INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 915 the capital of a corporation and a tax on its franchise measured by its capital is one between tweedledum and tweedledee. Since taxes on a corporation are in last analysis taxes on the interest of the shareholders in the corporate assets or business, to exclude federal securities from the computation of a tax on the corporate capital and to include them in the assessment of the shares of stock is to allow the state to reach with one hand what it is forbidden to touch with the other. The idea that federal securities cannot be taxed by a state is a mythical fancy so long as such securities belonging to a corporation may enter into the assessment of a tax on the corporate franchise and of a further tax on the interest of the shareholders in the corporation. The burden put upon the federal borrowing power by such taxa- tion of federal securities in the vaults of corporations is of course a more Hmited one than would be imposed by their inclusion in all property taxation. But the court in subjecting United States bonds owned by corporations to the fiscal power of a state did not go on any such common-sense distinction. The inclusion of the bonds in the assessment of franchise taxes was sustained on the theory of the absolute power of a state over privileges which it might grant or withhold.^^ The taxation of shares at their full value without de- duction of the contribution of United States bonds to that value was approved on the basis of a notion of the " separate individuality " of a corporation and its stockholders.^" The first of these theories has since been deprived of capacity to enable a state to measure taxes on the local business of foreign corporations engaged also in interstate commerce by the value of their total capital stock.^^ The second has been refused recognition in a recent case ^^ in which a state sought to impose double taxation on the economic interest in shares of a national bank owned by another national bank. It had previously been commented on imfavorably by Mr. Justice Moody in Home Savings Bank v. Des Moines,^ which found that a " See passage quoted from Home Insurance case in 31 Harv. L. Rev. 334. "No constitutional objection lies in the way of a legislative body prescribing any mode of measurement to determine the amount it will charge for the privileges it bestows."
- " See passage quoted from the Lander case in 31 Harv. L. Rev. 341.
■" Western Union Telegraph Co. v. Kansas, 216 U. S. i, 30 Sup. Ct. Rep. 190 (1910), and cases following it. See 31 Harv. L. Rev. 584-618, 937-53. ^ Bank of California v. Richardson, 248 U. S. 476, 39 Sup. Ct. Rep. 165 (1919).
- 205 U. S. 503, 27 Sup. Ct. Rep. 571 (1907), 31 Harv. L. Rev. 341-44.
