Montgomery County sentinel., 1927-12-23
Millions viii Be Saved.

Millions Of dollars will be saved annually
to small corporations, such as banks and
incorporated commercial concerns, as a
result Of important amendments to the
tax reduction bill forced through the House
OF Representatives by Democratic mem
bers. In sharp fight directed by Demo-
cratic members of the Ways and Means
Committee. the Democrats were victorious
in three important particulars.
One amendment reduces the tax on cor
porations with small incomes. Another
entirely eliminates the automobile tax and
the third makes it mandatory on affiliated
corporations TO file individual returns for
each corporation.
AS result of the amendments, it is
estimated the nations tax bill will be cut
next year $264,o0O,OO0. As recon-
mended by President Coolidge and Sec
Tetary Mellon, the reduction would have
been but $225. 900. 900, while the Repub-
lican majority on the Ways and Means
Committee recommended a reduction of
100000.
AS originally reported to the House, the
bill reduced the corporation tax from IS l-2
to ii Ia per cent, but required all cor
porations, large and small alike, to pay
the same rate. An amendment offered
by Representative Garner, ranking Demo-
cratic member of the committee, applied
the graduated rate principle to corpora
tions, based on the Democratic principle
OF ability to pay. This amendment was
adopted after sharp fight. in which
few Progressive Republicans Joined with
the Democrats. Under the amendment
corporations with a net income of less than
$4,000 will pay S per cent. Corporations
with incomes Of from $4,000 to $4,000
annually will pay 8 per cent. All cor
porations with incomes Of more than $l8,-
900 will pay II l-2 per cent instead of
IS l-2 per cent. as under present law.
However, all corporations with incomes of
less than $25, 1000 will enjoy an exemp
tion of $4,000.
One Of the most powerful arguments
Democratic leaders employed to force the
adoption Of the graduated tax plan for
smaller corporations was the fact, as
agreed by all economists. that the smaller
corporations, which do not enjoy monopo-
listic advantages, cannot pass the Federal
tax along to the consumers, so the reduced
rates are direct and tremendous advan-
tage to thousands of smaller banks and
manufacturing and mercantile institu-
tions which do not make profits in excess
Of SIS, 900 annually. II is estimated that
20 per cent Of all the corporations in the
country will be benefited by these reduc.
tions.
Under the affiliated return amendment
all corporations will be required to file
individual returns alike. Under present
law, holding companies and large corpora
tons with subsidiaries may file joint re-
turns. and get benefits by offsettine losses
Of one against the profits Of another. They
thus enjoy advantages individual corpora
ons do not have.
II is estimated that under the lower rates |
small corporations, the taxes they pay |
Ill be decreased $24.000,000 next year.
Under III, affiliated return amendment. il |
a estimated the large corporations will
ay about $25.000.000 more annually.
nus more than offsetting the Treasury
Jss resulting from the reduced taxes Of
mall concerns However, a substantial
annual increase in the revenue to the
Treasury resulting from the affiliated re-
urn amendment is expected until prob
I bly, S50,000.00O additional will come
nto the Treasury annually, or more than
ouble the loss from the benefit bestowed
pom small corporations.
As reported 10 the House 'he revenue