Page:Harvard Law Review Volume 32.djvu/953

INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 917 undoubted that the statute for the purpose of preserving the state power of taxation, considering the subject from the point of view of ultimate beneficial interest, treated the stock interest, that is, the stockholder, and the bank as one and subject to one taxation by the methods which it provided. . . . Again, when the purposes of the statute are taken into view, the conclusion cannot be escaped that the transmutation of the stock interest of the California in the Mills Bank, into an asset of the California Bank subject to be taxed for the purpose of reaching its stock- holders, is to overthrow the very fundamental ground upon which the taxation of stockholders must rest." ^® On the basis of this decision, it would be possible to support the contention that United States bonds owned by a corporation, since they must be excluded from the computation of a tax on the capital of the corporation, must also be excluded from a tax on the shares of stock in the corporation. Evidently a majority of the Supreme Court favored this view in 1907, when Home Savings Bank V. Des Moines ^^ was decided, though the contrary view was recog- nized as too firmly established to be overthrown. It is to be assumed, therefore, that the Supreme Court will continue to permit the states to tax United States bonds owned by corporations through full assessment of their shares of stock. It would be wholesome, how- ever, if some better basis for such taxation could be found than the unsubstantial one that the property of the shareholders is distinct from that of the corporation. Such a basis appears in the rules which have been worked out in the field of state taxation of interstate commerce. If we discard all the doctrinal disquisitions of the opinions and look only to the results of the decisions, we find that the controlling motive of the Supreme Court has been the desire to prevent the states from im- posing on interstate commerce any peculiar or unusual burden. Where the court has been assured that the state did not have a device which might be operated to discriminate against interstate commerce, taxation of that commerce has been allowed. Net in- come from interstate commerce may be included in a general income tax.^^ Property used in interstate commerce may be assessed by '^ 248 U. S. 476, 485, 39 Sup. Ct. Rep. 165 (1919)- " Note 43, supra. See 31 Harv. L. Rev. 343. <8 United States Glue Co. v. Oak Creek, 247 U. S. 321, 38 Sup. Ct. Rep. 499 (1918), 32 Harv. L. Rev. 634-43.