Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-05-27
THE INCOME TAX.
xIx.-The Corporation
Tax.
BY Frederic J. Haskin.

The corporation tax law enacted in con
nection with the Payne-Aldrich tariff bill
under circumstances that constitute q re
markable episode n American fiscal legis
lation has proved an efficient revenue
raising instrument. and whatever the de-
fects of the other parts of the Payne Al
drich law. no one seems to criticise the
operation of the corporation tax clauses
II has raised an average of about So
100000 a year in revenue. Furthermore
it has compelled corporations to keep ac-
curate records of their business and &c
give the federal government a look ir
upon their affairs that has generally beer
regarded as salutary. Knowing that Their
sworn statements to the internal revenue
bureau might be used against them in
other than tax proceedings. 1t has beer
followed by general tendency upon the
corporations TO keep their houses in order,
There are little less than 100000 corpo-
raticnS making returns showing their an
nual net incomes They represent a total
capitalization of about So. oo1.u1o $50. and
total bonded and other Indebtedness OF
approximately So OOo.H n,CG5. Their net
income approXinates S3.2.D.GV,GU year
A look at the records of the tax IN the
internal revenue bureau discloses some
interesting facts concerning different lines
of business. For instance. while the ma
jor portion of the adverse criticism OF
corporations has been directed against
the railroads and other publicservice
corporations, the records reveal the fact
that they make smaller net earnings than
any other class of corporations.
On the other hand. until recently. few
people have had much to say against
financial institutions
Big Profits Shown and insurance com
by Tax Records. corporation tax rec
ords disclose the fact that they make a
greater profit than any other class of in
situations OF course, the fact that rail
ways and the like are quasi-public partly
accounts for this. These returns show
that the net earnings of financial insti-
tutions and insurance companies amount
to 1854 per cent upon their capital stock
while those of mercantile corporations
amount to 1913 upon their capital stock
The percentage of industrial corporations
averages $50 per cent. and that of pub
lie service corporations All FER cent. The
four states of New York. Pennsylvania
Illinois and Ohio pay more than half OF
the tax. New York itself pays nearly q
fourth of it.
AS intimated above. the legislative his
tory of the corporation tax law is a re-
markable one The measure was not dis
cussed or even thought of in the pres-
dental campaign that preceded it's en-
actment. and although the Constitution
vests in the House of Representatives
the right of originating all revenue legis-
lation. it did not originate there. was
never before it for consideration, discus
sion vote. except as it came up in a
conference report. 1t was not mentioned
in the inaugural address of Mr.. Taft.
was not introduced by any member of
Congress and had many other peculiar
and unusual experiences. AS matter
of fact, when it seemed that something
had to be done to keep Congress from
passing an income tax law the Attorney
General. George w. Wickersham. drafted
the law and had it placed in the hands
Of Congress.