Dakota farmers' leader. (Canton, S.D.) 1890-19??, 1911-03-24
TAX LAW IS UPHELD
UNITED STATES SUPREME COURT
HOLDS CORPORATION TAX
is CONSTITUTIONAL.
LONG CONTEST AT AN END
Justice Day Reads DecIslon-Law Pro
yIdes That All incorporated Bodles
Shall Pay Tax o. Net Income
Above $4,000.

Neutrality-suspicious. a dissenting
opinion the Supreme court OF the Uni
ted States Monday handed down lts
decision holding the corporation tax
law constitutional. Thus ended a con
troversy waged almost continuously
since President Taft suggested its
enactment to CONGRESSES.
Justice Day read the decision In the
corporation tax ase 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
$25. 0 0 900 from the tax on the net in
comes of corporations doing business
for profit, in addition to which the
principle of the right to levy such &
tax is indicated and, the most OF all,
hat for which the government hal
been striving, access to the books OH
the big corporations and full publicity
with regard to their affairs is abso'
lutely assured.
The main points of the opinion, al
g by Justice Day. are:
1t was within the power Of the sen.
ate to insert the corporation pro-
visions In a tariff law which orig1na-
ted in the house.
The tax Is an Excise tax on the do
ing Of business" which is exactly the
basis on which the government de-
Tended the law.
h 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 IN.
constitutional.
The tax is regarded as measured by
income rather than being a tax on In
come.
OF all the objections to the tar
raised by suits In all parts OF the
country none Of them was found suf-
ficient to nullify the law.
Near the outset OF the opinion is
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 a sum equivalent to one per
centum Of the entire net income over
and above 5000 received from all
sources during the year-that Is, when
imposed in this manner, II 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 q tax upon doing business In cor
porate capacity"
The tax Is one per cent. Of the en-
tire net income owe and above $4,000
received from all sources.
1.-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
IS, 200 from all sources excluding the
amounts received as dividends on
stocks in other corporations, joint
stock companies or associations. or in
companies also subject to he
tax. In other words, the tax Is i'm
posed upon the doing of business Of
the character described and the eas
ure of the tax is to be h income with
the deduction stated. received no
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 the tax,
measured by the standard prescribed.
The difference between mere n
ship of property and the actual doing
of business in a certain way"
Justice Day first considered whether,
as claimed, the law made an unconsti-
tutional distinction between the cor
porations and partnerships or indi-
viduals. He said there was a sub
stantial difference between the carry
ing on of business between corpora
lions taxed and the same business
when conducted by a private Arm or
individual.
Measurement Of the tax by the net
income of the corporation or the COM
pany received by 1t from all sources
was defended by Justice Day in his
opinion as not being so unequal and
SO arbitrary and baseless as to fall
outside of the taxing power.