Evening journal., 1921-03-07

ness in this State with the result,
we believe that any corporation of
substantial size would, unquestion--
ably, leave the State.
Another very serious objection
to the bill is that it is very indef-
mite with respect to the ALLEGATION
of income Of Delaware corporations
and the courts might very well hold
that income received by a Delaware
corporation from its investments in
bonds or stocks Of other corpora
tions might very well be allocated to
this State, nor is it clear that the
income from royalties on patents,
trademarks or copyrights, or secret
processes might not all be allocated
to this State is taxed under the
provision Of the bill.
Another very serious objection
to the bill, which apparently was not
in the minds of the persons who
prepared the bill, is the question OF
retaliatory taxation. This bill pur-
ports to tax foreign corporations
upon the amount of their net income
arising from business done within
this State Under the retaliatory
provision Of the different States OF
the Union, this result would happen
Let US take, for instance, the case OF
the State of New Jersey. New Jer-
sey has a statute almost exactly the
same as the retaliatory statute of
this State, to the effect that if Della
ware taxes a New Jersey corpora
ton doing business in Delaware to
a greater extent than New Jersey
taxes a Delaware corporation do
ing business in New Jersey, then.
in that case, New Jersey viii i'm
pose the same tax upon Delaware
corporations doing business in New
Jersey that Delaware imposes upon
New Jersey corporations doing busi-
ness in Delaware. That is. under
this bill, if it should be adopted. all
Delaware corporations doing busi-
ness in New Jersey would have to
pay to the State of New Jersey a
tax of 8 per cent. upon the net in
come of such Delaware corpora
ton, arising from its business done
in New Jersey The probabilities are
that there are hundreds OF Delaware
corporations doing business in New
Jersey to one New Jersey corpora
ton doing business in Delaware. Ger
tainly no corporation organized un-
der the laws Of Delaware could afford
to do business in New Jersey
in competition with corporations
from other States, when tho
Delaware corporation would
have to pay a per cent. tax
in New Jersey and the corporations
of other States doing business there
would not have to pay such tax;
consequently the natural thing, and
, from a business standpoint the al
most inevitable result would be that
the Delaware corporation would
! surrender its Delaware charter and
take out a charter in some other
State which did not impose such
taxation and such corporation
would have no difficulty in finding
another State which would be glad
to receive it with open arms for all
ready other States of the Union,
particularly Maryland, have adopted
modern corporation laws and are
/ endeavoring to attract the corpora
ton business of the country TO
them.
I'm our opinion this bill is an ex-
ceedingly unwise proposition and
, has been prepared, evidently without
due thought to the existing hnan-
cial policy Of the State Of Delaware.
In our opinion it would destroy. to
n very large extent, the revenue now
/ being derived by Delaware from
corporations and would leave. moth
! ing in its place; for, if the result
of this bill would be to drive corpor-
ations from Delaware. we would not
only be deprived Of tho revenue now
accruing to US from the General
/ Corporation Law but we would also
/ fail TO receive the income from ex-
isting corporations because, under
! this bill, they would undoubtedly
leave the State.
"Our recommendation therefore is
/ that this bill, or any bill OF similar
/ character, should not be passed by
/ the General Assembly Of this State
CHAMBER OF COMMERCE.
civilian T. Budd, secretary"