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rusty and careless, and in the present day there is this very special reason, the safeguarding of the interests of those whose money is invested in an enterprise, but who can not, from the nature of the undertaking, take an active part in the management.

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LATEST BUSINESS LEGISLATION

Supplementary Income Tax Decisions-Recent Labor Legislation-Maintenance of Resale Prices.

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SUPPLEMENTARY INCOME TAX

DECISIONS

N February 21, 1916, the Supreme Court of the
United States handed down some important de-

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cisions supplementary to a general opinion on the Income Tax. These decisions are embodied in the opinions in Dodge v. Osborn (No. 396, October Term, 1915), Dodge v. Brady (No. 213, ibid.), Tyes Realty Co. v. Anderson (Nos. 393 and 394), and Stanton v. Baltic Mining Co. (No. 359).

Two important phases of the Income Tax are passed upon, more in detail than they have been in the general opinion. These phases are the following:

1. The constitutionality of the "surtax" or excess tax on the higher incomes, and

2. The question whether income derived in part from, or accompanied by and based upon, the physical deterioration of property is taxable exactly as if it were the result of current variations solely.

The constitutionality of the surtax is treated from various aspects in the three first cases cited above. These cases try to show that the tax as imposed by the statute was not sanctioned by the Sixteenth Amendment, because the statute exceeded the power of "direct income” taxation for the first time conferred upon Congress by that amendment, and, further, that the statute is, moreover, repugnant to the Constitution, because of its provision that it act retroactively for a designated time, and also on account of the illegal discriminations and irregularities which it creates, including the provision for a progressive tax on the incomes of individuals and the method pro

vided for the computation of the taxable income of corporations.

The specific circumstances and conditions differ in each of the three cases in which the "surtax" has been protested, and the series of opinions amounts to a broad general vindication and reassertion of the constitutionality of the surtax provision of the Income Tax, under practically all probable conditions.

The complainants, in the Baltic Mining case, attacked the constitutionality of the Income Tax on the proposition that the "income" of companies engaged in mining operations really comprised in part of capital depreciation and that it was not just to tax this for the following

reasons:

1. Because all other tax contributors were given a right to deduct a fair and reasonable percentage for losses and depreciation of their capital, and they were, therefore, not confined to the arbitrary 5 per cent fixed as the basis for deductions by mining corporations.

2. Because by reason of the differences in the allowances which the statute permitted, the tax levied was virtually a net income tax on other corporations and individuals and a gross income tax on mining corporations.

3. Because the statute established a discriminating rule as to individuals and other corporations as against mining corporations in the method of the allowance for depreciation.

4. Because of the discrimination created by permitting individuals to deduct dividends received from corporations, by permitting the exemption of individual incomes below $4,000, and through other methods of exemption and supposed favoritism.

Apart from the allegation of favoritism, which was disposed promptly by the court on the reasoning offered in the general Income Tax decision, the matter regarding the peculiar condition of mining property which depletes itself as the ore is taken out, resolves itself to a special phase of the problem: what is income? On this point the

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