Evening star., 1909-06-17
Vested Interest and Income
Tax Amendment.
AT MERCY OF LAWMAKERS
Statement of Advocates of an In.
come Tax.
CORPORATION TAX DEFECTS
Big Fortunes Will Escape and Small
Investors Bear Burden-Inequal-
ity Causes Dissatisfaction.

That a political Pandoras box has been
opened in Congress by the corporation
and income tax propositions is the fear
expressed today by statesmen at both
ends of the Capitol. Trouble. trouble,
toll and tribulations seem to be impend-
ing
In the end the Presidents recommen-
dations will be adopted. it is believed,
and. indeed. tacitly admitted. by those
who favor a more radical course, but
not until there has been a long and
wearisome debate and perhaps some
weakening of party lines.
Statesmen on the hill today were begin
ming to realize the gravity of the situation
created by the Presidents recommends
tions yesterday. History is being made.
The republican party" said member
of Congress today, through agree
ment between the executive and the leg
islative branches, formally enters upon a
campaign. under pledge of good faith.
to make il possible for future congresses
10 go as far as they like in schemes OF
taxation which the fathers inhibited.
Wealth at Mercy of Masses.
IF the plan carries through all its stages
y
come may by majority vote impose upon
wealth and industry unlimited taxation.
Given some great popular wave of emo
tion, such as the country witnessed in
the good old days of populism and free
coinage, with Roosevelt or a Bryan to
lead, vested interest will be at the mercy
OF the masses.
Profound concern is felt In the terms of
the proposed amendment to tax corpora
"a will he 4dnDfo d.
but already there are murmurs OF ols-
satisfaction with it unless 1t is framed to
reach more classes than the broad prop
osition would seem to include.
Carnegie Will Escape.
AS a concrete example Mr.. Carnegie
the holder Of $500, 100000 worth or more
of the bonds OF the United States Steel
Corporation. which pay him per cent IN
terest, will not be taxed. The holders or
the preferred and common stock OF the
CORPORATION will be taxed. Interest on
bonds is a hxed charge which must be
deducted from gross earnings and set
aside before the taxable net earnings can
be estimated,
The greatest and securest fortunes OF
the country are invested in the bonds OF
corporations and will escape under this
rlan. Tine small investor in stocks Will
bear the burden. The feeling of inequality
if not injustice wrought by this discrlm-
ination will facilitate the propaganda for
a more far-reachins tax. of the income
variety, in the opinion of congressman.
The original proponents of the straight
income tax will fight to the last for the
without waiting for the submission of a
constitutional amendment although they
feel they will be beaten. They realize the
tremendous weight of President Taft
plea OF orderly procedure through con,
stituticnal amendment, and understand
how il falls In with the wishes OF those
opposing the tax, who will urge 1t to the
utmost. They know that it will sway the
uncertain and the undecided. who will
gladly resolve their indecsion by follow
ing the calm leadership of the great con-
stitutionalist.
Their course is outlined in a statement
given out last night by Senators Bristow
and Borah after a conference which in
cluded Senators Cummins. La Toilette
and Clapp
The statement follows:
Statement Of Income Tax Advocates
The friends of the income tax feel it
a duty to continue to put forth every
effort to secure the adoption of the
measure They will therefore urge the
adoption Of the amendment.
They also stahd ready to support a
TScClutloH pToNlCllS oil dHicHuIHSHL
10 the Constitution Of the United States.
While they believe that the Supreme
Court will sustain the law. yet to pro-
vide against any possible contingency
that might result from adverse de-
cision they gladly favor the proposition
to amend the Constitution.
They do not feel satisfied with simply
q corporation tax tax upon the net
income OF corporations alone will very
tmperfectly reach the desired result. 1t
-urtlv
ers whose total incomes are very small.
and will exempt in large measure the
immense personal incomes of the coun-
try.
The provision they favor treats large
incomes exactly alike, whether received
by corporations or individuals and
whether arising from interest, dividends.
inheritances or otherwise. The plan
which they propose simply carries the
Presidents views to their legitimate end.
the Supreme Court as Is the tax on cor
porate incomes alone.
Big Incomes Exempted.
There is no reason for exempting from
this tax the vast incomes of individuals
like Carnegie, Rockefeller and Others a
very large part Of whose fortunes do
not consist OF corporation stocks II is
also well known that corporations. espe-
stances shift the burden OF the tax TO
the public by imposing upon the people
increased charges and prices
LAS to the publicity feature. there is no
substantial difference between the two
measures. In other words. there is the
same necessity for securing information
and insuring publicity in the income tax
as in the corporation tax. Every posi-
BILE effort will be made to secure the pas
sage OF the income tax amendment"
Test to Be Put Of.
The first test of strength on a straight
out income tax amendment will be post
poned until after the schedules of the
tariff bill are out of the way. vote
was set for tomorrow on this question
but Senator Aldrich will move to defer
the vote until AN the schedules are com
pleted.
The democrats of the Senate will NEE,
in conference at O'Clock to lay out q
party plan of action. This meeting viii
develop their policy on the corporation
i tax.
In the meantime, the republican leaders
in the Senate are strengthening their
plans TO carry out President Tafts rec.
concentrations to the letter and have nc
doubt of their ability to hold suficient
republicans in line to do it.