INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 405 erroneous assumption. The State is not confined to taxing the cars or to taxing them as separate articles. It may tax the entire property, tangible and intangible, constituting the car line as used within its limits and may tax the same at its real value as part of a going concern. The record makes it reasonably certain that the property, valued with refer- ence to its use and what it earns, is worth considerably more than the cash value of the cars taken separately — enough more to indicate that the tax is not in excess of what would be legitimate as an ordinary tax on the property taken at its real or full value." ^^ An interesting variant of the same question is raised in the Ohio Tax cases.^^^ Before the decision in the Galveston case, Ohio had a statute under which railroads were required to pay one per cent of their gross earnings from all commerce within the state. After the Galveston decision, the Ohio law was amended so that the gross-receipts tax was limited to intra-state receipts. The rate on railroads however, was increased from one to four per cent. Coun- sel for the company contended that this increase "was due to the fact that it was conceived that about three-fourths of their business was interstate, and that therefore a tax of 4% on the intrastate earnings would be about equal to a tax of 1% on the total; in other words, that the £ax rate was increased fourfold because such utilities were engaged in interstate commerce." ^^^ The argument was that a disproportionate rate on the intra-state receipts of companies whose business was preponderantly inter- state was in effect an effort to tax the interstate receipts. The Ohio tax was not in lieu of a property tax, so that, in view of the general trend of recent decisions, there was strong reason to believe that the court would hold it unconstitutional if, under the guise of levying on receipts from local commerce, it in substance reached those from interstate commerce. The complaint of the companies was like that made unsuccessfully in Pullman Co. v. Adams ^'^ and Allen v. Pullman's Palace Car CoP"^ in which it was urged that a specific tax of $3,000 and a tax of $100 plus twenty-five cents per mile, imposed nominally on intra-state commerce, were in ^ 246 U. S. 455-56, 38 Sup. Ct. Rep. 373 (1918). "4 232 U. S. 576, 34 Sup. Ct. Rep. 372 (1914). »26 Ihid., 592.
- ^ 189 U. S. 420, 23 Sup. Ct. Rep. 494 (1903). See 31 Harv. L. Rev. 582.
^ 191 U. S. 171, 24 Sup. Ct. Rep. 39 (1903). See 31 Harv. L. Rev. 582-83.
