I INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 415 pletely untaxed. Where they arise from business unconnected with any use of property, they do go untaxed unless some form of income tax is allowed. The question must be whether Shelby County's form of income tax should be approved, or whether the states should be driven to adopt some other method less likely to invade the realm which the states must not enter. The latest utterance of the Supreme Court indicates that the latter alternative is to be chosen. In sustaining the general income tax of Wisconsin, measured by net income, the opinion in United States Gliie Co. v. Oak Creek^^^ laid stress on the difference between gross receipts and net income. After contrasting the Crew Levick case with Feck &° Co. v. Lowe,^^^ which held that the federal income tax was not a tax on exports when measured by net income from an exporting business, Mr. Justice Pitney observed:, "The difference in effect between a tax measured by gross receipts and one measured by net income, recognized by our decisions, is manifest and substantial, and it affords a convenient and workable basis of distinction between a direct and immediate burden upon the business affected and a charge that is only indrtect and incidental. A tax upon gross receipts affects each transaction in proportion to its magnitude and irrespective of whether it is profitable or otherwise. Conceivably it may be sufl&cient to make the difference between profit and loss, or so to diminish the profit as to impede or discourage the conduct of the com- merce. A tax upon the net profits has not the same deterrent effect, since it does not arise at all unless a gain is shown over and above ex- penses and losses, and the tax cannot be heavy unless the profits are large." i«o Here is wisdom that cannot be gainsaid. It applies so pal- pably to any occupation tax measured in whole or part by gross receipts from interstate commerce that the Ficklen case can hardly hope to survive the menacie to its last remaining strength. With permission to tax net income from all commerce by a general state- wide income tax, the states can no longer complain that the death of the Ficklen case would compel them to confer a bounty on interstate commerce by exempting it from burdens which rest on local commerce. The gross-receipts taxes allowed in substitution "8 247 U. S. 321, 38 Sup. Ct. Rep. 499 (1918). 159 247 U. S. 165, 38 Sup. Ct. Rep. 432 (19 1 8). "0 247 U. S. 321, 329-30, 38 Sup. Ct. Rep. 432 (1918).
