The Monmouth inquirer., 1925-07-23
cath TAXES AS
BUSINESS KILLERS
Assistant Treasury Secretary
Tells Fable Of Fate Of Two
Successful Men.


Men cannot be expected to continue
to work, day after day, increasing the
productiveness Of this country and
benehting others, If they know that
on death the major portion OF their
earnings will be dissipated in Federal
estate and state inheritance taxes, de-
clares Charles S. Dewey, Assistant
Secretary Of the Treasury, In the
American Bankers Association Jour-
nal He says:
81 am going to relate fable IN
terms OF modern business conditions.
John Henry and Walter Brown were
aggressive, Woodworking men, ana
each had started business for himself.
sat the time this history opens.
John Henry had just died, leaving his
entire estate to his son. John Henry.
Jr. and had appointed his old FRIEND
Walter Brown, as executor. Prior 20
his death John Henry had moved 70
California, leaving his business IN the
hands Of his son under whom 1t had
continued to make excellent headway.
The father had been doing a little
Specializing In oil This venture had
not proved successful and he was In
debted in the gum of $500, 600.
Executor Walter Brown, on examt
nattOn of the estate, found the follow
ing situation: /
CAPITAL stock Of Henry & Co..
Inc, a Michigan Corpn- ..... 80. 00O, GOO
Personal debts due banks ..... 6OO.oOO
'sWalter Brown soon made the un-
pleasant discovery that in addition to
the personal Indebtedness of 100000.
and administration expenses Of $780,
900, the following death duties must
be paid:
California inheritance tax. ...... 6S5,700
Michigan Inheritance tax .sss.ss 10000
added to the personal debt and adj
ministration expenses, this made a
grand total liability of 1885, 200.
The year was 1920. Money was tight
Other manufacturing companies in the
same line which might have been In
terested In a purchase had no money
for extensions nor were the banks in
q position to handle loan OF this
type. Here was most successful
business, built up from small begin
nings by one man and carried on to
further successes by his son, about to
be placed under the hammer.
''Is there any justice In taxation that
may force man and his family to
lose the fruits Of his entire LIES labor,
and permit others to benefit? AS a last
resort, Henry, IT., was forced into a
bond issue. A loan, to settle the
debts, administration expenses and
death duties, OF $2,250.O0O was nego-
tiated, upon the following basisg
'-The capital stock Of the company
was left at $5,0O0,000 represented by
$4,000 shares. First mortgage per
cent bonds were offered the public
with bonus of two shares Of stock
with each $1,000 bond. The banker.
to protect his bond customers, kept
$4,000 shares to assure control Of
management, and John Henry, Jr.. re-
ceived the balance of 1880 shares.
John now has a good Job as general
manager Of his fathers old company,
but they do not pay him very much.
"Now we must return to Walter
Brown, executor Of John Henry. Sr.
Walter had always kept close to his
own manufacturing business The
more he considered his own situation.
the more closely it seemed to him to
resemble that of his old friend.
'He therefore called lawyer and
made complete schedule of his as
sets. requesting that an estimate of
administration expenses and death
duties be made. The schedule of as
Gets was as follows:
Capital stock. Walter Brown Co..
Mich. Corp. IA, 0UU,O0
California real estate ........... 1000 900
Tax-excmpt bonds. Mimi. Mont
and Colos ss..ss.se..ssssesss... 100000
Tota .ssssssssssessess..s-.. S5.oUVVOO
"within few days Mr.. Browns
lawyer made the following report:
Debts and admin. expenses. 49,. $500, 1000
Fed. estate tax. :...... $71o.6z5
Gal inheritance tax ~. 44S. 1874