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CORPORATION TAX ACT
SUPREME COURT OF UNITED
STATES UPHOLDS LAW.
Opinion, Delivered by Justice Day,
Goes Into Detail to Meet Ob
Washington, March 13.-In a unani
mous opinion the supreme court of the
United States today held that the.
corporation tax provisions of the
Payne-Aldrich tariff act are consti
tutional. Thus ended a controversy
waged almost continuously since
President Taft first suggested their
enactment to congress. The opinion
was announced by Justice Day, who
was appointed to the supreme court
bench from Ohio in 1903. It was an
elaborate treatment of the subject,
containing approximately 10,000
words. About half an hour was spent
by the justice orally explaining to the
bar the position of the court, the
printed opinion being used a basis for
Just What tt Seems.
The justice first determined that
the tax was just what it claimed to
be in the act, namely, an excise tax
on the doing of corporate business,
and not a direct tax on the ownership
of property. With that point aecidea
the justice took up at more or le
length the various objections urged
against the tax as an excise tax and
disposed of them to the satisraction or
the court. Finally he interpreted the
law so as to apply to real estate
companies and the so-called public
service corporations, but not to "real
Tax on Use.
The opinion predicates that the "tax
is imposed not upon the franchise of
the corporation irrespective of their
use in business, nor upon the property
of the corporation, but upon the doing
of corporate or insurance business
and with respect to the carrying on
aereof, in a sum equivalent to 1 per
cent. of the entire net income over
and .above $5,000 received from, all
sources during the year; that is, when
imposed in this manner it is a tax
upon the doing of business with the
advantages which inhere in the pecu
liarities of corporate or joint stock
organization of the character, describ
ed. As the latter organizations share
many benefits of corporations it may
be recognized generally as tax on do
ing of business in corporate* capacity.
Affects Foreign Companies.
"This view of the measure of the
tax is strengthened when we note that
as to organizations under the laws of
foreign countries the amount of net
income over and above $5,000 includes
that received from business transac
tions and capital invested in the Unit
ed States, the territories, Alaska and
District of Columbia."
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DR. EARL S. SLOAN, B(
Answering the various objections
raised against the* tax, Justice Day
first took up the contention that it
was a direct tax and unconstitutional
for the same reason that the famous
income tax law was declared uncon-!
stitutional in 1S95. He pointed out
that the income tax was held to be
direct because imposed upon property.
On Doing Business.
"In the present case." said Justice
Day, "the tax is not payable unless
there : is a carrying on or doing of
business in the designated capacity,
and this is made the occasion for the
tax, measured by the standard pre- I
Justice Day next took up the objec
tion that the provisions in question
levied a tax upon the exclusive right
of a State to grant ecrno'ate fran
chises in that it taxed franchises.
which are the creation of a State in
its sovereign right and authority.
"We think," says the opinion. "it
is the result of the cases heretofore
decided in this court, that such busi
ness activities, though esercised be-.
cause of State created franchises, are
not beyond the taxing power of the
Too Much to Grant.
. . It can not be supposed that
it was intended that it should be with
in the power of individuals acting un
der State authority to thus impair and
limit the exertion of authority which
may be essential to national exis
Justice Day .ex- addressed himself
to the objection that the tax was un
equal and arbitrary.
"The thing taxed," he said. "is not
the mere dealing in merchandsi,e ;n
which the actual transactions may be
the same, whether conducted by in
diJiduals1or ccrporations. but the tax
is raid tp1on th'" privileges which ex
ist ji; ccrtduc:ting business with the
advantages which inhere in the cor
porate capacity of those t,xed and
which are not enjoyed by private
firms or individuals.
Pay For Advantages.
"These advantages are obvious and
have led to the formation of such
companies in nearly all branches of
trade. The continuity of the business
without interruption by death or dis
solution, the transfer of property in
terests by the disposition of sharec
of stock, the advantages of businer
controlled and managed by corporate
directors, the generai absence of in
dividual ability, these and othe
things inhere i the advantage of bu:
iess thus conducted which do not ex
ist when the same business is co
ducted by private individuals or par
Measurement of the tax by the net
income from all sources, according to
the opinion, is not so unequal and ar
bitrary to the outside of the authority
of the taxing power.
Bests With Congress.
