The Ely miner., 1911-03-17
IS CONSTITUTIONAL
HIGHEST TRIBUNAL OF LAND
sUsTAINs TAFT's LEvYING
MEASURE,
OF THE PAYNE-ALDRICH LAW
First Legal Test Case Started by a
Woman.-Decision Assures Uncle
Sam Annual Income of
$25,0oo,0oo.
OF THE PAYNE-ALDRICH LAW

Washington, D. c. The corpo-
ration tax provisions of the Payne-Al-
drich tariff act were sustained as con-
stitutional by the supreme court of
the United States. The court was un-
animous in the corporation tax deci-
sion. Thereby source of income of
approximately $25,OOO,OOO annually
was assured to the government.
Of all the objections to the tax
raised by suits in all parts of the
country none of them was found suf-
ficient to nullify the law. The court
did hold that the tax was not appli-
cable to the real estate trusts" of
Boston which are organized not under
any statute but under the common
law.
Near the outset of the opinion, as it
appears in printed form, is the state
ment that the tax "is imposed not
upon the franchises of the corporation
irrespective of their use in business,
nor upon the property of the corpora
tion, but upon the doing of corporate
or insurance business and with respect
to the carrying on thereof in a sum
equivalent to one per centum of the
entire net income over and above
$4,000 received from all sources DUR
ing the year; that is, when imposed
in this manner it is a tax upon the
doing of business with the advantages
which inhere in the peculiarities of
corporate or joint stock organization
Of the character described. AS the
latter organizations share many ben
efits of corporate organization, it may
be described generally as tax upon
the doing of business in a corporate
capacity.
History of Corporation Tax Cases.
The fight against the constitution
ality 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.
The provisions of the law stated
that the tax was special excise tax
with respect to the carrying on or do
ing business" 1t was to be paid by
every corporation, joint stock com
pany or association, organized for
profit and having 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. 1t was provided
that the tax should be equivalent to
one per centum upon the entire net
income over and above $4,000 received
from all sources" exclusive of amounts
received as dividends upon stock of
other corporations, joint stock com
panies, or associations, or insurance
companies subject to the tax.
The first action in the courts to
test the constitutionality of the law
was begun in the United States cir.
cult court for the district of Vermont
A woman began it. Stella P. Flint
guardian of the property of Samuel N
Stone, Jr, stockholder in the Stone
Tracy Company, of Windsor, VT, be
restrained from paying the tax. She
claimed that the tax was unconsti
tutional. Her attorney, Maxwell
Evarts, brought the case to the su.
preme court, after the circuit court
had declined to hold the tax uncon.
stitutional.
The constitutionality of the tax was
attacked from all the points from
which any tax possible of enactment
by congress could be attacked. Prom
inent among the objections to the law
was the argument that the tax was a
direct tax, not apportioned, according
to the constitution. Some dubbed the
tax "a corporation income tax" and
invalid for the same reasons that the
income tax was declared unconstitu.
tional in 1895.
Mill and Lumber Plant Burns.
Winnipeg. Man. = The saw mill
and plant of the Red Deer lumber
company at Barrows, Sask., was de-
stroyed by fire. The loss is 100000,
covered by insurance.