Omaha daily bee., 1909-04-22
Iowa Senator Presents Amendment 70
Tariff Bill Makes an
Extend Ach.
WILL PRODUCE MILLIONS
All Incomes Under Aousand a
Year Are E
CORPORATIONS ARE TAXED
CORPORATIONS ARE
Provision Made for Reaching Divi'
dends Drawn by Nonresidents.
QUESTION FOR SUPREME COURT
senator Suggests that Decision Of
1904 BE Reviewed In Light OF
Hundred Years Previous
History,

Hundred wears freNiouH
History.
WASHINGTON. April 2i-substantial
progress was made by the senate in the
consideration of the tariff bill. No senator
being prepared to speak on the bill as
whole. the reading OF the measure by para
graphs was begun. The various items III
the chemical schedule were passed over
for future consideration. The reading was
frequently interrupted by the discussion of
amendments and only eighteen pages oil
the bill were disposed Of. Senator Cum
Minis presented his income tax provision
and discussed It at length.
At . r. m. the senate went Into executive
session.
The nomination of Thomas c. Dawson to
be minister to Chile was confirmed.
CummBns' Income Tax Amendment
senator Cummins introduced his amend
ment to the Payne Aldrich tariff bill. pro-
vidng for a graduated income tax, which
he believes would produce SiO,C0o,Oo9 revenue.
MIR. Cummins pointed out that it differs In
some important particulars from either
the law OF 1894 or the amendment Offered
by Senator Bailey. 1t exempts incomes
below 5000 and authorizes the deducton
of that amount from every duuable IN
come.
The rate provided for is as follows
Upon incomes not exceeding $4,000. per
cent; not exceeding 10000. "a per cent
not exceeding $4,000 s per cent; not ex-
ceeding $4,000 s1k per cent not exceeding
$4,000. per cent; not exceeding 100000.
per cent; upon all incomes exceeding SloO,-
600. 6 per cent.
Mr.. Cummins believed that the gradu-
ated tax go provided for will produce
somewhat less revenue than fiat tax OF
per cent.
The duty is to be levied upon individual
incomes. He treats corporations as mere
instrumentaIities for individual profit ana
the chief reason for not including corpora
tlons is that TO put tax upon the incomes
OF corporations is TO tax those who are
stockholders of the corporations, but whose
total incomes would not reach 5000. pre-
cisely as though they had dutiabie incomes
This would be the result with flat rate,
Int he points out that when the graduated
tax is employed Il - obvious that the in
dividual inc ONE can alone be considered
otherwise" he says, "the man with the
lowest dutiable income would, Insofar as
is derived from a corporation, oftentimes
Dear the maximum rate levied upon the
highest increase.
object of Income Tax.
The chief object of a graduated income
tax law is to put the burden OF government
upon those who are best able to bear H.
and "a do so IL is necessary to put higher
rate upon the large incomes than upon
small ones There is no advantage of put
ting in corporate incomes, because under
the law of 1924, as well the Bailey amend
lnent the individual has the right to de-
duct from his general income amounts re-
ee'ved as dividends from a corporation, IL
tae corporation pays an income tax.
the amendment proposed by Mr.. Cum
MINIS further provides that all corpora
tons shall make annual reports showing
their gross and uct earnings and the
amounts paid as Interest and dividends
and tho persons to whom payments are
made and also the names OF all officers
or employees receiving 5000 per year or
more In this way the undivided profits
OF a corporation are ascertained and the
distributed share Of each stockholder
charged as part Of his income
I'm presenting the resolution to the sem
ate Mr. Cummins said that II any tax
we're levied on corporations it would be ex-
trsmely difficult to classify the corpora
tions to NEE, the requirements of the con-
sdtutlon. He declared that graduated in
come tax on corporations would result in
great corporations paying the highest rate,
although their stock might be largely held
by men OF small means. In that way the
result might be TO place the highest tax
ON men of small incomes,
such result" said Mr.. Cummins.
would not only be unjust, but It would
destroy the essential principles that under
lies the income duty
Question of validity.
MIR. Cnmmius said he recognized that his
amendment challenged the opinion Of the
supreme court of the United States on the
law OF 1894. in respect to the constitutional
ssauirement regarding direct taxation, and
he believed il would be impossible TO frame
an income tax law that would not antag-
pnize that opinion, "If." he added, that
opinion is to stand in it's fun scope. then
the United States must abandon for all
time, or until the constitution is amended
the exercise OF power and authority which
had been recognized for 100 years before
the opinion was announced"
Mr. Cummns expressed the opinion that
the supreme court should again be invoked
THAT decision" he said, restricts the
federal authority and We should not permit
time 10 pass without again asking an exam
ination of this vital power of the govern
ment"
lie declared that such restriction OF
the poWer OF taxation of the government
would prove disastrous i'm time Of war,
Mr. Smith OF Michigan said the proposed
amendment would not reach the income:
Of the Americans resident abroad unless
the tax was placed on the corporations
Mr. Raynor took the same view.
Suppose" he said. Carnegie. with ar
Income OF s5Oo,OOo year. derived from th'
Steel corporation. should be living abroad
there would be no way to collect the ta'
he had no other property In the United
states to be attached
u propose replied Mr.. Cummins, "tha
the corporation shall pay that tax. Thsi
is the purpose OF my amendment"
Mr. Cummins referring to newspapei