The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1911-03-13
TAX IS UPHELD.
Continued from Page one.9

capacity of those taxed and which are
not enjoyed by private firms or in
dividuals.
These advantages are obvious and
have led to the formation of such
trade.
ut is the distinctive privilege
which is the subject of taxation"
Measurement of the tax by the net
income of the corporation of the COM
pany received by it from all sources
was next defended by Justice Day as
not being so unequal and SO arbitrary
and baseIess as to fall outside of the
authority of the taxing power.
Justice Day said it was objected
that certain of the corporations whose
stockholders challenged the validity of
the tax were SO called real estate COM
panies.
Real Estate Corporations.
1--WE think it clear said he, that
corporations organized for the purpose
of doing business and actually engaged
in such activities as leasing property,
collecting rents, managing office build
ings, making investments for profits,
or leasing ore lands and collecting roy
altieS, maintaining wharves, dividend
profit and in some cases investing the
surplus are engaged in doing business
within the meaning of the statute and
in the capacity necessary to make
organization subject to law
The court held that it was no part
of the essential governmental func-
tions of state to provide means of
| transportation supply artificial light.
water and the like. Therefore, it was
determined that the Coney Island
and Brooklyn Railroad company and
the PETERBOROUGH Rapid Transit COM
pany of New York were subject to
the tax.
After dealing at length with nu-
merOus other objections to the law
Justice Day came to the attack upon
it based on the so called publicity
feature and the provisions which re-
quire certain returns to be made to
the government as an aid in the as
sessment of tax.
THE taxation. being, as we have
held said the justice, within the le-
ultimate powers of congress, it is for
that body to determine what means
are appropriate and adapted to the
purpose of making the law effectual.'-
History of the Case.
President Taft is regarded as the
father of the corporation tax idea as
represented in this statute He evolv-
ed it during the discussion of tariff leg
islation and income and inheritance
taxes in 1908-1909. AS a result, congress
inserted the corporation tax law
into the Payne-Aldrich tariff act pass
ed by congress. 1t became section SO
of that statute.
The law subjected to the tax in a !
general way every corporation, joint
stock company, or association organ
lied for profit and having a capital
stock represented by shares, and every
insurance company. The tax was des
ignated as "a special excise tax with
respect to the carrying on or doing
business and it was provided that it
should be equivalent to one per CEN
tum upon the entire net income over
and above $1,000 received from all
sources" during the year. There were
f0 he gRl 6o6 From 13a f10x
ever, amounts received as dividends
upon stock of other organizations, sub
jected to the tax. Exempted from the
tax We're certain organizations, such as
labor, agricultural, horticultural and
fraternal beneficiary societies.
One paragraph of the law provided
for the publicity of the returns requir-
ed as basis of fixing the tax.
The tax was to be paid on or before
June 80 of each year and the returns
for each year were to be made by
March 1. 1t was provided that the tax
should be paid for the year ending
June 30, 1910. although the law was not
passed until August 3, 1909.
Test Is Begun.
Not until shortly before the expira-
ton of the time for the making of
the returns was the first move made to
test the validity of the tax. This move
ment to test the great question about
corporation law started in the little
lOWn OF W10QSOr, VI.
There Maxwell Evarts New York
lawyer, son of the late William NJ.
Evarts. has a summer home. He had
often noticed the keen competition be-
tween the two general merchandise
stores in the town, the Stone Tracy
company, a corporation. and Dwight
Tuxbury & Sons, partnership con-
Germ He saw what he believed was
discrimination against the corpora
ton If it were compelled to pay the
4ox H.
rangements, and SO accepted the po-
sition of counsel for Stella P. Flint, |
as general guardian of the property for
Samuel N. Stone. Jr.. a minor, who
owned stock in the Tracy COM
pany. Suit was brought in the federal
court by Mr.. Evarts to enJoin the cor
poratiOn from making the returns and
paying the tax. on the ground that the
law was unconstitutional The cor
poratiOn filed a demurrer, which was
sustained and the bill dismissed. An
appeal was taken to the supreme court. |
The institution of the Flint Stone-
Tracy case was the signal for the
bringing of suits in many sections of
the United States. All were decided !
in exactly the same way, and almost
invariably appeals were taken to the
supreme court. The government was
allowed to intervene. Fifteen cases, !
headed by the Flint-StoreTracy suit, |
were set for argument on March IA. |
1910.
Other Cases Begun.
Besides the Vermont case, those
heard were:
Wyckoff Van Derhoof vs. The Coney
Island & Brooklyn Railroad company.
Francis L. Hine VS. Home Life In
surance company of New York.
Fred w. Smith VS.. The Northern
Trust company of Chicago
William H. Miner VS.. The Corn Ex-
change National bank of Chicago.
Cedar Street company VS.. Park
Realty company of New York.
Lewis w. Jared VS.. The American
Multigraph company of Cleveland.
Joseph E. Gay VS.. The Baltic Min
ing company, Michigan corporation.
Percy H. Brundage vs.. Broadway
Realty company of New York.
Paul I.acrnix Motor Taxir1 eft er