Evening star., 1924-01-04
STOCK DIVIDENDS
TAXcLAUs|E.L0||s''T
Rainey Amendment AZ M DIN Voted
/ Down, 12 toll. bysHouse
i Committee.

AhlllC0 to0dy -iCJSStco ah
to the administration. tax bill. under
which gains from sales Of stock divi-
dends would be subject to normal
and surtax rates. The amendment,
offered by Representative Rainey.
democrat, Illinois, was voted down.
IL to IL. -'~''-
The bill as submitted by the Treas
ury provides that for the first two
years after the declaration of stock
dividends incomes derived from their
sale shall be taxed under the nor
NAL and surtax schedule. but after
that time the maximum tax shall be
121s per cent - 3.
Three Members Absent
Three members of the committee
Hull, democrat Tennessee; Frear,
Wisconsin. and Kearns, Ohio, repub-
licans--were absent and were not re-
corded in the vote.
Ten democrats and Representative
Young, North Dakota, a republican.
supported the amendment, while the
twelve opposing it were all republi-
cans. ~
Mr.. Rainey obtained permission TO
bring up the question again, and he
announced later that he would pro-
pose another vote on the amendment,
p1opaols mopa tse,6 G6nansed an somewhat TO put
The text Of the amendment, which
was drafted by Treasury expert at
Mr.. Rainey's request, follows:
"The term capital assets means
profit or investment for more than
two years (whether or not connected
with his trade or business), but does
not include property held for the per-
sonal use or consumption of the tax
payer or his family Of stock received
as a stock dividend by the taxpayer
or by the donor, IL the taxpayer ac-
quired the stock by gift, or stock in
trade OF the taxpayer or other prop
erty held by the taxpayer primarily
for sale -, d.
Redraft Is Requested. .r
The committee instructed the expert
assisting 1t In the redrafting of the
bill to redraft a provision, contained
also In existing law, which exempts
from taxation contributions to the
American Legion and it's auxiliaries.
The committee was of the opinion the
exemption should be broadened to in
clude organizations of veterans of all
wars and their auxiliaries, including
those of Confederate veterans.
movement to POSTPONE the pro-
posed conference of House repub-
licans on the bonus question planned
ground today Representative Long
worth. the republican leader. who
believes 1t inadvisable to press a
bonus bill to a vote at this time, said
former service men who are seeking
to have the conference called were
being urged to suspend circulations
of petitions for that purpose.
Mr.. Longworth said he thought the
ways and means committee should
have abundant opportunity" to con-
harrassed by instructions from the re-
publican membership Of the House to
report bonus bill before acting on
proposed changes in tax schedules.
postpone discussion Of provisions OF the
tax bill, involving changes in policy as
we'll as those amending tax rates,
until a decision has been reached on
the question of reporting q soldiers
bonus bill. Among the proposals thus
income and providing a community
property tax. 1t was decided. how
ever, to take up at once the Treasury
Secretarys recommendation for limit
Ing capital loss exemptions to 12S
per cent. the maximum now fixed for
computing taxes on capital gains.
Frear PlnAs Tnx Rin
Representative Frear. republican,
member Of the commit
tee and a leader Of the insurgent
group, announced In letter to Sec
retary Mellon yesterday that he in
tends to Introduces bill designed to
reach tax-free' securities" and he
also is planning to- address the House,
on changes he. advocates fnl
the revenue Law. .3 =
Discussion OF the question of stock
dividends resulted in the committee,
at the suggestion of Representative
Ratney. asking A. w. Gregg, an assist
ant to Secretary Mellon who Is advising
the committee. to draft an amendment
designed to exclude stock dividends
proposed bill. -
Mr.. Gregg drew up the amendment
yesterday, action on which went over.
Amendment Ineffective.
''The amendment" he advised the.
committee. 80 far as future transae-,
tions are concerned, would be entirely
ineffective since it could very easily
be avoided. If such an amendment
were enacted, corporations, instead Of
declaring stock dividends could re-
the sole effect Of the reor-
being an increase in the
capital stock of the corporation. Such
a reorganization. since it would in
"a
poration, would accomplish the same
result, in substance. as a stock divi-
dend- The amendment, however,
would not exclude from the capital
gain section the gain realized from
the sale Of stock in the new corpora
ton"
Declaring that the proposed amend
ment would discriminate unfairly be-
capitalized their earnings by means
Of stock dividends and those which
have not, Mr.. Gregg said that 'df 1t
is desired to tax the gain from the
sale of stock received as a stock divi-i
dend at the full rates. 1t would only
seem logical to tax all gains from the,
sale Of stock IN the same manner" z -"
such action" he added, however,
would be entirely inconsistent with
the thsory sio esiian end principle Of the cap
would materially discourage invest
ments In stocks" :,
Delay Naming Committee.
Decision as to appointment of a
subcommittee to investigate the Rus
sian situation was deferred today by
the Senate foreign relations commit
tee pending the address Of Senator
Lodge Monday. The postponement
was at the suggestion of Senator
RerRh, who probably will head any
committee named, and who is expect
ed to reply to Mr.. Lodge at Mondays
session.
Hearings on the general agricultural
situation will be started next week
by the Senate agricultural committee
under decision reached today. Wit
nesses from various sections Of the
country will be present.
CAL lF0RMiA'S FEDERAL
JUDGES ILL; CLOG FEARED