New-York tribune., 1921-10-22
Danger Seen in
Levy on u. 5.
Foreig Traders.
McCumber Fears American
Firms Abroad Will Be
Forced to Operate With
Their Competitor Nations
Many Strong Complaints
Hitchcock Says Present Law
Is Just and Amendment
Will Handicap Exporters

From INC 1ftOuttG0 o w dSHSHDtOn bhTCU1
WASHINGTON, Oct Widespread
comment was aroused to-day upon the
possible effects upon the American
export trade and shipping Of the action
of the Senate yesterday in adopting,
by vote of 35 to 80, the La Toilette
amendment to the tax bill, annulling
the exemption Of incomes of American
traders in foreign countries.
In some quarters it WAS declared the
burden of the Federal income tax, in
addition to the levies paid the govern
ments of the countries in which Amer
ican foreign companies operate, Will so
handicap many of them they Will be
unable to compete with foreign rivals:
The Senate's action is characterized
by persons in touch with the American
export trade as the adoption Of an ex-
tremely short-sfghted 7,olicy. They
point out that this double taxation OF
the countrys foreign business, while
competitors pay no home taxes, will
yield comparatively small revenue and
ct the same time have disastrous effect
upon an extensive amount Of business.
Senator Porter J. McCumber, of
North Dakota, ranking member Of the
Finance Committee, in discussing the
Lafollette amendment, expressed the
fear that some Of the American cor
porations abroad may be so hard hit
as u result of this new burden that
they will be forced 90 surrender their
American corporate existence and
continue as businesses of present COM
petitor nations. great many Ameri-
cans, he said, are now organizing as
foreign corporations to escape the
heavy taxation.
Vigorous COMPLAINTS Made
"The corporations doing business as
American corporations in the Philip
pine Islands are making very vigorous
complaints, and they declare. and
General Wood declares, that they can
not compete" said Senator McCumber
"They have something else to do. be-
sides making a mere profit and paying
an income tax upon that profit. If
the foreign corporations can make
twice as much profit this year, they
can expand, they can advertise, they
business, they can compete and in
crease the business, where the Ameri-
can corporation would be forced TO
take the laboring oar at all times
against stronger competitor. 1t is
simply question of fact. The evil
dence that comes before the committee
is that it is essential, If they are to
continue in business, that they must
continue without being SO handicapped
as they are at present
"If we benefit the country by in
creaslng our exports, the whole United
States is better able to pay taxes, and
the little tax that you would collect
from the individual or the corporation
that is responsible for the increase in
the business would be bagatelle COM
pared with the general benefit to the
country. After all, it is simply q
question whether it is best for the
commerce of the country, for the in
terest Of the country, that we should
keep these corporations American cor
porations. Is it best for the interest
Of the country in it's foreign trade
that we allow all American corpora
tions doing business in foreign coun-
try such immunity as will put them on
something near like an equal competi-
tive footing with other foreign corpo-
rations?"
Hitchcock Opposes Amendment
The position taken by Senator Nc
Cumber also has the strong support OF
Senator Hitchcock, of Nebraska. In
commenting upon the LaFollette
amendment, Mr.. Hitchcock said:
"My idea of this situation is that
the present law is just. If an Ameri-
can concern goes into foreign coun-
try and does business in that foreign
country-say an American paper man
ufacturing concern goes into Canada
and does business there, as some of
them have, or erects some of its fac
tories over therefor all the taxes
that it pays in Canada it is allowed a
credit upon its taxes in the United
States. That is just; that gives it
every opportunity to expand in a for
eign country without actually putting
premium upon its abandoning the
United States"