"We must not forget that the right
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SFree. AddreS3 ____
to select the measure and objects of
taxation devolves on the congress and
not on the courts. and such selections
are valid unless constitutional limita
tions are over-stepped."
The court was able to find no such
violation of constitutional limitations.
With regard to real estate compa
nies the justice said:
"We think it clear that corporations
organized for the purpose of doing
business and actually engaged in such
activities as leasing property, col
lecting rents, managing office build
ings, making investment of profits or
leasing ore lands and collecting roy
alties, managing wharves, dividing
profits, and in some cases in:vesting
the surplus, are engaged in doing
business within the meaning of the
statute and, in the capacity necessary
to make such org2niza,ion, subject to
Railways Subject to Tax.
The court held that it was not part
of the essential governmental func
tions of a State to provide means of
transportation, supply artificial light,
water and the like. Therefore, it_ was
determined that the Coney Island &
Brooklyn Railroad company, and the
Interborough Rapid Transit of New
York are subject to the tax.
After dealing at length with nu
merous other objections to the law,
Justice Day came to the attack upon
it based on the so-called publicity fea
tures of the provisions which require
certain returns to be made to the gov
ernment as' an aid in the assessment
of a tax.
"The tax being, as we have held.'
said the justice, "within the legitimate
powers of congress, -t is for that body
to determine what means are appro
priate and adapted to the purpos3 of
making the laws affectual."
Covers Fifteen Cases.
The opinion thus summarized cov
ers 15 of the 18 cases in which the
constitutionality of the tax was as
sailed. The non-applicability of the
act to real estate "trusts" was de
cided in the other three cases. Ii:
these cases the law was held inap
plicable to the Cusning Real Estate
trust of Bozton on the ground tha
the trusts were not organized under
the statutes of the State oi- of thE
United States, but existed merely un
der the common law. The Minneapo
lis Syndicate was bheld not liable tr
the tax, because the real estate whicl
it held before consolidation had gone
out of its control' and therefor<
the syndicate was "not doing busm
ness within the meaning of the law.'
SOUTH IS TRE PLACE
FOR POOR PEOPLE
Champ Clark Amends Greeley to Nod.
ern Effect--His Chance of the
Chicago, March-. 14.-Congressmar
Champ Clark, of Missouri, the coming
speaker of the national house of rep
resentatives, today amended the fa
mous saying of Horace Greeley, say
ing: "Go West young man, go West,'
and made it to read: "Go Souti my
boy, go South.
"The South is the place and my
advice is to go there. You won't
eat as much as you do here in thE
North. If you do, you'll die. Youi
clothing must be lighter and there
fore less expensive. You won't have
to 'buy fuel to speak of and you can
allow your horses and cattle to graze
out of doors the year around.
Poor Man's Land.
"Believe me. the South is the poor
man's land, and you'll live to see the
day when the South is going to be the
richest part of the United States.
"Why, say, I know a man who
made $15,000 in one year off three
acres of lettuce. Sounds fishy, doesn't
it? True, though, for I took the pains
to find out. It's a great country, boys,
and if you want a good tip follow my
advice. That is, go early to the
Southland and grow up with its prog
Mr. Clark "admitted'' he would
make a good Democratic candidate
for president at the next election. say
Might Go Further.
"Well, the Democratic party might
go further and fare worse-and I
think it will."
He prophesied victory for the reci
procity measure and said of the tariff:
"We can get by Mr. Taft with a
few schedules, we hope, where we
never could pass with a whole bill."
Mr. Clark intimated that if Repub
licans in the next house did not like
committee appointments, they could
go hang for all the good it vfould do
them. Only he said it thiis way:
"Those who don't like the appoint
ments can take advantage'of the great
American privilege of cuesin'."
will answer emergency calis in con
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ITH THESE you may or<
W Human Life, of Boston, I
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NOTICE OF FINAL SETTLEMUENT.
Notice is flereby given that the un- """""
dersigned will make a final settlement
n the personal estate of Charles L.
Williams in the Probate Court for
'Newberry County on the 16th day of
IMarch, A. D. 1911, at 10 o'clock a. m.
and immediately thereafter apply for
a discharge. All persons holding
claims against st-id estate will pres
int same, uly'attested, to the under
signed on or before said date.
C. P. Williams, W
Administrator of Charles L. Williams. ser
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