Arizona republican., 1911-03-14
CORPORATIONS. HAVE ID PAY. Validity of Tariff Act Tax
 Up Held IA UNANIMOUS OPEN ION Though Stoutly Assailed From Every Possible Side the Law Suggested By the President is Sustained By the Supreme Court
IA UNANIM 0US 0PI IN ION


 ous opinion the supreme court of the United States today held that the cor poration tax provisions of the Payne Aldrich tariff act were constitutional | Thus ended a controversy waged all most continuously since President Taft first suggested its enactment to con- gress..
 The fight against the constitution ality of the corporation tax began all most immediately after the enactment | of the Payne Aldrich tariff law During the long days of wrangIinG in congress over that measure, President Taft originated a plan to raise part of the ! revense necessary for the running of the government by imposing a corpora- | tion tax. He is said to have made the first rought draft of the proposed law and to have asked the department of | justice to perfect it.
 SUBSTITUTE FOR INCOME TAX. Scarcely fifteen years before, the supreme court Of the United States had | declared unconstitutional the income | tax measure enacted by congress. In or ! der to have a valid tax. the errors of I that law had to be avoided Finally the attention Of members of the house and senate were called to the proposed corporation tax as a constitutional measure. It was urged as preferable to another income tax which, it was | argued. probably would be declared un- constitutional and as under the circum- stances better legislation than an in heritance tax. When the tariff bin was in the senate. the corporation tax pro- | visions in Tod to the Payne bill passed by the house. They remained there and became q part Of the tariff act.
 ITS PROVISIONS. R "a
 The provisions of the law stated that 1 the tax was special excise tax with ! respect to the carrying on or doing business" It was to be paid by every corporation. joint stock company or as sociation. organized for profit and hav- ing a capital stock represented by shares. and every insurance company, organized under the laws of the United States or of any state or territory IL was provided that the tax should be | equivalent to l per centum upon the entire net income over and above s5. 900 received from all sources" exclusive of amounts received as dividends upon stock of other corporations. joint stock companies. or associations. or insur- ance companies. subject to the tax. | The law provided also that returns should be made by those taxed to the treasury department. to be used as a | basis for assessing the tax These were open to inspection but in 1910 con- gress enacted legislation providing that the returns should be open to inspec- tion only upon rules and regulations approved by the president
 THE TEST.
 The first action in the courts to test ! the constitutionality of the law was begun in the United States circuit court for the district of Vermont. A woman began it. stella P Flint. guardian f the property of Samuel x. Stone, Jr. stockholder in the Stone Tracy com pany of Windsor, Vt. began an action to have the company restrained from paying the tax. She claimed that the tax was unconstitutional Her attor- ney. Maxwell Evarts brought the case to the supreme court. after the circuit court had declined to hold the tax un- constitutional
 When the Stone Tracy case came up | lOI DtlOTt lne supreme court in March. 1910. fourteen other cases likewise attacking the validity of the law and decisions likewise sustaining the constitutionality of the tax. had reached the court. They were advanced ! and heard with the original case. Be | cause presumably of vacancies on the bench, the cases were restored to the docket for reargument. This reargu- ment occurred in January. 1911.
 A GENERAL ASSAULT.
 The constitutionality of the tax was attacked from all the points from which any tax possible of enactment by congress could be attacked. Prominent among the objections to the law was the argument that the tax was a direct tax not apportionad. according to the constitution Some dubbed the tax "a corporation income tax and invalid for the same reasons that the income tax was declared unconstitutional in 1895. l Others claimed that it was a tax on state franchises and hence was an un- constitutional interference with the sovereignty of the states. Another line of objections was based on the argu- meut that as an excise tax. it was not uniform. but contained unconstitutional classsifications The publicity features Of the returns were attacked as taking private property without compensation.