The Hartford republican., 1909-06-25
new TAX BILL
Being SHAPED.
Measure Discussed at Meet
ing at White House
Exact Terms Will Not be Made
Public Until it is All
Ready.

washington, June 23.--Details OF
the proposed measure for the taxa
tion of net earnings of corporations
were arranged last night at the most
important conference that has been
held at the White House since Mr..
Taft assumed the Presidency.
There we're present as the Presi-
dents guests at dinner Attorney Gen
eral Wickersham and Senator Root,
who are charged with the task of
drafting the measure; Secretary of
State Knox and the Republican mem
bers of the Senate Finance Commit
tee; Speaker Cannon, and other Rep
resentatives.
For two hours the corporation tax
measure, which had been prepared
in the form of an amendment to the
tariff bill, was viewed from every
angle. Many changes from the form
in which it was placed were suggest
ed and not a few Of these were de-
clared to be wise.
The terms of the measure, as fl
nally agreed upon, although not yet
whipped into form, provide that all
corporations having capital stock and
organized for profit shall pay a tax
of 2 per cent. on their net earnings.
Corporations coming within that des-
ignation will be compelled to make
returns to specially named agents of
the bureau of internal revenue of
the Treasury Department. giving the
amount of their gross receipts, cap
ital stock, bonded Indebtedness and
all other visible debts. Separated from
these returns, the corporations will
be compelled to report the amount of
their net receipts, after deducting
their general and ordinary running
expenses, interest on bonds up to
the amount of the capital stock, in
terest on notes and other forms of
tangible Indebtedness and any actu-
al loss that may have been incurred in
business which less was not made
up by insurance, salvage or other form
of return.
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 accounts of mercantile
corporation, losses upon securities
held by banks, uncollectible notes and
all other forms of bad debts which
are usually charged to profit and loss
accounts.
AS has been stated before. the 2
per cent. tax will apply to all corpo-
rations organized fer profit, but each
corporation will be allowed a $4,000
exemption, which means that the tax
will not be collected except upon earn
ings in excess of $1,000.
ANY corporation which makes a
false report to an agent of the Bureau
of Internal Revenue who has been
designated to collect information re-
garding earnings, or who has made a
fraudulent return upon any of the
subjects covered by the law will be
subjected to penalty. The amount OF
this penalty is the only feature OF
the bill which was not decided. Most
of the participants in the confer
ence expressed the opinion that this
penalty should range from $1,000 to
$4,000 the amount to be fixed by O
United States court upon presentation
of all the facts connected with such
fraudulent terms.
The tax will be collector upon the
entire amount OF preferred and com.
mon stock of every corporation and
upon the bonds of a corporation
where they exceed the total amount
of capital.
1t is intended that the bill shall be.
come operative Immediately on tn,
passage of the BILL The life of the
measure was made indeterminate, in
stead OF two years or some other fix.
ed limitation, such as had beer
suggested originally. The present veal
tax will be collectable July /. 1919, tn,
beginning of the nxet fiscal year.