point of view, to say nothing of its economic and political
significance, was the Corporation Tax Act. That Act, forming §38 of the
Tariff Law, provides--

That every corporation ... organized for profit and having a
capital stock represented by shares ... shall be subject to
pay annually a special excise tax with respect to the carrying
on or doing business by such corporation ... equivalent to one
per centum upon the entire net income over and above five
thousand dollars received by it from all sources, etc.

The act goes on to require the corporations to make periodical reports
concerning their business and affairs, and confers on the Commissioner
of Internal Revenue a visitorial power to examine and compel further
returns.

The genesis of the act is interesting. The growing demand for more
efficient regulation of the corporations, so pronounced during President
Roosevelt's Administration, had foreshadowed such legislation. It
remained, however, for President Taft to take the initiative and mould
the shape which the legislation was to take.

In the course of the Senate debate on the new Tariff Act it had become
apparent that an influential party in Congress, backed by strong
sympathy outside, was bent upon passing a general income tax act. The
previous Income Tax Law had been pronounced unconstitutional by the
Supreme Court as violating the provision of the Constitution that all
direct taxes must be apportioned among the states in proportion to
population.[1] That decision, however, had been reached by a bare
majority of five to four. It had overruled previous decisions and