New-York tribune., 1909-06-18
CORPORATION TAX NOT
DESIRABLE, SAYS GARY.
Calls 1t Extreme and ImpacticabIe
B. r. T. Counsel against It
CIezcs for / Per Cent LcUy.

the financial district. among corporation eXeCu-
tives and lawyers as we'll as among investors in
general Less attention paid to the sugges-
ticn that the Constitution be amended as to
make federal income tax possible.
Wall Street particularly took notice of what
the President pointed out the logical
quence Of tax on corporation incomes. that is.
the federal supervision which must be exer-
cised in order TO make the law effective
the annual accounts and business transactions
of all corporations The opinion was ex-
pressed that this would in effect. place the in
dustrial corporations under just as close gov
ernment supervision as that exercised over
the railroads by the Interstate Commerce Com
mission.
As chairman Of the board of directors of the
United States Steel Corporation. the largest cor
roration in this country. the views of f. H.
Gary are of exceptional interest. To a Tribune
reporter he expressed his opinion of the Presi-
dents recommendation for tax on net incomes
Of corporations follows:
PERSONALLY, l believe in publicity and in
modified government control, but. without fur
ther consideration. do not think the legislation
proposed in the last message of the President
for an excise tax on the net incomes of corpora
tions is desirable or practicable it seems 10 me
the proposition is extreme and. if adopted,
would mean government management in some
respects.
Besides, it might interfere with our present
system Of protection
Professor Frederick Collin. general counsel Of
the BROOKLYN Rapid Transit Company and a
student Of taxation. said that IN theory. he did
not believe in Indirect taxation. anyway. He
believes a tax should be so directly a burden as
To make the taxpayer everlastingly vigilant re-
carding the expenditures Of government officials.
VIEW OF 4 r T COUNSEL.
But # we must have an indirect tax he
declared, Il do not believe that It should be
fixed rate There should be- devised some system
by which Congress might each wear declare
certain rate of tax on certain things. according
to the needs Of the government II YOU collect
. per cent every year the net incomes OF cor
porations You viii pile up a surplus which viii
encourage extravaganza. The tax should he
adjusted to the needs Of the government. eco
nomically administered
IF We are 70 tax net earnings of corporations
the law should he so drawn that the earnings
will he automatically computed. IT would not
do 20 leave these matters 70 the discretion of
any official or set Of officials it would lead 10
endless dispute and trouble II might be ar
ranged 20 tax dividends declared and interest
paid on bonded Indebtedness. Even then some
Observation-Disclosures might arise
As Tor an income tax Professor Collin said
that. theoretically. II was one Of the hest, mt
practically would he one Of the worst that could
be evolved.
Henry CIews. the well known banker and
broker expressed the idea that national tax
on corporation earnings would not he objection
able II It should be ! instead Of per cent on
the net earnings The higher figure. he be-
lieved would etiHe industrial progress 1t
would he excessive" said Mr. Clews. "One per
cent would be more reasonable and should he
ample It must he remembered that in the
natural order Of things business will go on in
creasing so that / per cent will make a large
aggregate amount five years hence. So heavy
tax as . per cent would prove a serious handi-
cap in preventing investors from becoming
stockholders in corporations. It would dwarf
enterprise
An income tax IS entirely Objectionable. ac-
cording to Mr. Clews He holds with the Presi-
dent that il would be uuwise to ask the Supreme
Court Of the United states to reverse itself by
putting before It income tax law. But even
should the Constitution be so amended as 70 as
sure the stability Of such an act, Mr. Clews be
lieves It would be bad form Of taxation 1t
would be inquistorial and deceptive, he SAID
MANY people not entitled to credit in their
business would be likely to give false position
to il by declaring incomes they did not earn
and others would be tempted to commit perjury
avoid
of American citizens ip the attitude Of crimi-
nails"
LEGALITY OF TAX QUESTIONED.
4 G PIevdell secretary Of the New York Tax
Reform Association and corresponding secretary
Of the international Tax Association, questions
the legality Of a tax corporation earnings.
He said:
Personally do not like to see corporations
singled out in this fashion am I convinced
that the Supreme Court decision quoted by the
President covers the proposed tax. However
even if legal, the question remains whether it is
right.
"A tax on corporations is always popular
People think only of certain corporations with
vaiua BILE monopolies. and forget the great num-
ber of business corporations that enjoy no spe-
ciaI privileges. Nor do people realize that sucn
taxes fall on shareholders. unless shifted to the
consumer There is reason why a man who
does business through investing in corporate
shares should pay a federal tax from which
similar but unincorporated business is exempt
Mr. Taft saws that the tax will be upon the
privilege of doing business as an artificial en-
tttv This privilege. however, is given by the
states In the exercise of their sovereign powers
Corporations pay special taxes to the
va rious states sometimes twice on the same
values) in addition to taxes their real and
personal property similar to those paid by indi-
viduals There thousands Of competitive
corporations already burdened by special ana
ordinary taxes. to which an extra tax is serl-
Gus matter, II the rate remains at per
cent Just As heavy taxes in the case OF indi-
yiduals drive the weaker to the wall, so the
large corporations can view with complacency
the imposition Of extra taxes. knowing that their
weaker competitors will bc the greatest suffer-
ers." . >,