New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1922-12-14

4 operate laundries, creameries, grain
elevators, retail stores, small fac
tories and other concerns in which
it is desired to have many persona
interested in the business. 3
We repeat that there is no good
reason why the persons desiring
to conduct any business, whether
large or small, under the corporate
form of ownership, should be
placed by policies OF the Govern
ment under any burden or disad-
vantage as compared with indi-
vidual proprietors or partnerships.
| They are entitled to like consider
alton and similar treatment.
Personal and Corporate Taxation
As we have seen, individual pro-
prietors and partnerships are taxed
upon their profits once for all, and
afterwardv may leave them In the
business or take them out, as they
please. Their taxable incomes Tin
excess of personal exemption for
normal taxi to the extent of $4,000
per year are taxed 4 per cent, and
above $4,000 bear q normal tax OF
8 per cent, land the regular sur
taxes. The corporation is taxed
l2H per cent upon its taxable in
come, and any distribution OF that
income to its individual stockhold-
ers is taxed again upon the same
basis. for surtax as the income of
individual proprietors and partner
ships. In other words the effect is
this: parties doing business as
corporation pay 12H per cent tax
on the net earnings of the business
instead of the per cent or per
cent normal tax which individual
proprietors and partnerships pay,
and the same surtaxes as the latter,
upon all their income from the
corporation dividends.
Although it is argued that cor
poration is an entity, and as such
properly subject to taxation indie
pendent of its stockholders, it is
evident that all taxes paid by cor
poration come out of earnings that
are destined for the stockholders,
and while moderate taxes may be
justified as compensation for cor
porate privileges, it is evident that
they involve double taxation, and
to that extent penalize the use of
the corporate organization. More.
over, heavy taxation of corpora
ton earnings are inconsistent with
the whole scheme of graduated
taxation for they fall at the same
rate upon stockholders with small
incomes as upon stockholders with
large incomes. The present l21
per cent tax on corporation in <
comes is heavier tax than many
shareholders would have to pay if
they received their portion Of the
earnings from a partnership in
stead of from corporation, and
that discrimination will be made
greater If corporate taxes are in
creased.
The surplus, or undistributed
profits Of corporations, 5equitably
belongs in due proportions to the
small and large stockholders ac-
cording to their holdings. The in
dividua1 proprietor or member of a
partnership withdraws profits from
the business or not, as suits the
case, but has paid the surfaces to
which he is subject. The corpora
ton pays 1877 per cent, but no sur
taxes, for the reason already
shown, j. e., the imposition of grad
uated surfaces upon corporations
would be manifestly unfair to the
small stakeholder or the stockhold-
or OF small income. There are
many stockholders in the United
States Steel Corporation and every
large corporation whose total in
comes do not make them sul+f-ct
to surfaces. If the graduated
scheme Of taxation is right heavy
taxes upon corporation earnings or
surplus are all wrong. The profits
of corporations should be taxed as
they are distributed to the stock
according to the total in
comes of the several stockholders.
The Law Regarding Surplus
The argument for the taxation Of
surplus is that If cor
porations were permitted to accu-
mulate earnings in their treasures
indefinitely, or to invest them out
side OF the business, the stockhold-
ers subject to surtaxes would escape
the payment of them so long as
this policy was followed. When
ever the distribution of corporate |