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Corporation
tax, imposts levied by federal, state, or local governments against
corporations, their income, or their peculiar attributes, such
as charters, capitalization, dividends, and franchises. In the
United States such taxes were brought about by the difficulty
of taxing corporate bonds and stocks and by the growth of corporations
beyond state bounds, with consequent difficulty of assessment
and taxation.
Such special state corporation taxes now include fees and licenses
for incorporation or for an increase in capitalization or for
filing the corporation's charter in another state; taxes on gross
earnings; taxes on tonnage and financial instruments or transactions;
franchise taxes; capital stock taxes; and net income taxes. In
1909 the federal government imposed an excise tax on net incomes
of U.S. corporations.
That tax was superseded by a corporation income tax after the
Sixteenth Amendment (1913). In Great Britain in 1920 a tax was
levied on corporations, including foreign companies of limited
liability doing business in the United Kingdom, but exempting
the profits of corporations receiving income from other corporations
already taxed. In both the United States and Great Britain, excess
profits tax has generally been imposed only during wartime.
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