The Waterbury Democrat., 1933-07-29
tIn The Magazine of Wall Street,

NAm 1uC MhB6xAMC UA WNH StECeV) Investors in corporation stocks will have to pay $70,000, 900 cash for. the return of prosperity. The Federal Government is now spend- ing $3,000,0O0,O 900 to recover pros- perity thereby. The new taxes ifn- posed by Congress to meet interest and sinking fund for this huge business and job-creating program include forced contribution of 70 million dollars from the recip- tents of dividends.
 To simplify and insure collection of this amount corporations are required to deduct and turn over to the revenue collector 5 per cent of all dividends declard to other cor porations. So, whenever you get your first dividend check to which the law is applicable, you will find 1 that 1t is 5 per cent less than you would otherwise receive. And that enues exceed expenditures
 checks until the prohibition amend ment Is repealed or Federal rev enues exceed expenditure.
 This means nothing to the pay
 
 clerical work but 1t means Q sixe- able reduction of income from stock investments. As there are many millions of you this reduc- tion is comparable to a 5 per cent cut in payrolls in it's theoretical effect on the purchasing power of the nation. Whether 1t will have any appreciable erect on business Is doubtful in face of the rising wave of prosperity.
 But this direct dividend tax is not the only way in which the in- vestor Is forced to sacrifice in the cause of better times. The amend- ed revenue act assesses corpora tions dollar a thousand on the declared value of their capital. This tax is calculated to aggregate 80 million dollars. It will be talk en into account in the declaration of dividends. So your declared div idend may be smaller-probably will be---tffan otherwise would have been the case. Your purchasing power will be reduced thereby, al- though in the new mood of op- timisn you may be spending more. For that reason the aggregate buy ing by investors may not be affect ed. Then, too, what the investor doesn't get the government does get and spend. This thought may also be applied to the practical business effects of the corporation dividend tax.
 To whatever extent in the pres ent business psychology of the public q reduction in the net in- come of corporations by 80 mill lion dollars, passed on to share-, holders or not, may. have on the market price of stocks is problem atical.
 The tax on consolidated corpor- ation incomes will be raised x of 1% on 1883 incomes and 1e6 in 1884 and 1885, but the amount in- yolved is not large.
 And still we are not through with the incidence of the prosper ity taxes on corporations, share holders and business. With great forehandedness congress has pro- vided for a tax on prosperity after 1t arrives. This comes in the shape of an excess profits tax of 5Eo on net income of corporations in ex. cess of 12h% of the declared val- ue of the corporation's capital. This provision interlocks with the capital tax. If corporation puts a high enough estimate on it's cap. ital 1t can escape the excess pro. fits tax. But if it undervalues it's capital 1t will be in danger of rum ming up against the excess profits tax.
 There remains some bad news for the public utility group. The financing of prosperity by spending tax money calls for the transfer ence of the 3D sales tax on cleo. tric current used commercially or domestically from the consumer to the. power companies. This shift becomes effective September l. In