New-York tribune., 1912-03-15
REPORTS ON BUSINESS TAX
Republicans Declare Democratic
Bill Unconstitutional.
A BURDEN ON ENTERPRISE
Majority Defend It., Saying 1t
Would Be Upheld by the
Supreme Court.
TFrom The Tribune Bureau


Washington. March IA report ,attach-
ing the constitutionalty of the Democratic
bill TO extend the excise tax law, and de-
claring that under it's terms Andrew car
negie, John ID. Rockefeller, the Astors and
other large holders OF real estate VIII es-
cape taxation. while the men who are car
rying on active enterprise will bear the
burden, was filed to-day by the Republican
members Of the Ways and Means Commit
tee.
The minority report. presented by Repre-
sentative Nicholas Longworth, is dlrectly
opposite fat its contentious TO the majority
report. presented by Representative Under
wood The Democrats at great length up
hold the constitutlonallty Of the excise tax
which they have devised to raise the 800
0G1.00 in revenue which VIII be lost IL the
free sugar bill becomes law.
Republican members OF the Ways and
Means Committee point out that the tax Is
IN reality an income tax, which has been
declared unconstitutional by the Supreme
Court Crticlsing the plan OF the Demo-
Gratis TO levy an excise tax against AL
those doing business" whose net incomes
exceed 5000 a year. the minority report
SAYS:
If any part OF the bill could constitution
aIlv survive IL would he that part only
which purpOrts to levy tax upon incomes
which are the result Of the work of hriIls,
copartncrships or individuals. Thus. undeI
the terms of the bill, incomes derived from
accumulated wealth would not be subJec.
to taxation and the tax imposed IL iesleu
against the right TO work ana TO MAINTAIN
the struggle for existence.
Under this bill Mr.. Carnegie, for instance
and John -. Rockefeller would entirely es-
cape taxation, and such great real estate
America or abroad, and whether their IN
come is spent in America or diverted To tof-
eign countries, would be exempt rom taAa-
ton; while the men who are carrying OH
prise are giving employment to their fel-
low men ard affording them means OF nEeh-
hood. would be subject to taxation. Ihc
effect of this bill. therefore, would be u"
encourage idleness and sloth ana 10 dis-
courage enterprise and industry on the part
of the individual
The minority report points out that an
exactly opposite purpose Is carried out lh
the home of the income tax. Great Britain
whore incomes which are not the result OF
the efforts Of their possessors have a higher
rate Of taxation imposed on them than
those which result from industry and enort
The Democratic Contentious.
The majority report says, in part
While the bill embodIes a new application
Of taxes IL carries all the modern phliosopns
Of taxation. II proposes to obllge inc cili,
zen to contribute annually fair ana Just
portion OF his net gains TO the ma;htenaiioJJ
Of the government. This bill, IL cnacteu
into law will accomplish in the main an
the purposes of a general income tak law
ana At the same time escape the disappiof"''
~ the Supreme Court. ss IL keeps wen
within the principles laid down ny tiat
court I'm sustaining the consutntIohaH'S Vi
tho corporation tax law .o,
A large percentage OF the customs taxes;
amounting to 1909. g65. 662 in 1911 was paII
by peOple whose incomes did not efr'eu
81 600 wear The bill aims TO distribute
more Justly the tax burden hy shiItlng an
equitable portion OF the taxes 10 the shouId-
ers Of those Of larger earnings. Ih,r. are
no statistics as 10 the number oi indlHld,
uals firms and copartnerships In the Umted
States that would be subject TO the taxes
proposed by this bill. 49,
The proposed tax is not direct TAX
upon the property. real or personal, OF me
copartnerships or individuals. but special
excise upon tho carrying on or DOING DUST
ness by such copar,nerships or indivlduais,
and II therefore needs 10 apporuonm"nt
among the states according To popuiatloh'
ms required by the Constitution with ref
crencc 10 direct taxes.
The proposed tax Is uniform throughout
the United states II II he true that the
tax Is an excise. its Indirect character ~
at once established.
The tau is legislatively intended az an
excise, AZ shown by the plain language OF
the BIZ.
The subject Of the tax IL the conduct or
transaction Of business which. according
TO u uniform line of decisions by the Su-
prenc Court of the United states, is n
proper subject OF excise tax.
The fact that the tax Is To he measured
bv the net income Of the taxable person or
firm does not change it's real character
-O--