The New York herald., 1922-12-07
NO TAX ON SURPLUS
: IN PRESENT SESSION
However, New Congress May
Propose Revenue Changes,
Leaders Say.
MELONS, WITHIN LAW
Stock Dividend Distributions
Due to Fear That Levy
Would Be Made.
Special Dispofch to THE NEW YoHK HnRALp.
New York Herald Bureau,
Washington, ID. c., Dec. 9.

cpectot OtSpotob 10 HI NEW Aokh AAHnA~SS'
New York Herald Bureau.
Washington. ID. c., Dec. 9.
The apprehension Of business men and
corporation heads that Congress is pre-
pairing to tax the surpluses OF corpora
-tions. which 10 held to be responsible for
the distribution of more than $500. .000.-
900 in stock dividends in recent months,
Is without foundation. so Tar as the pres
ent session Is concerned.
What the next Congress- to be seated
on March 4. will do. however. Is another
matter. The insurgents In both the
Senate and House are contemplating a
drive on corporations through changes In
the tax law. but their program Is not
complete. The policy of the Republican
regulars now in control Of the Ways and
Means Committee and the Senate Finance
Committee will be to avoid legislation
that might hamper business.
stock Dividends Not Taxable.
In both the Senate and House leaders
said to-day that corporations, In making
their stock dividends, are fully within
the law. which provides that tax Is not
to be levied when surpluses are dis
tributed in this way.
Senator Smoot (Rep., Utah) ana
Representative Nicholas Longworth
(Rep., Ohio). ranking members OF the
Senate Finance Committee and the
Ways and Means Committee respective
", said that undoubtedly the general
tendency to distribute stock for the sur
pluses accumulated by corporations Is
due to fear among business men and
corporation heads that surpluses sooner
or later would be taxed. Mr. Long
worth said he was being besieged with
inquiries from all parts of the country
x,,l,ot xr,ao T.
ing any such thing at this time.
"T'he Ways and Means Committee Is
contemplating nothing Of the sort" Mr..
Longworth said. Representative Frear
(Rep., Wis., as Is well known, has
been engaged with Secretary Mellon in
q discussion Of the subject, but has not
introduced any bills or resolutions to
change the law. 1t may be said. with
full emphasis, that nothing will be done
to change the law at this session."
Representative Frear. on the other
hand, declined to make any prediction
as to what he intended to do about ask
ing for a law to cover the situation, in
line with the recommendation he has
made to the Secretary of the Treasury,
particularly due to the stock dividends
declared by the Standard Oil companies.
He referred inquirers to the letters he
has written. but nothing more.
II have been in legislative work too
long" he said, ito make any predic-
tions as to what I intend to do"
Expects Action Next Year.
Senator Smoot, who upon the retire.
ment of Senator McCumber IN. d..
will be chairman of the Senate Finance
COMMITTEES, was fully as confident as
Representative Longworth that the pros
ent session would not take up the mat
ter Of stock dividends. but he said that
he would not be surprised II oater
the whole matter would be opened
up by those who want the law changed
to make such dividends taxable.
The Treasury Department attitude
toward stock dividends. which Is the
same as that Of those who control the
Senate and House committees, Is that
there Is no evasion of the tax law by
this action. The Treasury view, ex-
pressed by Secretary Mellon, is that the
distribution of new stock In this manner
Is simply a matter of bookkeeping.
since 1t does not alter in any way the
financial standing of the corporation or
the person to whom the stock Is issued.
In other words the issue of new certi-
hcates merely increases the number Of
shares In the corporation involved. and
the recipient of the shares has no in.
come to tax.
The whole situation Is attracting far
less attention among members of Con-
gress than In the business world.