Evening star., 1933-12-18
Manufacturers and Board of
Trade Representatives
Oppose Plan.
REDUCTION OF PAYMENTS
is ADMITTED BY EMERY
Insists Unifcation of Accounting
of Subsidiaries Needed to
Give True Picture.

BY Associated Press
A majority of the House Ways and
Means Committee today indicated in
their questioning OF witnesses on the
were determined to eliminate consoli-
dated income tax returns by corpora
tl0nS.
James A. Emery Of Washington, rep
resenting the National Association of
Manufacturers, and M. L. Seidman of
the New York Board of Trade both
placed their organizations on record
against the proposal TO abolish the
consolidated returns.
Their argument brought a rush Of
questions by Representative Sam Hill,
Democrat, Of Washington, chairman
of the subcommittee that made the
proposal, and Representative Vinson,
Democrat, of Kentucky.
Fundamentally Sound
Don't you think that each corpora
ton should stand on its own bottom?'
Hill demanded of Emery.
1T will increase the cost to the tax
payer" Emery replied
1t is fundamentally sound" Hill in
sisted. According to its gain as a blisi-
ness enterprise, each corporation should
pay its tax separately"
Vinson contended the reason "corpo-
rations continue to file consolidated re-
turns" despite the 14a4 per cent tax as
against the 1924 per cent for single cor
porationS was because 1T reduced the
amount of taxes they have to pay"
1t is true in many cases. Emery con-
ceded.
He added, however, that big business
could not prevent true picture, With
out bringing an accounting OF various
subsidiaries under consolidated return.
Representative Cooper, Democrat, of
Tennessee introduced into the record a
report that the greatest number of
subsidiaries any one corporation con-
trolled in this country was 29l, while
only two had as many as 80.
Cited Opposition.
Representative Shallenberger, Demo-
crat, of Nebraska asked If Emery did
not think abolition of the consolidated
returns would not increase revenue for
the Treasury.
The witness cited that the Acting
Secretary of the Treasury, Henry Nor
genthau, jr., and his predecessors, for a
number of years opposed doing away
with consolidated returns He added,
however. that it might be fair, pro-
vided separate returns did not place too
great hardship on the taxpayer.
Emery recommended Federal sales
tax but the committee members ap-
parently did not weigh the suggestion
heavily.
Seidman also opposed the proposal
not to permit partnerships to take
credit in subsequent years for lNSses
incurred, but to take them in the VAR
they are suffered
Emery's suggestion for sales tax in
cluded phraseology in the law giving
President Roosevelt the right to raise or
lower liquor taxes to stamp out boot
leggers.
Emery warned that subcommittee
recommendations showed "a startling
taxes on gross, rather than net in
Genes" Then he said:
Entering a fourth fiscal year Of
deficit and enlarging public debt, we
urge. in the lace of the demonstrated
unreliability of income taxation as a
major source of income, the serious
consideration of a gross Federal sales
tax with exceptions for food, clothing
and medicine, as a substitute for the
many existing special sales taxes and
the emergency levies' repeal.
Would Assure Revenue.
I'VE urge levy on fermented liquor
and spirits at such rates, having in
mind State and local taxation, as will
assure additional reliable revenue with
out encouraging Illicit competition. To
afford opportunity for trial, particu-
larly to determine the most workable
rate for spirits. we suggest the commit
tee might consider the adoption of a
definite congressional standard of tax
alton which would permit an admins
trative finding of fact by which the rate
could be 1eXibly adapted to experience"
The manufacturers counsel also
asked application of the electrical
tion of governmental competition with
private business; rejection OF the rec
ommendation to decrease "25 per cent
over a three-year period" the present
depreciation and depletion allowance;
diSapproval Of the proposal that foreign
income taxes not be credited against
domestic ievles.
Emery said: THE present permission
for the making Of consolidated returns
is severely limited, but the business OF
the country has accommodated itself
to it,
Warns of Tax Burden.
He suggested study before ANY seri-
GUS engagements of the tax burden,
which, added to the costs unnecessarily
accepted under the industrial recovery
and agricultural adjustment acts. might
become financially unendurable Tor
many industries, weakened by three
years of continuing loss and contracted
credit"
The present treatment OF security
losses under Federal tax laws was de-
scribed by Seidman as diScouragng
activity In the capital goods indus
tries.