Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1920-03-11

to determine the durability of vege-
table and mineral tannages: CD
Oak, as compared with chlorine tan
committee who must deal with the
difficult problem now presented, first
of providing for the deficit created
by the refund and next by tapping
sources of future taxation to raise
money in place Of that lost to the
government as a result of the deci-
sion Monday, take substantially the
same view of the question as does
Justice Brandies.
The Situation Now
Representative Cordell Hull, au-
thor of the income tax law of 1915
and the pre-eminenf authority in
congress upon taxation, summed up
the situation about as follows:
l. Congress cannot tax sockhold-
ers with respect to undivided prof
it's in a corporation.
2. Groups Of individuals can here
after form artificial entities and
screen themselves against the pay
ment of their just share of taxes.
s. Individuals can avoid taxation
of the super-tax by holding the stock
dividend and living upon the increas-
ing value Of it without ever selling
it.
4. In war times, congress cannot
find sources of revenue such as
super-income tax, because stockhold-
ers of war-profit making and other
corporations can successfully shield
themselves.
5. The court decision goes a ding
way toward preventing equality in
the application of the income tax law
to all classes of tax payers.e~
These opinions are held generally
by members Of the house and senate.
but there is no other resource open to
them except to initiate further
amendent to the constitution permit
ting the taxation of sock dividends.
Some discussion of such an amend
ment was heard at the capitol today.
but it was in no sense concrete,
1t is recalled that when the origi-
nal income tax law was declared I'M
constitutional in 1898, it was killed
by a divided court. Five justices
stood against the law of that time
and four for it. Monday five JUS
tees stood against the tax on stock
dividends and four for it. It was
after the decision Of 1893 that the
movement began for an amendment
to the constitution which resulted
more than twenty years later in the
ratification Of the sixteenth amend
ment.
May Have to Refund Billion
Immediately upon being informed
of the ruling Of the supreme court,
the treasury department began to cal
culate upon the loss of revenue which
would be sustained in the future and
upon the amount of money which
would have to be refunded, Treasury
officials confessed, however, that
they were totally unable to determine
even approximately how much money
had been illegally collected. They
agreed that the amount would run
into the hundreds of millions of dol
lars in all likelihood and might even
approach a billion, since all collec-
tions made from stock dividends
since 1916 are subject to refund.
The original enactment on this
subject was in that year. The pro-
vision was re-enacted in 1917, again
in the war revenue act of the same
year, and fourth time in the final
revenue bill of congress. The sec
ton was not attacked in the courts
at the time of it's original enforce
ment. Not until the war was over
did the plaintiffs in the present case
press the issue for a final decision.
But the effect Of the decree is re-
troactive to 1915.
During the past four years tens
Of thousands Of persons have paid
income taxes upon stock dividends,
and much Of this, if not most if it,
is represented in the super taxes
For that reason the treasury depart
ment has no specific classification
of the amount of money it has re-
| ceived from this source. The amount
of money involved cannot be de-
termined, therefore, until all the
claims for refund have been made
and have been settled. 1t will be
months, if not years, treasury Of
| ficials said today, before all the
claims will be listed, paid and the
total outlay arrived at.
| HOW to Get Refund
The machinery for the refunding
of the illegally collected tax is even
now in motion. A separate bureau
| in the treasury department has been
established for handling such claims
| All that a claimant needs to do, it
was explained today, is to file his
papers showing how much tax he has
paid on stock dividends, citing all
the facts. This may be submitted
through any collector of interna
revenue or direct to the commission
in Washington, who will put j
| through the mill, and, if verified
the money involved will be refunded
Tax May Be Avoided
In view of the assertion of con-
gressional leaders that the opinion
Of the supreme court would result
in a great number Of corporations
declaring stock dividends instead OF
cash dividends upon surplus in their
treasures, treasury officials were
asked today if this would be possible
with respect to profits earned dur
ing the calendar or fiscal year, 1919
It is the informal conclusion OF
the treasury officials that corpora
tons which have not yet filed their
income tax returns may dispose OF
their surplus earnings in any way
that they see fit. If a given COM
| nanv for examnla wishes TO Use