Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-09-30
TAX ON INTANGIBLE
PROPERTY CALLED
UNLAWFUL, Insult
Attorneys for Peters Estate
Bring Action to Re-
cover Levy.

law of the District of Columbia is as
sailed in brief filed today in the
Supreme Court of the United State:
by Attorneys A. S. Worthington anc
Vernon E. West on behalf of John c
Ieald, George h. Hamilton and Will
ton J. Lambert, copmittee of the es-
tate of Eugene Peters. in suit
brought by them against the District OF
Columbia to recover tax levied upon
the intangible property of the estate
and paid by the committee under pro-
test.
The suit was filed originally in the
Supreme Court of the District of CO.
1umbia, where it was decided by JUS
tice Stafford in favor of the District.
Appeal was taken to the Court of
Appeals of the District, and, after
argument, that court certified cer-
TO the Supreme Court of the United
States for determination. Counsel for
the committee then filed motion
to have the latter court consider the
whole case, the decision of which
motion was reserved until final hear
Ing.
Law Void. Contention.
It IS contended in the brief. among
Che numerous points raised, that the
intangible tax law is altogether void
because by the provisions of the stat
utes governing the fiscal relations be-
tween the government of the United
States and the taxpayers of the Dis
trict of Columbia. the money collected
from the taxpayers under the in
tangible tax law goes into the Treas
ury of the United States, to be used
for the general purposes of the gov
ernment. This. it is asserted, is be-
yond the power of Congress.
The brief points out that June 80.
1918, the District had collected in
taxes ss,2sO,6s5.46 more than it had
expended. In the fiscal year ended
June 80. 1919. the tax collected on in
tangible property amounted to $822.-
292.78. of which $7s3,2s6.72 went to
surplus. making total surplus to
the credit of the District on that
date of $4,063,9e2.1S.
1t is contended that this so-called
surplus. created to large extent by
the collection of the intangible tax, is
not kept as trust fund for the bene-
fit of the District. but is treated the
same as moneys derived from federal
revenues and subject to appropria-
lion as such.
The attorneys for the committee
state that, while this seems a
one. and quote from debates in the
Senate on the reprisal of the half-and-
half plan, in which Senator Works
said: The money which has already
been contributed by the District of
Columbia and not expended belongs
tiop. There is no way by
which the District can make any de-
mand upon the for -the-
rspayment of the money they have
paid under legal taxation.
1t simply remains in the Treasury OF
the United States government. to be
dealt with as the government may
choose" And Senator Chiffon said:
'Is the money collected from the Dis
trict of Columbia legally District
af n
into the Treasury of the United
States; it is the money of the United
States, and it goes into the Treasury
as does any other money" These
statements are supported by deci-
sion of the controller Of the
Treasury.
Raise ON Tangible Directed.
The attention of the court is called
to the fact that in the last appro-
priation bill Congress directed the
Commissioners to raise the tax rate
on tangible real and personal property
from $3.50 on $1c0 to an amount not
exceeding s2 per s108. sufficient to
penses for the current year, without
resort to the surplus. Pursuant to
this authority the Commissioners rails
ed the rate to s1.95 per 500.
The validity of the intangible tax
law is also assailed upon the ground
lndI the dCl every uOH-ECol-
dent of the District who engages in
business therein TO pay a tax on all
his intangible property wherever sit
uated, with certain exceptions applica-
BILE alike to residents and non-resi-
dents.
"the moneys and credits of any
person, Arm. association or corpora
tion resident or engaged in business
within the District" Many authori-
ties in the Supreme Court of the
United States are cited to show that
Congress has no authority to tax the
Intangible property of non-residents
of the District. except insofar as the
same may be used in business trans
acted here. To bring the act within
the power of Congress it would be
necessary to limit it to money and
credits forming part of the capital of
business done in the District. and this
limitation would apply to residents
and non-reSidentS alike. This would
violate the intent Of Congress. since
Congress had the power. and clearly
intended. to tax the intangible prop
erty of residents, no matter how used
and no matter where situated. 1t is
contended that, since it is impossible
to thus limit the operation of the
law. it is wholly void.
The employers liability cases, 207
United States, 463 are cited as conclu-
employers liability act was held wholly
void, because it related to employees
engaged in commerce within single
state. as well as to those engaged in
commerce within the District of Column
bia and in interstate commerce. The
Supreme Court decided that the act
could not be limited to interstate CON-
merce when applied to the states, with
out likewise SO limiting it when applied
TO the District. Congress had the pow.
rapItlafa the relation between en-
ployer and employe within the latter
and it was held that to limit the act tc
the District would be construction con-
trary to the intent of Congress.
1t is also contended in the briel
that the law is void because the
stock of business companies which By
reason of or in addition to incorpora
tion receive no special franchise ol
privilege" is so vague and indefinite
as not to be susceptible of reasonable
construction. There is no rule. 1t |!
asserted. by which the taxpayer car
ascertain just what is special fran
chise or privilege
Exemptfng Clause Attacked.
1t is pointed out that residents o
this District and non-residents en-
gagged in business here hold shares o
stock in thousands of business copora
tions holding charters-granted eithe
by special act or by general in
corporation laws-from every state il
this Union. and doubtless from ever.
civilized country in the world. Prob
ably no two of these charters and n
two of such general incorporation
statutes are alike. This law impose
upon the taxpayer the duty of send
ing for the charters and general in
. corporation laws involved in his case
and of then trying to determine whicl
OF them has received a special fran