The Washington herald., 1913-06-23

or other securities. or real estate. will
be carefully scrutinized. and II 1t goes
into fund that is not distributed to the
policy holders or is reinvested or passed
to a surplus, all of such income above
5000 will be taxed
The subcommittee Of the Democratic
majority of the Finance Committee
spent the day in redrafting the income
tax provision. 1t is being entirely re-
written.
Decision on Utility Corporations.
It is understood that the majority Of
the Finance Committee reached a conclu-
sion in regard to such public utility cor
porations as the marlborough Company
in New York by which the objections
urged on behalf of the company have
been met. The company urged that 1t
operated the lines under a lease from
the Gould system, which required IL to
turn over an annual dividend free from
taxation. They urged that the effect of
the law. II passed, in the form in which
the House adopted it. would be to re-
Iieve the Gould interests Of a tax on its
income, shifting IL TO the corporation.
While the members of the committee will
not say just what amendment has been
made in this provision, they admit that
it has been rewritten in an effort to meet
the objections urged against ii by the
1nterborough Company.
Further explanation of the provision
fixing the minimum exemption at 5000
and taxing the separate incomes OF both
husband and wife, indicates that, as the
Senate committee has left the bill, II
both husband and wife have separate in
comes of 5000 and over, no exemption
will be allowed for either on account Of
dependency of the other.
1t was at first supposed and widely
published that even IL the wife had
separate income sufficient to make her
subject to the tax. her husband would
be given an exemption of 5000 additional
in the matter of his own income, pro-
vided he could show that his wife relied
on him for support. apart from her in
come. But whatever construction the
courts may put upon the matter il is
evident that it is the intention of the
committee the make the language suffi-
GENTLY clear that no exemption will be
allowei the husband on account of a de-
pendent wife, if the wife has an income
of 5000.
An amendment has been put into the
income tax provision specifically exempt
ing the incomes of States and munich
palities. The Underwood bill was silent
on this point. The majority of the
Finance Committee realizing that a tax
on a sovereign State or any of its agen-
Cies would be unconstitutional, thought
it better to specifically exempt them and
avoid possible litigation attacking the
cOnstitutionality of the bill. should it be
silent on that point Many States derive
incomes from investments in railroad
bonds. as do certain municipalities
The committee experienced considerable
difficulty with the provision of the hill
taxing incomes from bonds. where such
bonds are of the coupon class. and whore
the real owner of them may be hard
10 locate. Much objection was raised
against the plan OF the House Till to
tax such incomes at -heir source"
This plan provided that the company is
suing the bonds should retain the inter-
est until the tax was paid. The Senate
Committee has decided to stand by the
House provision in the main. which pro-
vides that the holder of the bonds may
collect the interest upon proof that the
income from the interest is not taxable
Furthermore. the committee will prob
ably add an amendment requiring all
bond brokers and agents to disclose to
the Internal Revenue Bureau the names
Of persons TO whom they have sold COIL
pom bonds
The Democratic leaders in the Senate
believe that the party caucus will re-
quire most of this week TO complete the
work on the bill. and that ii will not get
into the hands of the full Finance Com
Inittee with Republican members pres
ent before next week. The bill may be
reported to the Senate before the end OF
next week. but time will be accorded to
the minority Of the Finance Committee
TO prepare their adverse report on the
bill The majority members will also
want few days TO submit the formal
report. Debate on the bill in the Senate
will not open before Monday, July z.