Clipped From San Francisco Chronicle

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THB FEDERAL CORPORATJOIS tAXt h wd End Our raJWe Sytkm at Cotv cdrei IW fa TeHseekri IF THE - FedetafwrpcWiW tat enacted by Con - igresi at th tuftestioft of the Pretident i Mistimed by the Supreroa Court at vety likely it may be by divided court - - it will mark he end of the political tttem of thit country at conceived by the father and as they nippoted firmly estab lithed by the Constitution That theory we a tovrJeign people of thawhoLj United Sutet creating two mdependent government each paramount within its sphere a defined in the Conrtitutkm If the corporation tax it awtaineclit will firmly ettablish the princte hat tha Federal Government fi para - mouni nor oniy wimm UMtpnere asngnea ran 07 the Cooitjrution but in matters cUlrly withm the sphere of SuU government It will be then merely a quettion of an exciting taut and a tuiuble method lot the Federal Covernaoent to take oyer one After another all the governmental functions which were uppoaed to b wrthin the exclusive jurisdiction of the state And the remarkable thing about it is that nobody seems to cart anything about it The Supreme Court - hat held whenever easel have come before it that no tttta could tax the franchise of any corporation charUred by the United States because it would be in derogation of the dignity and power of the United State Government The leading case it that pf McCulloch v Maryland in whichwa involved the validity of state taxation of a bank chartered by the United States but the tamo principle hat been applied in all similar cases which have reached tha Court regardless of the nature of the corporation In McCulloch vs Maryland the unanimous Court by Chief Justice Marshalltaidj That tit por to tax Involves th powor to aoatrept that the powor t - dootroy map dafat aid roadop uitlrts tha newr t erstt that there I a plain rnuaatne la conforrinr en en orrnmnt a powtr t eontrol tha eonstltutlonal maar of aaethor ara srapooltlona not to b daolad Upon that reasoning the Court held a state tax on the franchise of a Federal corporation invalid nor will the Court uphold the equivalent of such a tax no matter how disguised But if at the tame Court has many times Mid the state governments are within their spheres of equal authority with the Federal Government within its sphere the language of the Court in McCulloch vs Maryland is prohibitive of Federal taxation of the franchises of state corporations as would doubtlett have been held at that tune It i not at all certain that it will be so held now The President expects the Supreme Court to uphold the tax at an excise tax under the principle laid down in Spreckels Sugar Refining Company vs McLain 192 US 397 In that case however it was only held that a state corporation could not merely because it was a state corporation escape liability for a tax levied on all persons natural or artificial engaged in refining sugar The present tax is an entirely different thing It docs hot affect any natural person is not confined to any particular industry but applies to all corporations state or Federal regardless of the business in which they are engaged While the smaller corporations will pay no tax they mutt all make return from the mere fact that they are corporation This sinslins out of the corporation makes the tax a franchise tax and is therefore in the language bf the Supreme Court in derogation of the power and dignity of the state which the Court will not permit when a state taxes a Federal corporation and which the Court in McCulloch vs Maryland held to be a plain repugnance as between governments of equal authority which the Federal and state governments hate been repeatedly held to be For the Court to uphold this tax will therefore be to hold that the states cannot impair the power and dignity of the Federal Government acting within its sphere but that the Federal Government may - impair the power and dignity of the state acting within its sphere And if that be true in one case it must be true in all cases in which Congress or the treaty power may choose to act the control of public schools for example There is a very general protest against this tax on many grounds and it will be bitterly contested in the courts but while this assault on a vital fundamental principle of our Government it among the objection enumerated by some by most it is overlooked and by none is much stress laid on it which teems to show that the people of the United State are now prepared to accept the centralization of our Government i

Clipped from
  1. San Francisco Chronicle,
  2. 21 Sep 1909, Tue,
  3. Page 6

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