tax assessed upon doing bust
ness" rather than on franchises" and
not upon income. but merely measured
| by income.
Suppose mat n corporation had taken
out charter to do business but had not
done any" said Justice Day. Would
that corporation be subject TO this
taxi"
| Mr. Evarts said that it would not, be-
| cause its net income did not exceed
$500. Justice Day followed up his ques-
ton with another about the distinction
| between the right to do business and the
doing Of business. Mr.. Evarts had trou-
bic in making a distinction that did not
do violence to his argument. He finally
stated his position in reference to the
tax to he this: by limiting the tax TO
| corporations, Congress made their char
ters as such a condition precedent to the
! tax and therefore it taxed the instru-
| mentality OF tho state"
|