Die Arbeiterfrage in der Südrussischen Landwirtschaft

Bibliographic data

Monograph

Identifikator:: 832651257

URN:: urn:nbn:de:zbw-retromon-63075

Document type:: Monograph

Author:: Devas, Charles S. http://d-nb.info/gnd/124362435

Title:: Grundsätze der Volkswirtschaftslehre

Place of publication:: Freiburg

Publisher:: Herder

Year of publication:: 1896

Scope:: 1 Online-Ressource (XXIII, 521 S.)

Collection:: Economics Books

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36 STOCK DIVIDENDS property, for instance, bonds, scrip or preferred stock of the company. The payment from profits of a large cash dividend, and even a small one, customarily lowers the then market value of stock because the undivided property repre- sented by each share has been correspondingly reduced. The argument which appears to be most strongly urged for the stockholders is, that when a stock dividend is made, no portion of the assets of the company is thereby segregated for the stockholder. But does the issue of new bonds or of preferred stock created for use as a dividend result in any segregation of assets for the stoek- holder? In each case he received a piece of paper which entitles him to certain rights in the undivided property. Clearly segregation of assets in a physical sense is not an essential of income. The year's gains of a partner are taxable ag income, although there, likewise, no segregation of his share in the gains from that of his partners is had. The objection that there has been no segregation is presented also in another form. It is argued that until there is a segregation the stockholder can mot know whether he has really received gains, since the gains may be invested in plant or merchandise or other property and perhaps be later lost. But is not this equally true of the share of a partner in the year’s profits of the firm, or, indeed, of the profits of the individual who is engaged in business alone? And is it not true, also, when dividends are paid in eash? The gains of a business, whether conducted by an individual, by a firm, or by a corporation, are ordi- narily reinvested in large part. Many a cash dividend honestly declared as a distribution of profits proves later to have been paid out of i because errors in forecast prevent correct ascertainment of values. Until a business adventure has been completely liquidated it can never be determined with certainty whether there have been profits unless the returns have at least exceeded the capital originally invested. Business men, dealing with the problem practically fix necessarily periods and rules for determining whether there have been net profits—that is, income or gains. They protect themselves from being seriously misled by adopting a system of depreciation charges and reserves, Then they net upon their own determination, whether profits have been made. Congress in legislating has wisely adopted their practices as its own rules of action. Third. The Government urges that it would have been within the power of Congress to have taxed as income of the stockholder his pro rata share of undis- tributed profits earned, even if no stock dividend representing it had been paid. Strong reasons may be assigned for such a view. (See Collector v. Hubbard, 12 Wall. 1.) The undivided share of a partner in the year’s undistributed profits of his firm is taxable as income of the partner, although the share in the gain is not evidenced by any action taken by the firm. Why may not the stoek- holder’s interest in the gains of the company? The law finds no difficulty in disregarding the corporate fiction whenever that is deemed necessary to attain a just result. (Linn & Lane Timber Co. v. United States, 236 U. 8. 574; see Morawetz on Corporations, 2d ed., §§ 227-231; Cook on Corporations, 7th ed., §§ 663, 664.) The stockholder's interest in the property of the corpora- tion differs, not fundamentally but in form only, from the interest of a partner in the property of the firm. There is much authority for the proposition that, under our law, a partnership or joint-stock company is just as distinct and pal- pable an entity in the idea of the law as distinguished from the individuals com- posing it, as is a corporation.’ No reason appears why Congress, in legislating under a grant of power so comprehensive as that authorizing the levy of an income tax, should be limited by the particular view of the relation of the stock- holder to the corporation and its property, which may, in the absence of legisla- tion, have been tdken by this court. But we have mo occasion to decide the question whether Congress might have taxed to the stockholder his undivided share of the ecorporation’s earnings. For Congress has in this act limited the income tax to that share of the stockholder in the earnings which is, in effect, distributed by means of the stock dividend paid. In other words, to render the stockholder taxable there must be both earnings made and a dividend paid. Neither earnings without dividend—nor a dividend without earnings—subjects the stockholder to taxation under the revenue act of 1916. Fourth. The equivalency of all dividends representing profits, whether paid in cash or in stock, is so complete that serious question of the taxability of stock dividends would probably never have been made if Congress had undertaken to 5 See “Some Judicial Myths,” by Francis M. Burdick, 22 Harvard Law Review, 393, 304-396; The Firm as a Legal Person, by William Hamilton Cowles, 57 Cent. L. J., 343, 348; The Separate Estates of Non-Bankrupt Partners, by J. 1). Brannan, 20 Harvard Law Review, 589-592; compare Harvard Law Review, vol. 7, p. 426; vol. 14, p. 222; vol. 17, p. 194.

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