Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1909-06-22
CORPORATIONS
MAY EVADE TAX,
SENATOR FEARS
ELKlNS PROMISES SPEECHES
ON NEW MEASURE
PRESIDENT BELIEVES COMPANIES
WILL SUBMIT
Questions as to constitutionality of
Proposed Legislation Do Not
Disturb the Chief Ex-
ecutiVe

w ASHINGTON, June 2l.-Presldent
w Taft is decidedly optimistic over
w the outlook for his corporation
tax. but a number of senators VINO
called at the White House today de-
clared that the proposition would Keep
The senate in session until long after
August 1.
Senator Elkins was one of the callers,
and he declared he and 9th rs would
have some remarks to make in the sem
ate when the new scheme OF taxa tlon
is considered. Mr.. Eikins believes ali
corporations would attempt 10 AVOID
payment of the tax.
President Taft on the other hand does
not believe that a > per cent tax on
net earnings is heavy enough 10 make
any of the larger corporations resort to
evasive measures.
AS 10 bonds, II is possible, the presl-
dent feels, to provide limit for the
issuance of such securities, based on
the capital stock, that will prevent cor
porations from transferring all their
securities into bonds, the interest on
which is paid from gross earnings.
Some provision may he made as to
the issuance of bonds in the future TO
provide that the interest shall be paid
only from net earnings.
Prepare Draft of Law
Attorney General Wickersham and
Senator Root are jointly preparing a
draft Of the new law.
Questions as to the cOnstitutionality
of the proposed tax do not disturb the
president. The right to impose such a
tax has been distinctly upheld in a
case before the supreme ceurt-that Of
Spreckels against the United States.
IF an income tax were passed, injunc-
tons against its collection could be Sc
cured because of the supreme court de-
cision declaring unconstitutional for
mer act of this character. 1t would be
years before any collection could be
made under such a tax even If the
court finally reversed itself.
The president does not believe there
is any immediate emergency to stop
collection of corporation taxes. The
courts must presume it to be constitu-
tional under decisions of the past, and
hence no Injunction would issue. There
seems but little doubt that the corpora
ton tax d passed viii exempt earnings
Of $4,000 and less. This is the under
standing at the White House.
The collection Of the proposed Porpn-
ration tax would be under the direction
OF the internal revenue bureau. The
internal revenue authorities would act
in harmony with the bureau of corpo-
ratiOns of the department of commerce
and labor, and it would fall 10 this
latter bureau to keep an eye upon the
corporations as to any evasive meas
ures they might adopt, The method Of
collection would be similar to that en-
ployed in collecting the whisky tax.
Long Debate on Hides
The tariff bin amendment of the
finance committee taking hides from
the free list and restoring the Dingley
rate of 10 per cent ad Valorem was
before the senate all day. and it prob
ably will not be disposed of before late
tomorrow.
Senator Warren of Wyoming and
Senator Carter of Montana supported
the provision, and in vigorous language
attacked the attitude Of the free hide