New-York tribune., 1909-06-12
THE TAX ON CORPORATION INCOMES.

To the Editor OF The Tribune
Sir: The proposed federal tax on the income Of
corporations would be unequal in its operation and
interfere with an important source of state
revenues.
Such tax would reduce dividends and really be
a upon the individual stockholder There is
reason except that he Is an easier victim why
should be taxed upon n income derived
from an incorporated business. while another man
receiving income from similar but unincor-
porated business is exempt.
Most corporations are engaged in production or
trade and a special tax such incomes from pro-
duCtion is a hindrance 10 enterprise. The
porate form Of doing business is necessary to mod
err production and should not be discouraged by
arbitrary and discriminating taxation The special
state taxes paid by business corporations are
burdensOme enough. especially as. owing TO the
lack comfy between states there is often double
treble and even quadruple taxation of corporate
property
In the State Of New York ordinary business cor
porations now pay state income tax OF 2,5 rer
cent when dividends are per cent over. When
the dividends less the is usually q larger
percentage uf the income. The total receipts from
this tax more than $l.coO,COO These business
corporations liable. in addition, to the same
local taxes on real and personal property as fall
on individual property and usually pay on rela-
lively larger personal property assessments.
Railways pay similar state income tax and an
additional gross earnings. while the street
railways another basis; total receipts.
81 100000 The rate net income varies greaty.
but the general range is from 10 per cent. With
the gas. water, electric and telephone corpora ton
taxes the states income these taxes is bout
So 100000 (This does include the 100000 from
savings banks. trust and insurance companies)
Railways and other public service corporations are
also liable to local taxation on real and personal
property and 10 special franchise assessments for
the value of the privilege OF using crossing high
ways.
Special taxes on corporations are being used by
a number OF states as part of a general plan to
separate sources OF state and local revenues
there is a growing tendency TO increase these
special taxes In most cases such taxes are in ad-
diton to full liability local taxation. Generally
manufacturing corporations excepted from
snecial state taxes in order to encourage produc-
tion.
1t was stated in a Washington dispatch
the tax on corporate dividends is similar the
English system Of taxing incomes at the source"
The English tax applies TO all incomes. and
much of the is paid over by corporation Is
credited to the individual when he finally makes
his settlement with the government At least this
is fair as between all forms of incomes.
1t is argued sometimes in favor of special taxes
that the shareholder obtains an income without
actually doing any work. The may be true
of the individual owner OF a business. and the
argument applies with much force to other
forms of investment. Especially does it apply
the enormous incomes derived from the increasing
values of land. that in sense due 10 the
activity Of the owner but result largely from the
in fact from the transportation facilities furnished
bv public service corporations. whose shareholders
tamong others it is proposed to tax.
A c. PLEYDELL.
Secretary New York Tax Reform Association.
New York, June Il. 1903. -