The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1911-03-13
Corporation Tax Is
Constitutional Says
u. S. Supreme Court
Decision In Famous Cases Which Have Been Hanging Fire IN
High Court for Some Time, Handed Down Today
Many Corporations Attacked the Corporation Tax Provision Of
the Payne-Aldrich Bill

pany or association, organized for
pront and having a 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 per
centum upon the entire net income
over and above $4,000 received from
all sources exclusive of amounts re-
ceived as dividends upon stock Of
other corporations, joint stock COM
panies, or associations, or insurance
companies, subject to the tax"
The law proided also that returns
should DO 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
congress enacted legislation providing
that the returns should be open to
inspection only upon rules and regu-
Iations approved by the president
Woman Began Fight.
The first action in the courts TO
test the constitutionality of the law
was begun In the United States circuit
court OF Vermont. A woman began
1t. Stella p. Flint, guardian of the
property Of Samuel N. Stone. IT,,
stockholders in the Stone Tracy Co.
OF windsor, VT, began an action to
nave the company restrained from
paying the tax She claimed that the
tax was unconstitutional. He 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 for argument before the supreme
court in March, 1910, fourteen other
cases likewise raising the validity OF
the law and decisions likewise sustain
ing the constitutionality of the tax.
had reached the court. They were ad-
vanced and heard with the original
case. Because presumably of vacan-
cies on the bench, the cases were re-
stored to the docket for reargument.
This reargument occurred in January.
1911.
The Objections to the Law.
The constituitonality of the tax was
attacked. Prominent among the OBJ
tections to the law was the argument
that the tax was a direct tax, not ap-
portioned, according to the constitu-
ton. Some dubbed the tax "a cor
poration income tax" and Invalid for
the same reasons that the income tax
was declared unconstitutional IN 1896.
Others claimed that 1t was a tax on
state franchises and hence was an UNI
constitutional interference with the
sovereignty Of he states Another line
of objections was based on the arg1-
ment that as an excise tax, il was not
unfirm but contained unconstitutional
The publicity features
OF the returns were attacked as taxi
ing private property without compen-
sation. To all of these objections, the
department, through the late solicitor
general, Lloyd w. Bowers, at the first
hearing and through his successor.
Frederick w. Lehman, at the second
hearing, made answer.
After the argument of the fifteen
cases, the court took UP three other
cases involving the tax. In these the
principal controversy was over the in
depreciation OF the law. The leading
point was whether the tax was to be-
imposed on Boston trusts" organized
to hold real estate, but not incor-
porated. The Boston concerns con-
tended that the tax should be assessed
only on concerns organized under the
statutes of the United States, states or
territories. The government argued
that business concerns organized under
the common law were included within
these meant to be taxed.