The Washington times., 1909-04-19
RPORATION TAX
REPUBLICAN SNAG
Insurgents Can't Agree, and
CumminS PoStpones His
Income Bill.
IOWA SENATOR
EXPLAINS PLAN
Would Not Assess on Companies
and individuals Earnings,
Too.

Because the insurgent Republican SEN
ators have not reached an agreement
among themselves as to the framing
OF an income tax measure, Senator
Cummins did not present today the bill
he has drafted and on which he is try
ing to secure unity Of action among the
Republicans who favor such a measure
The differences among the men who
believe in the general principle of such
a measure is not related, as has been
represented, to the adjustment Of the
graduating percentages, but to the
question Of whether corporation incomes
should be taxed. Senator Cummins does
not believe that the incomes OF cor
poratiops should be taxed. He recog-
nizes that from political point OF view
this is difficult position to take, be-
cause at first glance the average per
son will feel that the income or a great
corporation should especially be sub
Jected to this burden. But he further
be heves that when the matter is
properly understood II will be recOg-
nized that this is impracticable. would
result in much injustice. might make
a graduated tax almost impossible, ana
would seriously menace the prospect OF
the measure being sustained in the
courts.
Persons Only Taxed.
AS drawn by Cummins, the bill pro-
vides that incomes of persons only shall
be taxed. lie would start with 1 per
cent tax on incomes OF 5000 or $1,000.
raising II so that at $4,000 or S1OO,OO6 5
per cent should be imposed He makes
no exemption Of income from real
estate.
The old income tax law Of 1894 which
was never administered. taxed alike in
comes OF corporations and OF persons.
In doing this IT undertook TO make a
classification Of corporations, taxing
some and exemDting others. Thus mu-
Iual insurance companies were not
taxed. This classification is looked upon
as likely 70 wreck the measure on the
judicial rocks. The proposed measure
therefore. exempts corporations incomes
entirely.
"Corporauons are merely instrument
talities for earning profits and direct
Ing them into the pockets of natural
persons, explained Senator Cummins
70 the nalf score OF progressive Repub-
lican Senators who gathered at his
home for a consideration of the meas
ure. If you tax the income of a cor
poranon as received by the corporation,
and afterward tax that same money
as Il goes TO the shareholders as dfvl-
dends, II is subject to the criticism of
doubling the taxation. so this measure
proposes to tax corporation profits
WheE they become part of the incomes
OF individuals to the individuals. Cor
Porations would be required TO make
statements, showing their stockholders
and the dividends or interest paid. so
that statements Of individuals could be
checked by these reports.
Explains His Plan.
Another highly important reason for
taxing the income OF the individual
rather than the corporation Is that it
viii make the graduated tax less unjust.
Take an Illustration. A great corpora
ton has one shareholder who draws
an aggregate Of 5000 In dividends in a
year, while another, owning a big block.
draws $4,000. That corporation would
be in the class 10 pay the highest rate
OF tax under this bill cay per cent
II would have to take per cent awav
from the small shareholder as well as
from the large owner. A 5000 income
under the graduated scheme, II earned
by personal effort, would be taxed, say,
] per cent, or go. But il taxed through
the corporation II would be subject TO
per cent, and that would make 500.
an unjust share Of the burden for q
man with 5000 income to pay"
The one difficulty about the plan as
Senator Cummins rankly explained TO
the Senators. Is the possibility that the
public would not understand il, and
would mistakenly assume that il was a
Discrimination against individuals, pub
hc opinion being much more interested
IN getting at the great corporations than
in reaching individuals. Senator Cum
Minis expressed the belief that when
properly understood il would be ac-
Qepted by the public as preferable TO a
nat tax under which the great corpora
ton and the individual Of small income
would pay the same rate.