New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-08
NEW YORK MAY ESCAPE
100000 INCOME TAX
Senate Expected TO Amend the
Tariff Bill to Protect City'S
Subway interests.
HULL AGREES TO PROPOSAL
Author of Section Declares 1t
Was Net Intended by Trainers
to Impose Levy on Mu-
nicipal Revenues.
From The Tribune Bureau

From The Tribune Bureau
Washington, June Louis II. Hahlo As
sistant Corporation Counsel and Douglas
Nathewson, Deputy Controller returned
10 Now York to-day after comforting
with Representative Hull and Senator
O'Gorman, hopeful that an amendment to
the income tax section of the tariff bill
viii be adopted which will mean saving
TO the City Of New York Of between $500,
90 and S35O,o00.
The matter rests solely with the Demo
cratic members Of the Finance Committee
Of the Senate Mr.. Hull assured the Wis
itors that it was not the purpose Of the
trainers of the bill 10 impose a tax on
municipal revenues and that. If such
would be the effect Of the measure as
now drawn. he would approve an amend
ment modifying the language.
Nh Hahlo and Mr.. Mathewson con-
ferred to-day with Senator O'Gorman
who will take up the question with the
members OF the subcommittee OF the
Finance Committee which is revising the
income tax section \ brief has been pre-
pared and will be submitted to the sub
committee and members Of Congress on
Monday.
I'm their brief the representatives Of
the city. after explaining in detail the
situation with respect 10 the bond issues
for the building Of the new subway and
the citys part in the transaction, urge
that TWO amendments be adopted. one
eXempts states and political subdivisions
OF states and municipalities. organized by
the authority of state governments, from
the payment Of the tax on their incomes.
Not Intended to Tax Them.
Mr.. HUI in MS speech in explanation
OF the income tax bill in the House, said
that it was not intended that revenues
OF states and subdivisions Of states
should be taxed. He repeated this to-day
TO Messrs. Hahlo and MathewsOn.
This phase Of the bill is presented IN
Paragraph G.. which IL is proposed to
amend. The paragraph provides that
III computing the net income under this
section there shall be excluded the in
terest upon the obligations Of state
u auy political subdivision thereof. In
his speech MI. Hull said:
Paragraph eXempts from the law
salaries Of state and local officers and
interest upon state and local bonds The
Supreme Court has often held that under
our form Of government the states have
no power 10 tax the instrumentalties OF
the federal government and. conversely
that the federal government has no power
under the Constitution 10 tax the instru-
mentalities of the states"
II was admitted by Mr. Hull to-day that
Il was intended 10 exempt by this section
the obligations Of municipalities chartered
by state governments, The interest of
New York City in the new subway with
the Brooklyn Rapid Transit and the In
terborough companies does not come di-
\ rectly in this category, although II is prac-
u tcally the same kind Of interests which
were 10 be exempted from the tax.
To Avoid Complications.
4 second amendment is proposed 10 the
bill 10 cover the New York situation. pro-
viding that in the case of corporations or
corporate projects in which a municipality
has an interest such as the subway, the
tax shall be paid by the corporation, and
the municipality shall be reimbursed for
its portion Of the tax from the national
treasury. In this way there would be no
complication in the collection Of the tax,
and the private stockholders Of the cor
poration would not be able to escape pay
ment
The argument that the city. il il enters
into the business Of street railway trans
portation, should be amenable 10 the tax
Is also covered in the brief The de-
clsion Of the New York courts upholding
the right of the municipality TO enter into
the building of subways for the public in
terest will be referred 10 in reply TO this
contention.
IL is estimated that the share New
York City will pay under the present bill
will. after the new subway has been
in operation few years. amount to
more than $4,000. The payment Of this
tax, II is asserted. cannot be avoided as
the measure now stands. In contracts
with the Interborough and the Brooklyn
Rapid Transit companies it is expressly
stipulated that taxes. such as the pro-
posed income or corporation tax, shall be
regarded as a fixed charge before the net
profits are TO be apportioned 10 the COM
panies and the city. The city, therefore
will find its returns reduced TO the ex-
tent OF It's interest, and the public. which
bears the expense OF the undertaking,
Will eventually pay the tax.
In view OF Mr.. Hulrs statements. II is
believed that the Senate Finance Com
mittee will incorporate the amendments
suggested. or amendments to the same
effect before the bill is reported.
SUED BY "KISSlESS BRIDE"