The Montgomery advertiser., 1909-06-23
CHANGES IN
 TAX MEASURE Leaders Confer at White
 House. ARRANGE ALL THE DETAILS All Corporations Having Capital
 Stock to Be Taxed. An Exemption of sS,ooo Per Year Is Made, Which Protects corpora- tions Which Have Earning Not in Excess of that
 Amount.
ARRANGE ALL THE DETAILS

washington, June 22-Details of the proposed measure for the taxation of net earnings of corporations were arr
 ranged tonight at the most important conference held at the White House
 since Mir. Taft assumed the Presidency.
 There were present as the Presidents
 guests at dinner, Attorney General Wickersham and Senator Root. who
 are charged with the task of drafting
 the measure; Secretary of State Knox.
 Senators Aldrich, Burrows. Penrose. Hale. Cullom, Flint. Shoot, McCumher
 and Lodge, constituting the Republican
 membership of the Senate Finance
 Committed; Speaker Cannon. Represent
 ative Payne, Chairman of the House
 Committee on Ways and Means, and
 Representative John Dwight, i(N. Y.).
 the Republican whip of the House. The statesmen sat down to dinner at o'clock. No business was discussed
 at the dinner, but for two hours after
 wards. the corporation tax measure
 which had been prepared in the form of an amendment to the tariff btlL
 was viewed from every angie.
 Many changes from the form in which
 It was written were suggested and not few of these were declared to be
 wise. The result was that the care-
 fully prepared copies given to each
 member of the party by Attorney Gen. eral Wickershnfn were returned to him
 at the end of the conference.
 President Taft himself suggested that copies should not be taken by members of the party until the amends
 ment had been perfected.
 All agreed not to make the form of the amendment public until it Is ready
 to be introduced In the Senate as Finance Committee amendment to the tarift bill.
 The terms of the measure, as finally
 agreed upon. although not yet whipped into form, provide that all corporations
 having capital stock and organized for profit shall pay tax of two per cent on their net earnfngs- Corporations coming within that designation will be compelled to make retur1is to specially named agents of the Bureau of Inter- | nal Revenue of the Treasury Depars. ] ment, giving the amount of their gross receipts. capital stock. bonded indebt, 1 edness and all other visible debts Snp. arafe from these returns the corporA- tiona will be compelled to report the amount of their net receipts. after de-
 ductinE their general and ordinary run ming expenses, interest on bonds up to the amount of the capital stock Of the
 corporation, interest on notes and other forms of tangible indebtedness, ana any actual loss that may have been in-
 cured in business. which loss was not
 made up by insurance, salvage or other form of return.
 losses are Characterised.
 The amendment will define in the
 broadest possible way the character of losses which may be deducted from
 the net earnings. upon which the tax
 is to be collected. These losses will include bad account of a mercantile
 corporation. losses on securities held
 by banks uncoliectable notes and an
 other forms of bad debts. which are
 usually charged to profit and loss ac- counts.
 As has been stated before. the per
 cent tax will apply to all corporations organized for profit but each corpora lion will be allowed a $5,000 exemp- ton, which means that the tax will not be collected except upon earnings In
 excess of $5,oO0.
 Any corporation which makes a false report to an agent of the Bureau or Internal Revenue. who has been des- ignated to collect information regard ing earnings, or who has made fraud plent return upon any Of the suo)ects covered by the law, will be subjected to a penalty.
 The amount of this penalty Is the only feature of the bill which was not decided tonight. Most of the parti- ciuants In the conference expressed the opinion that this penalty should range from $1, ,00O to 410,00o the amount to he fixed by a United States court upon presentation of all the facts connected
 with such fraudulent terms. The tax will be collected upon the entire amount of preferred and com mon stock of every corporation and
 upon the bonds of corporation where they exceed the total amount of capi- tai.
 come operative immediately upon pas | sage. tndeterminate instead of two years or some other fixed limitation, such as had been suggested originally. The nresent years tax will be collectable July :, 1910, the beginning or the
 next fiscal year.
 Leaders In the Senate and House
 have been flooded with telegrams from l corporations, expressing fear that the | law wosld be drawn In such form that | interruptions agents of the internal revenue bureau might use information obtained in some way so as to inJure | the business of a corporation. This | danger was discussed tonight. and 1t
 was decided that only especially des- | ignated agents of the bureau should | he permitted to interrogate corpora | lions concerning their puslueSs. AhS corporations make their returns di- 1 rectey to the Bureau of Internal Rev. enue in Washington.
 Takes in Mutual Companies. | It was decided at the conference to" night that all incorporated insurance ! companies organized for profit shall be brought within the terms of the pro- | posed corporation tax law. This will not exempt so-called mutual insurance oomnanies, which admittedly are. or | which can be proved to have been or" i ganized as proft-taking institutions. I Neither will 1t exempt fraternal in- | surance concerns which come within | that interpretation of the law. Estimates given today place the | nrobabie amount that would be raised bv the proposed per cent tax on net earnings of corporations. after taking | into consideration all of the exemp- tions stated, at from $25.OoO.oO0 to | S30. 100000.
 Neither the Senate nor House leaders undertook to forecast tonight the | length of time which will be required ] to pass this measure through Congress. | They stated that they did not under
 take to supply President Taft with that l information.
 The presence of the Republican