The sun., 1918-10-19
SENATE STRIKES OUT
IMPOST ON SURPLUS
Committee Puts All Corporate
Income at Same Rate in
Revenue Bill.
MUNICIPAL BONDS EXEMPT
Bureau Preparing i'm Advance
for Task of Collecting Tn.
der New Act.
MUNICIPAL BONDS EXEMPT

OF It's alleged injustice, namely, the dc.
ferential on distributed and und,s-,h.
uted corporate income. was gtr,cSe,
from the war revenue b'l to-day bv IL,
Senate Finance COMMITTEE, which sub.
stituted fiat rate Of ~ per cent. on all
net corporate income.
The revenue bill passed by the H5us.
at the instance of Chairman Kitchin .,
the Ways and Means Committee pr,.
vtded that corporate income Distribute
In dividends would pay IL per cent N.
come tax, while any portion OF the nc.
income held in rusinc~s ~ rsc.or No
safety would be forced 10 pay an i-co-r.
tax Of is per cent.--one- half more than
distributed income.
This section OF the kitchin bill wac
passed over by the Finance COMMITTEE
in its first reading OF the revenue bill
but little time was lost and little differ
ence OF opinion was noticeable to-day in
dlsposing of this vexing question, tn.
Finance Committee removed the differ
entail with scarcely n respectable nj.
nority opposing the move.
Kitchin OPPOSED to surpIuS.
How the House will receive mi,
change in the bill Is problema,Iea'
Chairman kitchin IL convinced tina,
business generally has been intent O.,
holding within corporations the creates,
amount OF money possible and that II
would IN mistake ~ aiop. any o,be.
system than one calculated 10 make cor.
porations distribute all their earnings :,
dividends. This matter will have % b.,
threshed out in conference.
The pveateSt protrSf h.., A..
against the provision that tax penal,v
| should be attached to business keerio,,
proper amount OF money 10 insu-c
successful operation. 1t has been III.
generally that taxing undistrbutoJ IN.
come IL per cent. was designed 70 force
payment OF practically all net income Q.
corporations in dividends and that III.
result of this would be DESTROYING tie
factor of safety necessary to business
The Treasury Department is under
stood to be opposed to the provision o.
the Kitchin bill which the Serate n.
nance Committee struck out to-day.
Municipal Bonds Excepted.
In line with the amendment adopted
Yesterday by the Finance Comnl!ttee
striking from the bill the spec!a, pro
vision that the income from state AMI
income tax. the provision was struck
from the tax bill that the income fron
such bonds should be permitted On a
credit or deduction from gross income
In determining the net Income subject
TO tax. This was interpreted as plain
indication of the Finance Conn ;tee's
guiding thought In striking from the
bill the specific provision that income
from such securities should pay tie
Income tax
The committee felt. Il was said 20.
cay tnat such tax was in violation
OF an express provision OF the CouS;!t.-
tioh ana that the fact that sura IN
Come was not to be taxed should carr
with it tho provision that thu non
taxable income should not he allowed
as credit from gross income. IT.,
senate Finance Committee also wrote
lrto the tax bill that income from
bonds issued by the War Finance Cor
pcration should not be allowed a. de.
duction or credit from gross income in
hSuring net Income upon which tax q
to be paid.
Loss Provision ExtcnJed.
Tic benefits oc tie an:.rlreat
adopted yesterday rrovid.n; tNtt ,asu
or previous taxable wears could hs
deducted from net inroMo Tor .-fn.a
'"Aapis years with certain Limitations
anu deductions was extended to-day ,a
cover to members OF partnerships and
the beneficaries OF an estate OF tn.
all to be governed however 10y r.gY!e
tons prescribed by tho Commissions.
OF Internal Revenue
Tho Firance Committee agrocd 70.
day TO the provision IN the Huuep L.a
mat FARMERS and o:hcr mutual hal.
cyclone or fire Insurance. companies:
mutual ditch or irrigation Con.pa-ie,
mutual or cooperative telephone con-.
panies or like organizations = "a ,u-c.
local character, the income o. VIII.
Cotsists solely Of assessments. dvrs cr
ices coNccted from members f,r tie
so'e purpose or meeting expenses, shou.l
ne exempt from the corporations -
rms section was passed owe. l,'o-,
Revenue bureau Prcparius.
Facing TIE most sllpendops t,v e,'.
lection job in the his.or, IT the woT.i
the Internal Revenue Bureau : en-.
denvoring TO prepare in advance tor t.
passage of the new revenue bill.
tentative regulations aud tax .or:as
nave oeen drawn or are uudr- sousla.
cratcn' even though thu hill has Vs..
yet been reported 10 the Senat, T..
WORK OF preparing for the next 'a3eI
must he accomplished In record time -
the Government may cole TIM ,,>g-
PROVIDED oy the end Of the fiscal year
Further delay in the pass, - ~ to
D!I holds back by ~ much Co,0r.at.p@
on necessary forms and regulations AL
there IL little doubt that the time TO-
snaAlns reports by individual, h-"-
ana corporations will have a. 10 cy-
tended beyonh the dates fixed
The war revenue act Of 1877 hH'a1'a
law early In October. This allowed
scant time for the organization e al.
ministrative work by the tax buzz, y @
the Treasury, and il was necessary IN
instances 10 extend the tima OK d.ilS tAs
various tax reports called for
Entirely New Forms Required.
Tho new revenue bill, pra,tl ally
doubling tho amount Of tax 10 lD col
lected and changing and Shifting hei
ules. rates and specific tRXes, VIII ca.
for the drawing Of complete new gcg.-
lations and forms for tax cO,leCt.u- rl--
poses. The bill will not become q ia%
until early In December, aai In" ttS
year ends December 81. TINS "ilI ''a'
terially shorten the time FOX uc.s -'N-'
work.
AS result OF this situation The a.
cess profits advisers and NIL the al1.l-
istrative officers are studying the '"'
from day 20 day. attempting =" see
current with the changes IN the II"
While this entails an enormous amour
of work. II is the only way in whl'l q"
bureau can prepare for the coli" 'tn.
OF the taxes before they arc d9e ~ ,F
end of the fiscal year,
The fOrCa OF EMPLOYEES In Tic