Evening star., 1928-05-01
TAX CUT MEASURE
OF S2O3,OIlD,O]O IS
UP BEFORE SENATE
Smoot Declares $212,000,-
600 Surplus in Sight Fixes
Limit of Reduction.
DEMOCRATS PREPARED
TO DEMAND 1925, 900, 900
Parties Disagree Over Amount of
Slash to Be Made in Cor.
poration Rate.
By the Associated Press.

By the Associated Press
The $2l2000,000 surplus in sight for
next year represents the maximum re-
duction possible in taxes at this session.
in the opinion of Republican members
of the Senate finance committee, Chair
man Smoot reported today in laying be-
fore the Senate the committees $685.
100000 measure.
Even this amount" Senator Smoot
by additional expenditures called for
during the fiscal year 1929 by new leg
iSlation"
The committee chairman gave notice
he would ask the Senate to take up the
measure on Thursday, and although a
sharp fight is in prospect. with Demo-
Gratis prepared to ask for 1925 900, 900
reduction program. leaders expect to
dispose of the measure by the end of
next week.
No Minority Report.
Senator Simmons Of North Carolina.
ranking Democrat on the committee,
announced today he would file no
minority report because "the issue be-
kNCCil bAIc GCtkINCIdb2 dAlQ EtCpNbAASSaA1o
on tax reduction is so simple that no
explanation Is necessary"
He said he would present the Demo-
Gratis S325, 900, 900 plan on the floor.
The main difference between this and
the Republican scheme is for a greater
cut in the corporation rate. which the
Democrats would slash to ii per cent.
Explaining the numerous changes
made by the committee in the $780,
100000 House bill Senator Smoot re-
vealed that the House provision for
repeal of the automobile tax was ac-
cepted at the expense of greater re-
duction in the corporation tax than
had been planned.
The Senate committee voted to cut
the 1879 corporation rate to 12is per
cent, instead of to ilia per cent, as
approved by the House
Your committee recognizes" the re-
port declared. that the corporation tax
is considerably out OF line In comparison
with the individual rate, and believes
that II should be reduced as rapidly as
the revenue requirements permit.
Many OF the inequities. difficulties and
complicated policies Of the present law
are attributable directly to the existing
method of taxing corporate profits.
Nevertheless, We are limited lIgidly by
the amount available for revenue reduc-
tion.
Auto Tax Repealed.
Had the automobile tax been re-
tanned there would have been available
surplus sufficient to justify reduc-
ton IN the corporation rate TO liz
per cent. However, the automobile man
ufacturers stated that they preferred
the repeal Of the sales tax to a reduc-
tion in the corporation rate and that
the railroads and others Joined with
them In advocating the repeal Accord
ingly. ii was necessary to recoup the loss
BY denying greater reduction In the
corporation rate"
AS for the Garner provision In the
House bill for graduated scale Of rates
on corporations with incomes of $780,
600 and less, Senator Smoot reported
this was stricken out upon the ground
that II cannot be supported upon any
sound principle Of taxation"
The committee report listed the fol-
lowing as the main features OF the bill
as sent to the Senate:
"tll The total revenue reduction is
but slightly In excess of 5000, ,000. 900,
an amount within the margin of safety.
as compared with reduction proposed
by the House bill Of S289, ,735 900, an
amount considerable In excess of that
warranted by the condition of our
treasury.
Graduated Tax Unsound.
"(2) The graduated tax on corpora
tons proposed by the House bill. form
OF taxation which is llnsound and with
out justification. from either a theoreti-
cal or practical point OF view, In elm
mated.
"t3) The intermediate surtax brackets
arc readiusted so as 10 remove the out
standing inequalities OF the present law.
under which certain classes OF indi-
yidual taxpayers are paying taxes dis
proportionately high in comparison
with other taxpayers
"tD The privilege granted afYiliated
corporations Of filing consolidated re-
turns. which the House bill denied after
1923. III restored. with certain necessary
amendments To eliminate the admins
trative problems OF the present law.
tol The provisions OF the present
law relative TO dividends out Of surplus
accumulated prior TO March /, 1913
eliminated by the House bill, are re-
stored.
"t6l The section OF the House bin
(section l04b attempting TO strengthen
the provisions OF the existing law reia-
tive 10 attempted evasions OF surtaxes
by Incorporation by an arbitrary and
artificial definition of personal holding
company is stricken out.
I'D Most OF the administrative pro-
visions Of the House bill, which were
given retroactive effect. are either elirn-
mated or made effective only as TO the
future"