New Britain herald., 1924-02-11
Changes Arc Cited.

the sale of capital assets shall not ex- ceed 12k per cent of the gain, and in
 the proposed bill it is provided that l the amount by which the tax is re-
 duced on account of losses from the
 sale of capital assets shall not exceed 12k per cent of the loss.
 "The provisions of the reorganza- l tion sections have been rewritten 10
 prevent the use of the section 10 es- cape proper taxation by increasing the basis for determining gain or loss | from tho sale of assets transferred in connection with a reorganization or
 by distributing as capital gains what are in effect dividends out of earn ings:
 Where the grantor of a trust re- 1 tains the power of revocation the in-
 come of the trust is to be taxed to him.
 "The penalty imposed by section e20 upon corporations availed of 10
 avoid the imposition of surtaxos on
 the stockholders is now based upon all the income of the corporation
 which would be taxed in the hands
 of the individual and the presumption
 is created that any company is availed
 of for the purpose of avoiding the im- position of surtaxcs on stockholders.
 "The deduction for interest paid on indebtedness (other than interest paid or incurred in connection with the trade or business Of the taxpayersD and tho deduction for non-business losses are allowed only 10 the extent that the sum of these two items ex- eeeds the tax exempt income of the taxpayer"
 II Rcpublicans' Report.
 Tho report of the II republicans of tho committee was tho same as Chairman Greens except for consid- orable additional argument defending the cut in surtaxes 10 a maximum of 25 per cent. It pointed out that the high rates were becoming increasing ly unproductive citing that incomes Of over sl0o,0o0 constituted 2a.b per cent Of the total income reported in 1916 and 5.4 per cent and 4.5 per cent. respectively, in 1920 and 1921.
 "The only way that the income tax as applied to large incomes can b Q made an actuality," the report said, lis by reducing the rate of tax 10 sound level and thus lcssening the in- centive to taxpayers 10 avoid the tax"
 Democratic Report.
 The democratic report called for q reduction in the normal taxes to two per cent of net incomes, up to s5,000; s5,OO0 and aoinshrdlucm fwypcmfw four per cent on incomes between s5,000 and sS,000 and six per cent above that amount.
 Representative Gamers original plan called for four per cent tax on incomes between s5,0o0 and s10,00o and the reduction to sS,O00 was eN- plained as necessary to cut down the loss in revenue which the treasury reported would be sus- tained under the plan. The surtax rates proposed by the democrats would start with one per cent at sl2,- 600 and increase to A per cent on in- come of s92,O00 and ovcr These rates the report said. would result in losses of revenue under treasury estimates, of sfS6,257,3Sj in the normal taxes to s77,Of4,s54 under the Mellon rates adopted by the commit tee. and s139.s03,195 in the surtaxes to s20o.352,2I3 under the Mellon surtaxes. The figures were based on 1921 revenue returns.
 Replies To McIIon's Charge
 Citing Secretary Melons declara- ton that Representative Garner, ranking democrat of the committee was playing politics in offering this lax decision plan" the report declared his expression was as "an Unheard of as insolent as it is inn- prudent and in the judgment Of the .oward progressive income taxation"
 Tn addition to asking different in- 'ome rates. The democrats proposed higher estate taxes and enactment Of gift tax, together with the repeal Of number of miscellaneous taxes in addition to those already revised by he committee.
 The report explained that all fca- ures Of the bill were considered hy he whole committee until tho income ates were reached. when the demo- rats were excluded Many sections of he measure, other than the income ates. are praised. particularly pro isions relating to stopping looPboids n the administration Of tho law. by which many large taxpayers escape heir just taxes" but the report added hat the majority bill still leaves lree discretionary powers with inc 'reasury department in tax matters"