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The Green Bag

instances in which taxation on busi ness, privileges or employments had "assumed the guise of an excise tax and been sustained as such" the court re frained from commenting on so much of the Act as related to this subject,8 but held, nevertheless, that all the sections in reference to an income tax together constituted one entire scheme of taxation, the whole of which was rendered invalid by reason of its unconstitutionality in respect to the income from real and personal property.9 The tax imposed by Section 32 of Act of 1894 was "on the net profits or income" of the corporations subject to the tax, while that imposed by Section 38 of the Act of 1909 is expressed to be "a special excise tax with respect to the carrying on or doing business . . . equivalent to' ' one per centum upon the entire net income. The language of the present act is borrowed from the War Revenue Act of 1898, 10 Section 27 of which provided that every person, firm, corporation or company "carrying on or doing the business" of refining sugar or refining petroleum, whose gross annual receipts exceeded two hundred and fifty thousand dollars, should be subject to pay annually "a special excise tax equivalent to one-quarter of one per centum on the gross amount of all receipts of such persons, firms, corporations and com panies in their respective business in excess of said sum of two hundred and fifty thousand dollars."11 This tax was sustained in the case of Spreckels Sugar Refining Company v. McClain12 as an excise, on the ground that the tax was imposed not "upon gross annual re ceipts as property, but only in respect »158 U. S., p 635. 'Id.,Stat, p. 637. I030 at L. 448. "Id., p. 464. "192 U S. 397.

of the carrying on or doing the business of refining sugar." The court said: "It cannot be otherwise regarded because of the fact that the amount of the tax is measured by the amount of the gross annual receipts. The tax is defined in the Act as 'a special excise tax,' and, therefore, it must be assumed, for what it is worth, that Congress had no pur pose to exceed its powers under the Constitution, but only to exercise the authority granted to it of levying and collecting excises."13 The use of the words "special excise tax with respect to the carrying on or doing business. . equivalent to" one per centum of net income, in the Act of 1909, is obviously an attempt to bring the tax within the decision in the Spreckels case. If, how ever, the tax is not in fact an excise, its character cannot be changed by calling it one. This is expressly recog nized in the Income Tax cases, where it is said that "the name of the tax is unimportant"14; that "it is the substance and not the form which controls"15; that the limitations of the Constitution cannot be "frittered away" by calling a tax indirect when it is in fact direct16; and that the court must decline to extend the scope of the earlier deci sions "so as to sustain a tax on the income of realty, on the ground of being an excise or duty."17 The language used in the Spreckels case is not in con flict with this view, for the court does not there regard the designation given the tax by Congress as conclusive upon the question of its real character. The fact that the Act of 1909 recites that the tax thereby imposed is "a special excise tax with respect to the carrying on or doing business" cannot, therefore, "Id. "157 "Id., "Id., "Id.,

p. 411. U. S., pp. 580, 581. p. 581. j p. 583. p. 579.