Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-12
SUPREME COURT RULING
ON IS APPEALS AWAITED
Tax, Indian, Press and Racial Prejudice
Cases Ready for Decision
Upon Recovering.

TIE ueCree 50 as 10 make the contracts
voidable rather than void.
The problems Of state taxation tn
clude number Of very important eases.
The constitutionality of the Indiana tax
on chain stores is up for decision. This
Is graduated license fee on those OPP
Grating etcTes: operators Of one store
pay So; those operating two 70 flve
stores pay t10 for each additional store
above one; those operating between SIX
and 10 stores pay SIS per store In ex-
cess Of five; those operating between IL
and 20 stores pay fee OF $40 for each
store in excess of 10. while those opera
ting in excess of IS stores pay S25 for
each additional store.
The appellant, Lafayette Jackson op-
crates 225 grocery stores in the city of
Indianapolis. He claims that the tax
| Is contrary to the equal protection
clause of the Constitution, because he
is compelled to pay about 1900 times as
much as one would have paid had he
done the same amount Of business In a
single store.
There are now 81 states which have
imposed graduated taxes on chain
stores. AS a method Of curbing chain
store competition, such laws might be
held unconstitutional, under the deci-
sion in Liggett Company VS. Baldridge.
which involved the Pennsylvania law
imposing limitations on chain drug
stores. But in this case We have o
tax, and the test for determining
whether a tax Is contrary TO the equal
protection clause is whether the CLASH
flcation adopted by the state Is 80 arbi-
trary and unreasonable as to have no
| relation to the object Of taxation.
State Stresses Difference.
The object here Is to tax the privilege
OF conducting mercantile business and
the state OF Indiana maintained that
the privilege exercised in operating one
store Is different from that Of operating
chain of stores, and furthermore
that the difference varies in intensity,
depending upon the number Of stores
operated.
The State argued that chain stores
enjoy tremendous advantages over in
dividuaI stores in buying cheaply, In
the use Of a large amount Of capital, In
extensive advertising campaigns, In the
use Of common warehouses, etc. The
State also stressed the fact that there
Is an important difference between the
chain store and the individually owned
store in their relations to the commu-
nifty; that while the latter has his cap
1tal invested in the community and
therefore takes a greater interest in IL,
the former Is a mere stranger in the
community and operates only for the
purpose Of deriving profits.
1t is interesting to note that Of the
three chain store cases now before the
Supreme Court, those which came from
the Federal district courts In Indiana
and in Mississippi resulted Ia favor Of
the chain stores, whereas the Supreme
Court Of North Carolina ruled in favor
of the State tax. The arguments Of
Indiana with reference to the difference
aAA tNNR h.
chain and individual stores are very
persuasive and 1t Is very probable that
the decision Of the Federal District
Court in Indiana viii be reversed.
Bus Taxation Appealed.
Several State taxes were attacked on
the ground that they imposed burdens
on interstate commerce. Such Is the
Tennessee law imposing tax Of $500
on each bus carrying between 20 and
80 passengers over trips of 10 miles or
more. This annual fee Is imposed in
lieu Of all county and municipal taxes,
but is In addition to the gasoline taxes
paid upon the purchase Of gasoline in
| the State and In addition TO thelicense
tax Of about SIS per year on each bus.
The act also provides that the tax of
$500 shall go exclusively to the general
funds Of the State.
trolling bus lines Is q burning question
these days, in view Of their increasing
competition with railroads, and thus far
the Interstate Commerce Commission
has no regulatory powers over them.
The bus lines also manage to escape
State control by operating over State
lines, and in this case the Interstate
Transit, Inc, adopted q method Of run
ming through section OF Tennessee so
that the tickets sold entitled the pas
senger to be carried over the State line,
whether or not they actually availed
themselves Of that privilege.
The Supreme Court of Tennessee, IN
sustaining the validity Of this tax, pur-
poSely overlooked what might appear to
be an evasion of State control through
scheme Of operation in interstate
commerce, but held that the tax was
valid as one imposed for the privilege
of using the State highways. The bus
line also maintained that the tax was
discriminatory, because 1t applies to
buses operating between points at dis
tances greater than 10 miles, and there
fore was aimed primarily at interstate
buses. But the State court held that
such distinction was not arbitrary or
discriminatory.
Burden ON q. S., Is Plea.
What are Federal instrumentalities
which may not be taxed by the States
has become a dificult question Of late:
In the Panhandle OIL Co. case, decided
few years ago, the Supreme Court
held that Mississippi could not impose
its gasoline tax on one selling gasoline
to the United States Government, be-
cause that would be burden on Fed
eral fundamentally. This was AVE.
to-four decision. In which Justice
Holmes disSented on the ground that
there was no appreciable burden on the
Federal Government, and that there
fore the tax should not be held uncon-
stitutional.
Since then, questions concerning tax
alton Of 1nstrumentalitdeS Of the Fed
eral Government have come IN increas-
ing numbers. Whether q state may
impose taxes on a corporation which is
a licensee Of the Federal Power Com
mission is also before tbs Supreme
Court. This point was raised by the
SuSQuehanna Power Co., which operates
the Conowingo Dam, when the State
of Maryland imposed tax on the sub
merged lands owned by the company
The State of Maryland also imposed
a tax on the stock of the company and
here it was maintained again that the
capital stock was not subject to tax
because the company Is hcenSee of
the Federal Power Commission. The
Supreme Court Of Maryland, upon eSr
animation of the obligations Of ncensee~
of this commission, came to the con-
clusion that 1t was not such an tnstru
mentality Of the Federal Government
as would absolve it from taxation by
the State.
Estate Tax Wrangie.
The most important question under
Federal taxation relates to the Federal
estate tax, and more specifically. to the
provision in the act relating to trans
fers made in contemplation OF death.
This provision has had q long and dim