Evening star., 1933-06-03
Testimony in Morgan Case
Brings Out Tax-Law Defect

Among the disclosures OF interest In
the J. P. Morgan testimony before a
committee of Congress the most i'm
pressive to the public is the failure of
the partners in the firm OF bankers
to pay income taxes in part Of the
period of the depression. General
sentiment is in favor of charging this
to defects in the income tax pro-
visions. Modification or substitution of
the sales levy is favored. Some point
out that the practice relating to capi-
tai gains and losses falls in period
of depression. The list of prominent
men who received favors from the firm
in stock purchases raises the question
whether men in public life should be
identified with such transactions.
From the very beginning our in
come tax law was theoretically wrong; /;
today 1t has proved to be In practice
huge blunder," thinks the New York
Times, while the Altoona Mirror be-
lieVes that Congress is in temper
to plug up a few loopholes in the
income tax laws" and the New York
Herald Tribune, favoring the sales tax,
advises that "the sooner Congress
realizes that 1t has been relying upon
a dangerous, unjust and unreliable tax
the better" The Cleveland News
AYERS that "the law is spotted and
streaked and probably needs revision .
The Texarkana Gazette suggests that
mo one need get angry with Morgan;
apparently he did just what the law
allows him to do"
THE capital gains provision Of the
income tax law" according to the Gin
cinnati Times-Star, melted huge re-
turns in the big years. but the cor
responding provision for losses has
partially crippled the law in the lean
years" That paper adds as to the
matter of investments: That the men
in public life whose names were on
Morgan'S list were expected to pay for
the privilege in political favors Is prob
ably far from the fact" The In
dianapolis News believes that. taking
the lean years with the good over a
period long enough to provide test
under average conditions, it Is probable
that the Government Jared well" The
Charlotte Observer predicts ''revamp-
ing of the law" while the Youngstown
Vindicator suggests taking the tax OF
capital gains and eliminating the pro-
vision for deduction of capital losses. "
The Boise Idaho Statesman agrees that
'the law should be revised, If 1t Is
shown to be unfair" The Omaha
World Herald would leave capital losses
and gains alike out Of the law" The
Chicago Daily News sees no ground for
legitimate criticism, while the Cleve-
land Plain Dealer AYERS that mot for
long will the country tolerate the kind
of practice which Morgan declares he
followed in relation to his income
taxes" The Danbury News-Times OBJ
serves that the last straw was laid
upon the congressional back" but the
Chicago Journal of Commerce advises
Let all the cards be placed on the
table and then let the judgment be a
ment." The Nashville Banner con-
cludes that wealth has not been pay
ing its way, but it will do SO in the
future"
Whether gains and losses should be
treated as they have been by Congress
has been a disputed question" say the
Topeka Daily Capital. suggesting that
1T takes roaring prosperity to make
the American system pay the Treasury
better than the English" The Miami
Daily News declares: when stocks
were soaring in new era days we were
taxing the profits, If they were sold.
from the rise. If we tax the profits on
the rise, is there any right to complain
If there Is a corresponding remission OF
taxes when there Is fall?"
On the subject of stock purchases, the
Rochester Times Union thinks that IF
tips work miracles among walters. they
probably accomplish things also among
big business men" The Newark Eve
ming News holds that 'favoritism like
this will strengthen the demand for
more and stricter government supervi-
sion of banking and finance" although
1t is convinced that ''in the long run,
although bureaucracy may be inescap-
able, it will have to be manned by q
much better and higher type OF human
being"
when Mr.. Mcrgan's frm." states the