The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-11-21
Far-Reaching Decision
Is Handed Down by
Court Of Appeals.
NO AUTHORITY
FOR DEDUCTION
Practice Of Many Commissioners
Of Revenue in Deducting In
debtedness Without Founda-
ton in Law-All Money
Advcntured in Business
Subject to Taxation.


whether ii be borrowed OF not, is sub
ject TO taxation. according TO de-
cision handed down Yesterday by tie
Supreme Court or Appeals Of Virginia
raxatIon on capital. tho opinion holds
is not to he regulated by tie an
nounccd capital stock Of 2 corporation
OF hy tile cash capital of proprietor
III the case OF An individual business
but IS To DC ba scd on the actual amount
Of capital. actually adveutured for the
business. The case IN point is that OF
the Bridgewater Manufacturing Com
pany against Funkhouscr. conmis-
s!oncr of the Revenue. from tho Circuit
Court OF Rockingham County. Ia the
/ opinion written bv Judge George VI.
Harrison. and III which the other
Judges concur, the decision " Inc
lower court is affirmed.
The BridEewatcr ManufacturinE
Company brought AN action III the
Circuit Court Of Rockingham County
against the commissioner OF the rev
cnue. asking the court TO correct al
lcEcd erroneous assessment OF taxes.
which relief was denied by the lower
court, and that decision stands affirm
| cd
Returned No PersonnI Property
The complainant IS i corporation.
with offices in Bridgewater. Rocking
i:am County. operating two Touring
mills and a WOODEN mill at Bridgewate,.
The company paid 1872 taxes assessa-
bic against il rs an Incorporated COM
pany by the state Corporation Commis-
sion, but IL d!d not report anything,
and was not assessed with anything
on the personal property assessment
books for that year
, AZ the November term Of the Rock
! ingham County Circuit Court Judge
i. a
/ jury 10 examine the tax returns. as re-
! quired by Section SIS of the Code or
/ NirEinia
Among many persons summoned he
| fore the special tax grand jury was
the manager OF the Bridgewatcr Manu-
featuring Company. who testified that
the total running capital OF the com
panr Invested in the business on july
]. 1912, was Sl6.1oS. and of this sum.
$4,000 was borrowed money.
AsscSsed by GRIND Jury
The grand jury directed the Com
missioner Of the Revenue for Ashby
District. Rockingham County. 10 as
sess the company for a capital Of sle.-
'oS. the amount il had in its business
on July J, The witness having been un-
, able TO state the exact amount engaged
IN the business on February l. the OH
cial taxing date. The aggregate tax
! imposed was s229G4 being s5S45
State, s6d.Sl county, and sloi IS district
taxes
In the opinion Judge Harrison first
valves aside as without merit series
Of technical objections as 10 the man
ner in which the assessment was made
the date OF The assessment. and other
aiiegeu irregularities in the method OF
procedure. The opinion continues:
Judge Harrison's Opinion.
To say that the meaning OF capital
"a daE TO-,
return forms. applied only TO individ-
| uais would be 10 hold that the Cen
eral Assembly intended TO impose q
less tax on corporations than on indi-
Niduals for carrying on the same bust
ness. The provisions Of the tax bill
furnish no ground for such conclu-
sions
There is no difference between :,
business as conducted by a corporal tion
and the same business rs conducted bv
an individual that would warrant any
olHereni meaning 10 be given TO the
! term capital in the two eases. ANY
! such discrimination would .be a viola-
non OF the requirements of the Consti-
! tuition as TO equality of taxation.
Ordinarily and in common pariance
the word capital when used in refer
ehcn 10 commerce or trade including
hiahutactnring siSn;,ies the money and
clher property adventured in the busi-
ness II can make no difference whctb-
er The capital or part OF il is borrowed
or NOT IL Is none the less the capital
. OF the user. and is employed for his
profit and at his risis
Many tSed borrowed Capital
II IS illustrated BY the evidence in
| 'he present case that large business
enterprises are often carried on chiefly
aho sometimes wholly with Il borrowed
workine capital. and if this indebtcd-
iS TO be deducted III ;sceriaininc the
! capllai for taxation. such enterprises
woul" escape their Just share OF the
pufoeh OF soNernment. though they
were ERE. actually earning large prolits
mere Is no reason why such Il dis
criminaton- should 10 made in favor
OF manufacturers and others falling i'm
.nc same class.&'nd there is nothing
In the statutes ~ justify the concIu
SION that any such favor was intended
me iaw-ma<ing power alone must de-
'erhine whether such an allowance
shouid De made or not i'm asccrtaininr
me lust amount of taxable property.
ana IL made. against what forms or
| property the deduction shall be al
lowed, ana 10 what extent. Az agairtst
the capital of the complainant i'm its
business. tho law-making power ba.
provided for no deductions of its in.
debtedncss, and the Idea that II in
tended to do so is neEatived By the
fact that, in the same statute, n de-
duction is expressly allowed I'm taxing
another and different form of prop
erty. There is no error In the iudf-@
mcnt complained of, and 1t is affirmed :,
Has Far-Hcaching Effect
It was stated yesterday that the
opinion was one of far reaching effect
In many of the counties. it is said. IT
has been the accepted practice of com
mtssioners of tho revenue I'm making