New-York tribune., 1909-07-08
AMEND EARNINGS TAX
CL4PP WOULD INCLUDE
HOLDING COMPANIES.
Proposition Didmetrically Opposed
to Presidents Tie7cs and I'm
HkeIy To BE Retained.
From The Tribune Bureau.I

From The Tribune Bureau
Washington. July THE Senate amended the
corporation tax provision of the tariff bill to-
day by striking out the words intended to ex-
eTnpt from taxation the profits which holding
companies derive from other corporations. Sen
ator Aldrich, behalf of the Finance Com
mittee accepted an amendment effecting this
change. which was offered by Senator Clapp.
There is little likelihood. however. that the
Clapp amendment will he retained in conference.
1t is diametrically opposed to the views of the
President who specifically charged the Attorney
General TO include in the amendment the words
which exempt from taxation amounts received
dividends upon the stock Of other corpora
tions"
Senator AIdrich was led to accept the CIapp
amendment by the discovery that the radical
Republicans and the Democrats had between
them sufficient votes to add IT TO the bill and
by the belief that the proposition would be- more
easily disposed OF in conference if there had
been record vote in it's favor in the Senate
In view of the Presidents conviction that the
elimination of the exemption which he caused
10 lie inserted in the bin would result N double
taxation. and therefore in Injustice the lead
ers are confident that the CIapp amendment wifi
be lost in conference. When the amendment
was on passage all the members Of the Repub-
iican organization voted against H. on the viva
yoce vote. but II declared adopted bv the
Chair. and no aye and no vote was demanded
IT is pointed out that many corporations hold
stock in various corporations that the profits
on such stock viii be taxed under tine provfsinn,
Of the bin as reported to the senate. and that
were the Clapp amendment retained the profits
on ali such stock It's was held by another COR
poration would be taxed a second time as the
profits Of such holding corporation
WOULD COMPEL DOUBLE TAXATION
Senator Clapp. in offering his amendment. ad-
vanced the argument that the exemption CON
stituted recognition by Congress Of the LEGALITY
OF holding companies. and in his estimation
nullihed the effect Of the Northern Securities
decision OF the Supreme Court That the ahIest
lawyers in the Cabinet and In the Senate attach
no Importance tn this argument has already been
told in these dispatches The effect OF the Clapp
amendment was pointed out this evening h. A
Senator who said that a certain savings bank in
Utah held large block Of stock in an insurance
company in that state. and the insurance com
pany in turn held a large block Of stock in the
savings bank. Did the conference committee
fail to Kill the Clapp amendment both companies
would be subjected to double taxation and prac-
ticaly single unit OF property would be taxed
four times 1t is further pointed out that in
some instances states have practically author
lied railroad company to hold stock in another
company with view to facilitating the control
by the state OF both companies this being nota-
bly, true of the State of Massachusetts which
has recently authorized the New York New
Haven & Hartford Sailroad to hold stock in the
Boston & Maine company. and yet MIR CIapp's
amendment would severely penalize such holding
company compelling it to pay double taxation
on its profits
Before the amendment was adopted Senator
Adrich spoke earnestly against it. Senator
D"iiiVer supported it in an impassione1 speech
which won for II the support Of all the in
surgent Republicans Senators Cummns. Daniel
and Newlands also spoke in support of the Clamp
proposition Some of the members of the
Finance Committee differed with Mr. Aldrich as
to the advisability of accepting the amendment
They believed that it would be Just al well to
permit the country to the extent TO which
the radical element in the Senate would no will
ing to go, but Mr.. Aldrich took the view that II
would be wiser to avoid yea and nay vote
because such avoidance would facilitate the
ultimate elimination of the Objectionable amend
ment
ALDRICH SOMEWHAT EVASIVE.
Senator Bailey undertook to commit MIR Al
drich to the retention Of the Clapp proposition
in conference, but the Senator from Rhode ISL
and replied somewhat evasively that he would
go into conference with the hope of retaining
all the Senate amendments 1t is explained that
Mr.. Aldrichs efforts in so far the Clapp prop
osition is concerned will be futile as when they
reach the corporation tax the House conferrees
win be guided entirely by the Presidents views |
and Mr.. Taft will not hesitate to impress on
MIR Payne and his associates the necessity of
eliminating the Clapp alteration.
Mr.. BulkeIey was greatly disappointed over |
the acceptance by Mr.. AIdrch of the CIapp |
amendment. He has been Il consistent oppo-
nent of the corporation tax the ground that !
it makes discrimination against mutual insur- |
ance companies. When the Cfapp amendment |
was accepted the Connecticut Senator said: |
THAT makes the corporation tax obnox- /
fous than ever Inspired by Mr.. Clapps sue
cess in forcing the adoption of his amendment,
Mr.. Bulkeley suggested that perhaps he might |
get some of his amendments through, provided |
he talked long enough and delayed action OH
the bill He offered several amendments chang
ing the phraseology OF the bill, and Mr.. Aldrich
Continued third