The Montgomery advertiser., 1909-06-22
TO DISCUSS
 PROPOSED TAX Conference Will Be Held
 Tonight. CHANGES WILL BE MADE
Taft Will Personally Supervise the
 Finishing Touches.
Senators Call At the White House To Discuss Subject, Declaring Con-
 gress win Not Adjourn
 Until August.

Washington, June 2I-President Taft will personally supervise putting the finishing touches upon the proposed amendment to the tariff bill. provid- ing for the imposition of d two-cent tax on the net earnings of corpora tions. This will be done tomorrow night .at conference at the White House.
 There will be present Attorney Gen. eral Wickersham and Senator Root, who are drafting the amendment; See- retary of State Knox and Senators Aldrich, Burrows Penrose, Hale, Cul- lom, Lodge. McCumber, Shoot and Flint, constituting the Republican membership of the Finance Committee. The draft prepared by Messrs. Wick ersham and Root will be discussed at the conference.
 Such changes as are agreed upon will be made by the Attorney General on Wednesday,, and it is expected the perfected amendments will be ready for introduction in the Senate on Thursday. The Attorney General and MT. Root had long session at the Cap itol today and reached an agreement on practically every feature of the cor poration tax plan. The portion which l Is giving them the greatest trouble re- lates to the government control of cor 1 porations. necessary to carry the law
 
 been little opposition to subjecting the corporations to the amount of publicity that will be required in the enforce ment of the law and to prevent manip- ulations of stocks and bonds for the l purpose of evasion.
 Members of the Finance Committee as well as MT Root and Mir Wicker. sham, agree with President Taft that such publicity must be given and that l without it, the corporation tax law would be a failure. This feature, 1t was today stated, certainly will be incor- 1 porated in the. amendment. The au- | thors of the draft, however, are experi- encing difficulty in finding an effective way of reaching the situation. Among the details of the bill deIerinIned to- day, are that the tax to be levied will i be at the rate of two per cent and 1 that 1t would be collected from all cor l porations. All banks will come with in the range of the tax bill and de- ducticns will be allowed national banks to the amount of taxes paid upon theif scirculation.
 In important provision to be includ- | ed In the bill Is a definition of net earn l ings. This will follow as nearly as possible the definition of earnings con talned in the interstate commerce act relating to railroad corporations.
 Taft Optimistic.
 President Taft Is decidedly optimis. tic over the outlook for his corpora tion tax. but number of Senators. who called at the White House today. l declared that the proposition would l keep the Senate in session until long past August 1. Senator Elkins was one of the Presidents callers and he declared that he and a number Of other Senators would nave some re- marks to make to the Senate when the new scheme of taxation is under con- cf 1 1ona fASr rt,nfa tor believes that all corporations would attempt, in some manner, to avoid pay ment of the tax. Additional salaries and all manner of expenditures would be resorted to. he thinks.
 President Taft, on the other hand, does not believe that a two per cent tax on net earnings is heavy enough to make any of She larger corporations resort to evasive measures. As to bonds. it is possible the President feels to provide limit for the issuance of such securities. based upon the capital stock, that will prevent corporations from transferring all of their securi- ties into bonds. the interest on which always Is paid from gross earnings. There seems to be no way in which the bondholders can be reached under the new law, except by double taxation on the corporation itself, which is not contemplated. Some provision may be
  future to provide that the interest shall be paid only from net earnings.
 Attorney General Wickersham and Senator Root are jointly preparing a draft of the new law At conference of MT. Wickersham with the President today. 1t was decided to call in MT. Roots seeVices.
 Questions as to the constitutionality of the proposed corporation tax do not disturb the Presidents The question was distinctly upheld in a case before the Supreme Court-that of Spreckels against the United States. This is a point where the President believes his corporation tax plan should outweigh an attempt to pass an income tax at this time. If an income tax were pass ed injunctions against It's collection could be secured because of the Su- | preme Courts decision declaring uncon- stftutional a former act of this char acter
 Years Before Collection.
 It would be years before any coi--l lections could be made under such a tax even If the court finally reversed itself and the treasury deficit might | continue to exist. The President does not believe there is any immediate way to stop collection of the corporation tax The courts must presume it to be constitutional under decisions and | hence no injunction would issue.
 There seems now to be little doubt but that the corporation tax as paid would exempt net earnings of $5.000 and less so as to take any undueS bur den off the smaller corporations. The collection of the proposed corporation tax would be under the direction of the Internal Revenue Bureau, and while additional inspectors and other employees would be necessary, it is not believed any added authority would be required. The internal revenue au- thorities would act in harmony with the Bureau of Corporations of the De- partment of Commerce and Labor, and it would fall to this latter bureau to keep an eve on the corporations as to any evasive measures they might adopt. Reports of the corporations would be received in Washington and the collection>sheets made out and ap- portioned to the various districts The method of collection would be sf7,ilar to that employed in the collection of tbp xyh