The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1911-03-13
Is Provision Of the Payne-Ald-
rich Tariff Act Passed in
1909
HISTORY Of THE LEGISLATURE
AND SUBSEQUENT LITIGATION
Suit Was Instituted In the Federal
Supreme Court By O Woman of
Vermont Acting as Guardian For q
Minor Stockholder.

IuluOf 0VOCknOl0efs
Washington, March 13.-The cor
poratfon tax provision Of the Payne
Aldrfch tariff act we're sustained to-
day as constitutional by the supreme
court of the United States.
BY this law q source of income of
approximately $25.0oo.o0o annually
was assured to the government OF
all tine objections to the tax raised
BY the suits In all parts Of the coun-
try, none Of them was found sufficient
to nulllfy the law. The court did
hold that tho tax was not applicable
to. the Real Estate Trust company Of
Boston which had been Organised, not
under any statute but under tho COM
mon Law. The law was held not an
;pucable to the Minneapolis syndicate
In the real estate business ON the
ground that It was not doing bugi-
ness" within the meaning Of the law.
The decision Of the supreme court
In upholding the. constttutionality Of
the tax law relieves the government
the law been declared unconStitutton-
81 and favorable 10 the corporations.
tho government would have to return
to 362, $50 corporations an aggregate
Of more than $2s. 100000 paid BY them
into the federal treasury by the op-
Grafton of the law. and an issue Of
|governmaut bonds probably would
have been found necessary.
+ The court was unanimous In the
dectSion.
Justice Day first announced that #
was within the power o1 the senate
4 to insert Cooperation tn1 provision
h the t1xj6 law, whtnh oxikinxted In
the houSp. and ok Which the tnx pro
viAtons a5e ! part. Justice hay 1atd,
a. Il appeared 10 thoDe who nstsmed
to him, the court held the tax a. an
excise tax on the doing Of business"
which is exactly the basis On which
the government has defended the law.
He next seemed to hold that the tax
provisions were not tho arbitrary ox-
ercise Of that power. This was urged
in the argument a. one reason why
the law should bo held unconstftu-
ional.
The fight against tho constitution
! slity Of the corporation tax began al
most Immediately after the enactment
Of The Payne-Aldrich tariff law Of
1909, of which It is a part. During
the long days Of wrangltng In con-
grees over that measure, President
Taft originated q plan to raise part
of The revenue necessary for tho run
ming of the government BY Imposing
corporation tax. He is said to have
made she frst rough draft Of the pro-
posed Raw and to have asked tho de-
partlnent Of Justice to perfect It.
Scarcely fifteen years before. the
supreme court of the United States
had declared unconstitutional the In
come tax measure enacted BY con-
gress. In order to have valid tar,
the errors Of that law had to be
avoided. Finally the attentton Of
members Of the house and senate
were called to the proposed corpora
ton tax as constitutional measure.
It was urged as preferable to another
income tax which, It was argued.
probably would be declared unconsti-
trtional and as under the circum-
stances better legislation than an In
heritance tax. When the tariff bill
was In the senate, the corporation
tax provisions were inserted as an
amendment to the Payne bill passed
by the house They remained there
and became q part Of the tariff act.
The provisions Of the law stated
that 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 association organized for
profit aud having q capital stock rep
resented BY shares. and every insur-
ance 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
one per centum upon the entire net
income over and above $4,000 receiv-
ed from all sources" exclusive of
amounts received as dividends upon
stock of other corporations. Joint
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 10 lnepecuon, but IN 1917
congress enacted legislation provid-
ing that the returns should be open
to inspection only upon rules and
regulations approved by the prest-
dent.
The first action in the courts to
test the constitutionality of the law
was begun in the United States cir
HEAT BELT COZ