612
The Green Bag
succession tax case of Knowlton v. called. Suppose the Act had provided that every corporation should be sub Moore.36 ject to pay annually "a special excise The tax imposed by Section 38 of the tax with respect to the carrying on or Act of 1909 is not a tax upon certain doing business by such corporation kinds of property, like a tax upon equivalent to one per centum upon the particular commodities, or a tax upon assessed value of the real estate owned certain kinds of business, like banking, by it." Can there be any doubt that insurance and sugar refining: it is this would be in fact a direct tax upon "equivalent to" one per centum upon the land? Or suppose that the Act had the entire net income of corporations provided that every corporation should generally, as such. The tax is thus not be subject to pay annually "a special in fact laid with respect to the business carried on by the corporation, but with excise tax with respect to the carrying on or doing business by such corpora respect to the corporation itself, be tion equivalent to one per centum upon cause of its ownership of an income, the entire net income derived by it from and this is a tax laid "merely because its real estate." Would the tax be in of ownership" as much as the income fact any less direct because it is called tax of 1894.37 The only distinction be an excise ? tween the two statutes is that the Act The answer to these questions seems of 1894 imposed a tax of two per centum clear, for the tax would in each case be "on the net profits or income" of cor the "essential equivalent" of a tax on the porations, while the present tax is property or its proceeds generally.38 But "equivalent to one per centum upon the it makes no difference in the result that entire net income." The difference is the tax imposed by the Act of 1909 is merely verbal and must be disregarded expressed to be equivalent to one per if the substance and not the form of the centum upon the entire net income of statute is to control. the corporation. The income received The operation of the statute is the "from all sources" is to be included, same by whatever name the tax is and so far as any part of that income is »»178 U. S., 41, 82: "Considering that the con stitutional rule of apportionment had its origin in derived from real estate, the tax is as the purpose to prevent taxes on persons solely because of their general ownership of property from much upon the income of the real estate being levied by any other rule than that of appor as in the case supposed. The same is tionment, two things were decided by the court [in the Income Tax cases]—First, that no sound necessarily true of the income from distinction existed between a lax levied on a person solely because of his general ownership of real municipal bonds and from other invested property, and the same tax imposed solely because personal property. So far, therefore, as of his general ownership of personal property. Secondly, that the tax on the income derived from such property, real or personal, was the legal the income of any corporation is derived equivalent of a direct tax on the property from from real estate and from invested per which said income was derived, and hence must be apportioned. These conclusions, however, lend no sonal property, the tax falls directly support to the contention that it was decided that within the decision of the Supreme duties, imposts and excises which are not the essen tial equivalent of a tax on property generally, real Court in the Income Tax cases.39 or personal, solely because of ownership, must be converted into direct taxes, because it is conceived "178 U. S., p. 82. that it would be demonstrated by a close analysis "The case may be, supposed of a corporation that they could not be shifted from the person owning either real or personal property, or both, upon whom they first fall." "See Nichol v. Ames, 173 U. S. 509, 521: "A tax all of which is employed in its Business and from upon the privilege of selling property at the ex which it derives no income except in the form of change, and of thus using the facilities there offered profits from its business. As to the net income of in accomplishing the sale, differs radically from a such a corporation the tax would not fall strictly tax upon every sale made in any place. The latter within the decision in the Income Tax cases, tax is really and practically upon property." although on principle it would seem to be governed
