The Washington herald., 1913-10-31
May ORDER TEST
OF INCOME,LAW
investment Bankers Associa-
tion Likely to Take Matter
to Highest Court.
WALL ST. MARKET LOWER
Call Money at 6 Per Cent, and the
Mexican Situation Causes
Point Declines.
WALL ST. MARKET LOWER
by i. A. FLEMING.


clause in the income tax law If the advice
OF the committee on taxation of the asso-
citation is carried out. and there is every
reason to believe that the suits will oe
nled and bitterly fought to the highest
court The committee also recommended
that all documents, treaties and analyses
OF the law be obtained by a committee
10 De appointed for use in arriving al
conclusions as to constitutionality.
Blue sky" laws came in for denuncia-
ton at the convention of the Investment
Bankers Association, with specific refer
ence Ior each State that has enacted such
legislation.
In commenting on the income tax Law.
r. w Rollins declared the great ma
lority does not understand its peculiar
phrasing"
Secretary McAdoo yesterday Issued a
substitute form to be used when offering
coupons for collection or payment with
exemption claim. The only change is that
parnes presenting coupons and claiming
exemption shall file NOT only exemption
GAINED on the coupons or orders. but
that the total amount of exemption
form.
Inc District Bankers Association COM
mlttee on income tax was in session YES
leToay afternoon at the American Sc
curlty and Trust Company. This instit,I
uoh' being, perhaps. more vitality inter-
esled through the large number OF estates
vIiloed 10 It's charge and the vagaries of
the INV with regard to landlord and
tenant has made a point of having heads.
OF departments inform themselves of
every feature, and close connection Is
maintained throughout the day with the
-l1erhdi Revenue Bureau in solving difs-
cult sections and invorved Language
Ihe Bankers Association committee in
SIudes Messrs. Saul, Bell, Hoover, and
Mchee. and their deductions NAV safely
oe accepted by the hnanciers of Wash
ington.
Would Simplify Matters.
The Illinois Bankers Association has
iIep9Ieu ana VIII have introduced in the
near future by Senator Lewis. an amend
Ineht the purport Of which is to prevent
the normal tax of / per cent being coll
lected at the source The proposed
amendment follows:
Any and all provision of the said ser
non IL authorizing or requiring the nor
raj tax to be withheld at the source of
the income, in so far as said provisions
spply- 70 residents. of the United States, |
shail be. and the same are. hereby re- |
pealed' but in all other respects said
nd
effect
All over the country bankers are spend-
ing half their time explaining or try
ing to make plain the rulings OF the In |
ternal Revenue Commissioner approved
ny Treasurer McAdoo to customers. who |
ADMIT that while they have read the |
law and digests thereon, they know
little or nothing about it.
At Ia Brokerage Houses and Trnder,
The income tax imposes many vexations |
upon brokerage houses, but is NOT as |
much of market factor as was at one |
time feared. Most of the difficulties con-
Germ the collection of interest on bonds /
held for customers and the question of |
withholding the tax at the source"
Many of the houses expect to be sub
Jected to greater expense for bookkeeping
and to great deal of annoyance until |
the Treasury regulations are thoroughly
understood and are working smoothly.
But, according to the construction of the
law in most of the houses, traders are
not likely to be bothered by the bill to
the extent of curtailing their operations |
Income derived from dealings in Sc /
curities is taxable, but from that income |
so lawyers have advised, may be de-
Quoted losses from such dealings, and
the net income from trading in securities
FROM
income there is also deducted the stamp
tax, the law specifically providing that
all State taxes are to be deducted in COM
putting net income. That is an important /
item for professional traders, many of |,
whose purchases of stamps run into the
thousands
A class of traders hurt by the law is
that known as involuntary investors.
While the law provides that losses ac-
tually incurred in trade may be de-
Quoted in computing net income, il says
nothing about paper losses, such as that
sustained by the involuntary investor
who has brought Steel on margin at 90
and has taken up the stock rather than II
take the loss. He is more than 5000
loser on his speculation, but that loss
cannot be construed as one actually in ,
CURED until he sells the stock. The in
voluntary investors are rather numerous /
at present and though the tax on their
incomes may not be heavy, every little
Dit added to the losses makes 1t a bit I
harder to bear them. The brokers' in !
come is not affected, however As was
pointed out by broker who has not vet Y
ost his eyesight looking for commissions,
he broker may even profit from the cir
He may persuade his Gus
omer to sell out his stock and take his
oss so that il can be deducted in COM
would then pocket an extra commission.
New York Stocks Weak. :
Stocks started well, making a small Z
let gain in the initial trading, but be- :
ore the end of the first hour there was :
'ersistent selling all along the line, with &
he three always-leaders attracting the G
most attention. Pressure on Steel conn q
non was severe and Reading. too, was 6
aided. Steel reports are not encour- ! !
ging, cutting Of prices and restricted
reduction due to curtailed orders be- I
ng reported from various independent J
and from the headquar- y
ers of the Steel Corporation.
The Bank of England did not raise its !
ate of discount, but the chances are :
hat II centers the gold supply to such q
n extent that the gold viii not come \
his way until the expectation win meet q
nth approval on the other side. Our Q
ankers will not be inclined to press 2
or imports.
Probably the Mexican situation had as n
luch to do with the weakness of the
fternoon, although the advance in the
ate on call money to per cent, the
ighest Of the year, was potent factor.
The fact that there was very little =
orrowing demand for stock at the close q
business on Wednesday gave out the a,