Evening journal., 1921-03-09
R. H. RICHARDS
POINTS Way To
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this State in order 10 comply
with the formal requirements OF
the Corporation Law.
Some of the members OF the
Legislature present seemed to
think this suggestion might be
helpful and offered a resolution
requesting me TO communicate
II more fully TO your committee.
Senator Alice objected TO the
suggestion on the ground that
he was opposed TO the elimina-
tion OF any OF the revenue pro-
visions from the School Law and
the incorporation Of substituted
provisions in separate acts. for
reasons that he gave.
While IL was different from
my original suggestion, I con-
sented TO endeavor 70 apply the
idea 1 had in mind 20 a change
in the provision OF the proposed
School Law imposing a tax on
corporations.
After going over this provision
OF the law last evening. am
sending you herewith one OF the
printed copies OF the bill known
as House Substitute for House
Bill No. 14i. etc" with the
changes made therein In lead
pencil. embodying the idea I had
in mind yesterday, In SO far as
the same can be embodied in
the existing bill.
The words keeping cash or
securities deposited in his
State" are as important as any
Of the other language used. For
eign corporations do this al the
present time, and will be able TO
do IL under your school law
without being liable to tax, be-
cause the mere keeping OF a
bank account or valuables on
deposit in a State does not con-
stitute doing business within
that state" under the definitions
Of that term that have been an
nounced from time to time by
the courts. Certainly, therefore,
II a foreign corporation could do
this in the State OF Delaware
without being liable 20 tax. do
nestle corporation should not
be Disseminated against in this
respect.
The suggestion that have
made does not in any respect
cover the objections 20 the cor
poratlon taxing provision OF the
bill arising out OF retaliatory
provisions Of the laws OF other
states taxing corporations. Those
engaged in the business OF or
ganizing corporations under the
Delaware law and maintaining
their local Office. 70 seems TO me,
as I stated yesterday. should be
consulted in this matter, mas
much as their Interests arc iden-
tical with the interests Of the
State.
Neither did my suggestion OF
yesterday remove objections
that have been made by such
companies as the Hercules Pow
der Company. Atlas Powder
Company and perhaps others
that merely have executive
Offices with clerical forces in
this State. but otherwise trans
act no business here. have
heard the counsel for one OF
these companies state that he is
entirely familiar with the New
York law and has made Returns
under II and that the proposed
Delaware law is by no means.
like the New York law. and
much more difficult TO under
stand and TO comprehend. lie
stated that he would be wholly
at loss TO know how to make a
Return for his company under
the proposed Delaware law. It
seems to me that representa-
tives OF such companies as
these should also be consulted.
Personally ii is my opinion
that 10 wouhd be much better for
the State to eliminate entirely
that part of the pending School
Bill that imposes this tax upon
COT OIUOTItAlNlios II NN llVA NNAANNt
the State can afford 60 take the
risks Of enacting il From what
heard yesterday, one of the
reasons why the advocates OF
this provision favor II is that
without il individuals could in
corporate themselves and thus
evade payment OF income tax.
This is true, but have never
seen a tax law yet that was not
susceptible Of evasion and 80 Tar
as the present provision for tax
ing corporations is concerned,
my slight study OF II has con-
vinced me that any corporation
that wants TO can evade II with
out difficulty and will not be re-
auired TO employ a lawyer "a
show IL how.
Yours very truly.
ROBT. II. RICHARDS