INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 653 reason of its own intrinsic merit or absence of sufficient demerit, there is something artificial and unwholesome in making it con- stitutional by endowing a state with a club which it may brandish at will. A tax on the extra-state income of a domestic corporation, if not good as an exercise of the taxing power, does not, as an original proposition, present a strong claim for recognition as an exercise of unlimited power over corporate creatures. It no longer fits the facts to treat the grant of a corporate charter as a bestowal of gracious favor by an act of high prerogative. In most instances it is today a mere record of a situation that by common consent is one demanded by the exigencies of normal business intercourse.^^ Even if it is held that a state is subject to limitations in wield- ing the taxing power by way of the amendment of corporate char- ters, there still remains the question whether a tax on the total net income of a domestic corporation can not stand on its own legs. New York,^° Wisconsin,^^ Montana,^^ Connecticut ^^ and West Virginia ^* ask domestic corporations to pay only on the income earned from business within the state, or on the proportion of total income roughly estimated to have been earned within the state. Montana, ex abundantia- cautelae or inspired by benevolence, excludes income from interstate commerce. • Missouri ^^ and Vir- ginia, ^^ however, take toll from all income no matter whence de- rived. As the profits from local or interstate commerce in other states increase, the revenues of the chartering state wax corre- spondingly. A historian might be reminded of a famous tea party, but we are thinking of the Constitution that followed after. Should the fact that the recipient of extra-state income is a domes- tic corporation justify a tax on that income? If such income is
- ' For elaboration of this position, to which the writer acknowledges his indebt-
edness, see Gerard Carl Henderson, "The Position of Foreign Corporations in American Constitutional Law," 2 Harvard Studies in Jurisprudence, chap. X. While Mr. Henderson is dealing primarily with foreign corporations, his analysis, it is submitted, apphes in considerable degree to domestic corporations as well. ^" Laws of New York (1917), chap. 726, § 214. See note 91, infra, for reference to later amendment. " See note 91, infra. " Laws of Montana (1917), chap. 79. ™ Acts of 1915, chap. 292; General- Statutes of Connecticut (Revision of 1918), chap. 73, §§ 1391, 1394. " Acts of West Virginia, Second Extraordinary Session, 1915, chap. 3. " Laws of Missouri, 1917, 528. S. B. 415, § 7.
- • 4 Virginia Code Annotated (Supplement, 1916), 552.
