Evening star. [volume] (Washington, D.C.) 1854-1972, 1911-03-13

limit the exertion OF authority which
may be essential to national exist
ence."
Justice Day next addressed himself to
the objection that the tax was unequal
and arbitrary. He first considered
whether, as claimed, the law made an
unconstitutional distinction between the
corporations and partnerships or indi-
viduals He said there was a substan-
tial difference between the carrying on
OF business between corporations taxed
and the same business when conducted
by private firm or individual.
The thing taxed said he. lis not
the mere dealing in merchandise. in
which the actual transactions may be
the same, whether conducted by individ
uals or corporations. but the tax is laid
upon the privileges which exist in con-
Quoting business with the advantages
which inhere in the corporate capacity
of those taxed. and which are not en-
joyed by private firms or individuals.
These advantages are obvious, and have
led to the formation OF such companies
in nearly all branches of trade. The
continuity Of the business. without inter-
ruption by death or dissolution, the
transfer OF property interests by the dis
position Of shares of stock. the advanta-
ges OF business controlled and managed
by corporate directors, the general alb
sence OF individual liability-these and
other things inhere in the advantages OF
business thus conducted, which do not
exist when the same business is conduct
ed by private individuals or partnerships
TT this distinctive privilege which
is the subject of taxation, not the mere
buying or selling or handling Of goods.
which may be the same, whether done
by corporations or Individuals
Measurement by Net Income.
Measurement of the tax by the net
income OF the corporation or the COM
pany received by 1t from all sources
was next 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.
I'VE must not forget that the right
taxation devolves upon the Congress
and not upon the courts. and such Sc
lections are valid unless constitutional
limitations are overskepped." The
court was able to find no such viola
ton Of constitutional limitations.
Clear ts the Court.
Justice Day said it was especially OBJ
jected that certain OF the corporations
whose stockholders challenged the valid
ity of the tax were so-called real estate
companies. I'VE think 1t clear" said he,
that corporations organized for the pur-
gagged in such activities as leasing prop
erty. collecting rents. managing ONCE
buildings, making investments OF profits.
Or leasing ore lands and collecting royal
ties. managing wharves. dividing profits.
and, in some cases. investing the surplus.
are engaged in doing business within the
meaning Of this statute, and In the ca
pacity necessary to make such organiza-
tons subject to the law
The court held that 1t was no part
he {nl fol
lions of a state to provide means of
transportation, supply artificial light.
water and the like. Therefore 1t was
determined that the Coney Island and
Brooklyn Railroad Company and the
marlborough Rapid Transit Company
Of New York are subject to the tax.
After dealing at length with numerous
other objections to the law, Justice Day
came to the attack upon II based on the
so-called publicity features OF the pro-
visions which require certain returns to
be made to the government as an aid IN
the assessment OF tax.
THE taxation being. as we have held,
said the justice, within the legitimate
determine what means are appropriate
and adapted to the purposes OF making
the law effectual.'
The opinion thus summarized covers
fifteen Of the eighteen cases in which
the constitutionality OF the tax was g.
sailed. The applicability Of the act
to the real estate trusts was decided IN
the other three cases.
In the other cases the law was held
inapplicable to the department store
trust and to the Cushing real estate
trust, both Of Boston. on the ground
that these trusts were not organized
under the statutes of the state or OF
the United States. but existed merely
under the common law.
The Minneapolis syndicate was held not
ia n estate
which it held before a recent reorgan-
ization had gone out Of its control, and,
therefore, the syndicate was not doing
business" within the meaning Of the law.