Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1911-03-22
TAX LAW IS UPHELD.
UNITED STATES SUPREME COURT
HOLDS CORPORATION TAX
is CONSTITUTIONAL.
LONG CONTEST AT AN END
Justice Day Reads DeclsIon-Law Pro-
vides That All Incorporated Bodies
Shall Pay Tax on Net Income
Above $4,000.

Washington.-W Without dissenting
opinion the Supreme court of the Uni
ted States Monday handed down its
decision holding the corporation tax
law constitutional. Thus ended con-
troversy waged almost continuously
since President Taft suggested its
enactment to CONGRESSES.
Justice Day read the decision in the
corporation tax case suits testing the
law having been brought from every
section of the country. By its affirma-
ton the revenues of the national treas
ury are increased annually more than
$25, 100000 from the tax on the net In
comes of corporations doing business
for profit, in addition to which the
principle of Ne right to levy such a
tax Is vindideKed and, the most of all,
that for which the government has
been striving, access to the books OF
the big corporations and full publicity
with regard to their affairs is abso-
lutely assured.
The main points of the opinion, as'
read by Justice Day. are:
It was within the power Of the SEN
ate to insert the corporation pro-
visions In tariff law which origina-
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.
The 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 un-
constitutional.
The tax is regarded as measured by
income rather than being tax on In
come.
OF all the objections to the tax
raised by suits in all parts of the
country none of them was found suf-
f1cient to nullify the law.
Near the outset OF tho 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 sum equivalent to one per
centum of the entire net income over
and above $1,000 received from all
sources during the year-that is, when
imposed in this manner, it is tar
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 it may be described generally
as tax upon doing business in cor.
porate capacity"
The tax is one per cent Of the en-
tire net income over and above $4,000
| received from all sources.
The income said Justice Day, '4s
not limited to such as is received from
4 property used in the business strictly
| speaking. but is expressly declared to
be upon the entire net income above
$4,000 from all sources excluding the
amounts received as dividends on
stocks in other corporations. Joint
stock companies or associations. or In
surance companies also subject to the
tax. In other words, the tax is i'm.
posed upon the doing of business Of
the character described and 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
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 carrying on or doing Of bust
mes in the designated capacity and
this is made the occasion for the tax,
measured by the standard prescribed.
The difference between mere owner
ship of property and the actual doing
of business in 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 sub
stantial difference between the carry
ing on of business between corpora
tions taxed and the same business
when conducted by private firm or
individual.
Measurement of the tax by the net
income of the corporation or the COM
pany received by it 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.
Kills Two and Himself.
San Francisco.-R. R. Mostyn, a
gunner on the cruiser California, Tues
dav shot and ki11od poucio ,Ooo1, =,