computation of taxes for later years, the statute provides that the declaration once made cannot be amended. Because of the method of computation, increase or decrease in the declared value of capital, and of the corresponding tax, produces, as the case may be, a decrease or an increase in the tax on excess profits.
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"* * * Here the purpose of the statute is unmistakable. It is to allow the taxpayer to fix for itself the amount of the taxable base for purposes of computation of the capital stock tax, but with the proviso that the amount thus fixed for the first taxable year shall be accepted, with only such changes as the statute prescribes for the purpose of computing the capital stock and excess profits taxes in later years. Congress thus avoided the necessity of prescribing a formula for arriving at the actual value of capital for the purpose of computing excess profits taxes, which had been found productive of much litigation under earlier taxing acts, see Sen.Rep. 52, 69th Cong., 1st Sess., pp. 11-12; cf. Ray Consolidated Copper Co. v. United States, 268 U.S. 373, 376, 45 S. Ct. 526, 527, 69 L. Ed. 1003. At the same time it guarded against loss of revenue to the Government through understatements of capital, by providing for an increase in excess profits tax under § 216 ensuing from such understatements." Haggar Co. v. Helvering, 308 U.S. 389, 391, 392, 394, 60 S. Ct. 337, 338, 84 L. Ed. 340.
Only one case, Oertel Co. v. Glenn, D.C., 13 F.Supp. 651, has indicated that the capital stock tax statute is legally objectionable if any other but a declaration of actual value were intended thereunder. Other cases conclude that although theoretically any value may be declared, practical self-interest of the taxpayer supplied by the scheme of inter-relation of the capital stock tax and the excess profits tax is statutory assurance that declared value will be founded on reason and fair value. Haggar Co. v. Helvering, supra; Hornell Ice & Cold Storage Co. v. United States, supra; Stromberg-Carlson Mfg. Co. v. McGowan, supra; Mountain Iron Co. v. United States, supra; Allied Agents v. United States, supra. By this scheme a high excess profits tax is intended to neutralize a declaration of low capital stock value and a declaration of high capital stock value is likewise intended to neutralize excess profit taxes.
We are likewise not without controlling authority with relation to the contention that the statute confers unwarranted legislative powers upon the taxpayer, there being no method prescribed for the ascertainment of value. The taxpayer is only required to furnish the factual basis for the tax, and no standard is necessary. In addition, he affects no one but himself in his declaration. Accordingly, the cases of Stromberg-Carlson Mfg. Co. v. McGowan, supra; Mountain Iron Co. v. United States, supra; Midvale Paper Board Co. v. United States, supra; Allied Agents v. United States, supra and Chicago Telephone Supply Co. v. United States, supra, have expressly overruled this contention.
Plaintiffs point out that the declaration of value for one year is retained in the adjusted declaration for subsequent years, and that the adjusted declaration has every objectionable feature of the original declaration plus the defects in the adjustment scale. In fact, the case of Chicago Telephone Supply Co. v. United States, Ct.Cl., 23 F.Supp. 471, 475, indicated by a dictum that an adjustment on such a basis might transgress constitutional limitations although in dealing with the tax for the year 1934 declared it constitutional. The same court, however, when the question came squarely before it in the case of Allied Agents v. United States, supra, sustained adjusted declarations of value and thus negated its prior dictum. The latter case has been followed in the cases of Midvale Paper Board Co. v. United States, supra and Stromberg-Carlson Mfg. Co. v. McGowan, supra.The basis for this conclusion is that a declaration of actual value is not contemplated under the statute, but only the value the taxpayer is willing to assert. It is admitted that the adjustments are not all-inclusive but reasonably inclusive so that the tax imposed in an adjustment year may not be said to be based on a valuation of capital stock that is arbitrary and unreasonable.
The objection that the statute arbitrarily classifies corporations for a special tax and discriminates against other forms of business has also been answered in a prior decision. Hornell Ice & Cold Storage Co. v. United States, supra. The statutes when construed together effect comparably equal assessments on like corporations.
The only new matter to be found in the above complaints which has not been presented to the courts, and which is offered to differentiate this case from prior cases, is found in the contentions that the capital stock tax is an ad valorem tax and constitutionally objectionable because it has not been apportioned pursuant to Article I, Section 9, Clause 4 of the Constitution providing as follows: "No Capitation, or other direct, tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." If it is not necessary to apportion this tax, it is claimed that it is an excise tax and void because of its alleged retroactive effect, because it undertakes to exempt corporations not doing business between June 16 and June 30, 1933, and for the reason that Section 215(c) of the Act of 1933 undertakes to provide for a taxable year of only fifteen days (June 16 to June 30, 1933), which allegedly is in conflict with Section 215(a) and (b) imposing a tax for the year ending June 30, 1933.
It has been held that the capital stock tax is an excise tax. Flint v. Stone Tracy Co., 220 U.S. 107, 108, 31 S. Ct. 342, 55 L. Ed. 389, Ann.Cas.1912B, 1312, Union Internationale De Placements v. Hoey, 2 Cir., 96 F.2d 591. An excise tax is not required to be apportioned according to population. It need only be uniform and levied for the public welfare. Flint v. Stone Tracy Co., supra.
There remains for consideration only the alleged objectionable features to this tax as an excise tax. The National Industrial Recovery Act of 1933 was enacted on June 16, 1933, and undertook to levy a capital stock tax upon every corporation for the year ending June 30, 1933 with respect to doing business for any part of such year, Section 215(a), but corporations not doing business between June 16 and June 30 were exempt, Section 215(c). The statute does not operate retroactively. It excludes its application to corporations not carrying on or doing business between the date of the enactment and the year ending June 30, 1933. Hence, it can affect no corporations except those in business after the enactment of the statute. Plaintiffs also argue that the statute provides for a taxable year of fifteen days and that the stock taxes for the year ending June 30 should be apportioned. There is nothing in the statute providing for apportionment. On the contrary, it specifically undertakes to levy this tax on a corporation doing business in any part of the year preceding June 30, excluding, of course, those corporations not in business after June 15, 1933.
Illustrations have been offered by counsel to show discriminations resulting from the inter-relation of the capital stock act and the excess profits tax. Similar illustrations were considered in the case of Allied Agents v. United States, supra, and were disposed of by the court in that case in the following language: "There are many taxes as to which hypothetical cases can be made up which will present, as between taxpayers, a strong discrimination; but in actual practice the two taxes under consideration are much more likely to work out fairly and with less discrimination than the old excessprofits tax which seldom if ever operated without more or less discrimination and often compelled one taxpayer having the same amount of profits as another to pay many times more taxes than a competitor which was using no greater amount of capital." 26 F.Supp. 98, 102. See also Rosoff Tunnel Corp. v. Higgins, supra, Chicago Telephone Supply Co. v. United States, supra.
We believe that this memorandum has dealt with all pertinent questions raised by the motions to dismiss the complaints in all the cases listed at its head whether the grounds of the complaints overlap or present original propositions, and we find that the motions prevail and each complaint should be dismissed.
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