The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1926-03-08
ny GEORGE BRITT
Especial Correspondent

Washington. March S.-The new
revenue act will relieve about 10000
corporations from paying federal in
corre tax.
This is the estimate of congress
sional statisticians, taking into con-
sidcration the provision of the new
law that if Il corporation produces no
net income it does not have to pay
taxes. The old capital stock tax,
which applied to every corporation,
is wiped out.
Those corporations which pay in
come taxes, however, will pay APP
proximately the same to the govern
ment this year as before. Their saw
ing WIN not be in money but in
trouble and controversy over making
their returns. The authors of the
law decided that the stockholders in
corporations would profit materially
LAS individuals from reductions Of
personal income taxes, and that their
business organizations should CON
tinuc to bear their burdens as be-
fore.
Leniency to Persons
because of the laws comparative
lenicncy toward persons, it is cx-
pccted that a good many corporations
may dissolve and reorganizc as part
nerships. These will be the ones
with small profits and limited num-
Der Of stockholders. Such reorgan-
ization usually can be made simply
and viii produce worthwhile rcduc-
ton in tax payments. Banks, of
course, cannot SO avoid the corpora
ton tax.
For the last five years the corpora
tion income tax has been 1919 per
cent OH net income. There was an
additional corporation tax of 81 per
$1,000 Of capital stock.
." The capital stock tax is abolished,
effective for the new fiscal year be-
ginning July !, next. To make up for
the resulting deficiency in revenue,
the income tax will be increased to
49,. per cent. However, the corpor-
alton inc9me tax for the present cal
cndar year is increased only to IL
per cent. This amount is to be paid
on the net income of the calendar
year, 1925. The smaller rate of in
crease for this year is intended di-
rcctly to avoid double taxation. since
the repealed capital stock tax is in
effect for half Of the year.
General Exemption
There is general exemption in
the new law, as before, of $4,000 in
come not subject to tax. Insurance
companies under the former law were
exempted from the capital stock tax.
10 preserve the balance in their ia
vor, the new act continues the rate
OF 1875 per cent for them, without
applying the increased rate.
The corporation income tax last
year produced revenue of about $780,
100000. The capital stock tax was
estimated to produce 1913 100000, and
this annual amount is expected to be
brought in by the additional | per
cent put on the income tax rate.
Not only does the new revenue act
favor corporations which have been
showing up ''in the red" on their
years accounts, but it confers great
advantage of practically and con
.cmcnce in It's application to profit
making concerns. Figuring the cap
ital stock value required estimates
of the value of good will and other
intangibles over which there could be
lengthy disputes and delays and ex-
, sensive settlements. The corpora
tions now, have to make only single
return, instead Of two.
Refusal Of Cuts
The retention of comparatively
high tax rates for corporations is
denial of numerous requests and Pc
titions. Banks, in particular, and
manufacturing companies bcsought
reduction. Corporation income taxes
have received slashing reductions
since the war. however, which were
considered as balancing the lack of
present relief.
Following the adoption of the in
come tax amendment in 1913, Con-
gress in that year imposed a per
cent corporation income tax. In 1916
1T was raised to per cent. During
the war the normal income tax was
made II per cent and ,surtax or ex-
cess profits tax was imposed with
maximum brackets of 80 per cent.
Promptly upon the close of the war
the excess profits tax was cut to a
maximum Of 40 per cent, and in 1921
tn" normal rate Of 12hs per cent with
no surtax was set to remain in eff
feet until the present.
TOMORROW: Three Cheers by
the Heirs