buttresses its decision by the argument _ex necessitate_--that
to hold otherwise would open the way for men to withdraw their business
activities from the reach of federal taxation and thus cripple the
National Government. The Court says:

The inquiry in this connection is: How far do the implied
limitations upon the taxing power of the United States over
objects which would otherwise be legitimate subjects of
federal taxation, withdraw them from the reach of the Federal
Government in raising revenue, because they are pursued under
franchises which are the creation of the states?... Let it be
supposed that a group of individuals, as partners, were
carrying on a business upon which Congress concluded to lay an
excise tax. If it be true that the forming of a state
corporation would defeat this purpose, by taking the necessary
steps required by the state law to create a corporation and
carrying on the business under rights granted by a state
statute, the federal tax would become invalid and that source
of national revenue be destroyed, except as to the business in
the hands of individuals or partnerships. It cannot be
supposed that it was intended that it should be within the
power of individuals acting under state authority thus to
impair and limit the exertion of authority which may be
essential to national existence.

This argument will not bear scrutiny. It apparently loses sight of the
vital distinction between a tax on the mere doing of business and a tax
on the privilege of doing that business in a corporate capacity. These
are two very different things. The right of Congress to tax the doing of
business was not disputed. It had been expressly upheld in the
well-known case of _Spreckels Sugar Refining Co. v. McClain_,[1] which
involved a tax on the business of refining sugar, whether done by a
corporation or by individuals. The tax under consideration, however,
goes further and fastens upon something new--something which in the case
of individuals or partnerships has no existence at all--which comes into
being only by the exercise of the sovereign power of a state. The
opponents of the tax, far from attempting to narrow the existing field
of federal taxation, were in fact resisting an encroachment by Congress
on an entirely new field, created by, and theretofore reserved
exclusively to, the separate states. It was conced