Page:Harvard Law Review Volume 32.djvu/673

637 INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 637 axe not subject to the jurisdiction so as to be liable to a privilege tax on the conduct of their business,^^ or to certain police require- ments set forth as a condition on bringing suit in the state courts.^' Are they so subject to the jurisdiction as to be hable to a tax on their net income? Mr. Justice Pitney plainly intimates that they are. A tax on net income, he says, is "like a tax upon property, or upon franchises treated as property." It is "but a method of dis- tributing the cost of government"; it "constitutes one of the or- dinary and general burdens of government." If the property of those engaged exclusively in interstate commerce is not exempt from state taxation, there is no reason to accord them immunity from a tax on their net income, which is "but a method of dis- tributing the cost of government, like a tax upon property." The important thing in the mind of the court seems to be the gener- ality of the burden, with the consequent impossibility of discrim- ination against interstate commerce. The result of this venture at mind-reading coincides with the analysis previously given of state taxes on property assessed by capitalizing the income earned from its use. To repeat Mr. Car- ter's concession in his brief for the companies in the Ohio Express cases: "Inasmuch as the existence of the States is necessary to the existence of interstate commerce, that ordinary system of taxation which is engaged in other business, is subject to State taxation, provided always it be within the jurisdiction of the State." As the case before the court involved a foreign cor- poration engaged exclusively in interstate commerce, it is fair to presiune that the dictum above quoted was uttered with such a corporation in mind. In Old Dominion Steamship Co. v. Virginia, 198 U. S. 299, 25 Sup. Ct. Rep. 686 (1905), the inference from the statement of facts is that the tug " Germania," which was one of the vessels of a foreign corporation held taxable in Virginia, was engaged exclusively in inter- state commerce, though this fact is not mentioned in the opinion. Property owned by a foreign corporation and employed exclusively in work for the United States government is taxable. ^ Gromer v. Standard Dredging Co., 224 U. S. 362, 32 Sup. Ct. Rep. 499 (191 2). The conclusion is irresistible that the many declarations that property is not exempt from state taxation because it is employed in interstate com- merce are intended to apply to property of foreign corporations engaged exclusively in that commerce. ^ Cheney Brothers Co. v. Massachusetts, 246 U. S. 147, 38 Sup. Ct. Rep. 295 (1918); York Manufacturing Co. v. Colley, 247 U. S. 21, 38 Sup. Ct. Rep. 430 (1918). " International Text Book Co. v. Pigg, 217 U. S. 91, 30 Sup. Ct. Rep. 481 (1910); International Text Book Co. v. Lynch, 218 U. S. 664, 31 Sup. Ct. Rep. 225 (1910); Buck Stove Co. v. Vickers, 226 U. S. 205, 33 Sup. Ct. Rep. 41 (191 2); Sioux Remedy Co. V. Cope, 23s U. S. 197, 35 Sup. Ct. Rep. 57 (1914).