The Carbon County news. [volume] (Red Lodge, Mont.) 1924-1931, 1925-07-16
DEATH 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
productivenees OF this country and
beneiiting others. II they know that
on death the major portion OF their
earnings win be dlssipated 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:
l am going 10 relate fable In
terms of modern business conditions.
John Henry and Walter Brown were
aggressive. Woodworking men, ana
each had started business for himself
AT 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 to
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 sum of 100000
Executor Walter Brown, on exami-
nation of the estate, found the follow
ing situation: -
Capital stock Of Henry & Co..
frb txux
Personal debts dne banks 80. 100000
Walter Brown soon made the I'M
pleasant discovery that In addition to
the personal Indebtedness OF 100000.
and administration expenses of $3.50.
600. the following death duties must
be paid:
Federal estate tar .......... 1897. $50
California Inheritance tax....... bS5. 700
Michigan Inheritance tax ....... 122. 900
-----
added to the personal debt and adj
ministration expenses, this made
grand total liabslity of $1.s55. 200.
The year was 1890 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 we're the banks In
position to handle loan of this
type. Here was a most successful
business, built mp 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 a man and his family to
lose the fruits Of his entire life's labor.
and permit others torbenefit? As last
resort, Henry. Jr., was forced into a
bond issue. A loan. to settle the
debts. administration expenses and
death duties, of s2.250.000 was nego-
tiated. upon the following basis:
THE capital stock of the company
was left at 100000 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
10000 shares to assure control of
management. and John Henry. Jr.. re-
ceived the balance of 1890 shares.
John now has q good job as general
manager Of his fathers old company.
but they do not pay him very much.
Nov we must return to Walter
Brown, executor of John Henry, ST..
Walter had always kept close to his
own manufacturing business. The
more he considered HIS own situation.
the more closely 1t seemed to him to
resemble that of his old friend.
HE therefore called q 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
sets was ~ follows:
c.yital stock. Walter Hrcwn Co.
ntcA. SWp. ..-....-sr-s.-.. ~ W. ~
California real sstate ...-....-.. LEGO 900
TAx-sxempt bonds. Nina. Nont
ANA Colo. s.s~s..s.~ss...-.s.~. - go
A0A& .-"s.sssss.s-@s.s...... " 800
within few dxys Mr.. Browns
lawyer made the following report:
nasss