Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1911-03-13
Corporation TAX
LAW sustained
IMPORTANT PROVISION or PAYNE
TARIFF BILL OPENED az gu.
PREME COURT.
TAX PROVISIONS NOT
ARBITRARY USE OF POWER
Court Holds That ss.tut. Is Good,
While Possibly Collecting Income
From Non-Taxsb's Propsrty-First
Suit Attacking Law Started by Won.
an-Numerous Other Actions.

oH-Numerou3 Otner Actions.
Washington, March 13.-The corpo-
ration tax provisions Of thu Payne
Aldrich tariff act were sustained today
as constitutional by the supreme court
OF the United States.
The court was unanimous In the cor.
poration tax decision. Thereby a
source Of income OF approximately
$4,000, 900 annually is assured to tho
government
OF all the objection to the tax raised
by suits in all parts Of the country
none Of them was found sufficient to
nullify the law. Tho court did not hold
that the tax was not applicable to the
real estate trust Of Boston. which
was organized not under any statute
but under the common law.
Tho law was held not applicable to
the Minneapolis syndicate. real es-
tate concern, on the grounds that 1t
was not doing business within the
meaning Of the law.
At 1928 Justice Day began to deliver
the decision. The effect was not ap-
parent In the beginning OF the reading.
Day Announces Decision.
BY regarding the tax as measured by
income rather than being . tax on In
come. tho opinion seemed. - Justice
Day proceeded. to hold that the law
SIS constitutional. Notwithstanding
,i1.. law might require the collection OF
the inco,:le fl o!rl non-taxabao sources.
Justice Day lirst announced that 1t
was within the power OF the senate 20
insert the corporation tax provisaons in
the tariff law which originated In the
houss. and Of which the tax provisions
are . part
Justice Day said that the court held
the tax a. an Excise tax on the doing
Of business" which 10 Exactly the basts
on which the government has defended
the law.
Justice Day next seemed to hsld that
the tax provisions WeDA not tho 'usbd-
uary exercise OF y power. This was
urxad In argumea,t ~ one foaeon why
the law should be held unconstitu-
tlonal.
A Tax 20 % Business.
Near the outset Of the opinion ~ It
appears in printed form. L. the state
mont that the tax 10 Imposed not up
on tho franchises Of the corporations
Irrespective Of their businesses nor up
on the property Of the corporations,
but upon the corporate or insurance
business In respect to the carrying OF
a sum equivalent to per cent OF the
entire net income over and above So
900 received from oil sources during
the year-that Is, when imposed in this
manner 1t ls a tax upon the doing OF
business with the advantage which I'm
here's in the pecularities Of corporation
OF Joint stock organizations Of the
character described. As the latter or
eanizations share many BENEFITS OF cor
porate organization, 1t may be directed
generally as a tax upon the doing OF
business In a corporate capacity.
All Revenues Assessed.
'.This tax, It is expressly stated. is
70 be equivalent to per centum Of
the entire net income over the above
81. 900 received from all sources during
the year. This Is the measure Of the
TAX explicity adopted by the tribunal.
The income is not limited to such as is
received from property used in the
business, strictly speaking. but Is ex-
rressly to 30 settled upon the entire net
income above $4,000 from all sources,
excluding the amounts received as
dividends on stocks In other corpora
ticns, Joint stock companies or associa-
tions, or Insurance corranies. also sub
jcct to the tax. In other words the tax
IL imposed upon the doing OF business
Of tho character described, 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. This view OF
the measure Of tax In strengthened
when We note that to organizations un-
der the laws Of foreign countries the
amount Of net income over the above
$4,000 includes that received from b1,si-
ness transactions and capital invested
in the United States, the territories.
Alaska, and tho District Of Columbia.
Part Of Tariff lav.
The fight against the constitutional
ity OF inc coTposSss!c:: tag he9an almost
immedioatsly after the enactment OF
the PaynS-Aldrich tariff law Of 1903, Of
which Il IL . part. During the hong
days Of wrAnslinS In conGreA over that
measure, President Taft originated q
plan 70 raise part Of the revenue neces-
cary for the running OF the government
by Imposing Q corporation tax. He Is
said 20 have made the nEze rough draft
Of the proposed jew ana to have asked
the department. Of Justice TO perfect It.
Scarcely fifteen years before. the SUI
prsmo court OF The United States had
declared demonstrations the income
tax measure enacted by congress, In
order TO have valid tax. tho Grors
OF that law had 20 be avodded. Finally
the a&tonaion Of snembors OF tn houee
and senate were oa1l0d to the proposed
cooperation tax a. . eons1Deuk1onsi
measure. Il Was urged - peofssa6ls
20 anothsr 5ncome tax which, lt was
argued, PROBABLY would b Declared
uneonSeitukIonal and - under the cir.
cumseanoes better legislation than IN
tax. When che tariff bg,l
was In the senate. tlse cosposa9ion tax
provisions wore inssEts1 = IN 1nsspd-
.gis9 . Z.