Evening star., 1934-01-25
Revision of Revenue Law Is
Expected to Bring in Addi-
tionaI s36,ooo,0O0 Yearly.
Report Likely Wednesday.
SURTAX TO BE LEVIED
OVER $4,000 MINIMUM
Capital Gains and Losses Provi-
sions Modified in Accordance
With Recommendations Made by
Hill Subcommittee-Surtaxes
Range Up to SO Per Cent.

BY the Associated Press.
The House Ways and Means
Committee today approved a re-
vision of the income tax rates
designed to bring in an addl-
tional S36,OOO,OOO annually in
revenue.
The committee established a
fiat 4 per cent normal income tax
rate on net incomes of $4,000,
eliminated the per cent levy on
net incomes of $4,000 and more,
but substituted a surtaX begin
ming on incomes of over $4,000
net. less reductions for family
and single persons exemptions.
Report Seen Wednesday.
Chairman Doughton announced that
the remainder of the items would oe
voted on tomorrow and Monday with
a view to having the committee formally
report the measure about next Weones-
day.
The new surtax rates begin at 4 per
less and $4,000 and are graduated up
to SO per cent on taxable incomes OF
over ST. 900 900, which, with the normal
4 per cent rate. brings the total on the
incomes in excess of Sl,000,000 to 63
per cent.
The committee compromised with the
Treasury and decided to continue the
consolidated income tax returns for cor
porations and their subsidiaries, but
increased the penalty tax for filing con-
solidated returns to per cent.
Thus. if a corporation fleS a con-
solidated return the levy will be 1854
per cent, compared with 1884 for single
returns.
Capital Gains Revision.
The committee had estimated that by
abolishing consolidated returns, revenue
amounting to S20,000,000 would be re-
turned. The Treasury disputed this.
but the penalty tax was estimated to
bring in a considerable portion of the
amount.
Existing law as affecting depletion
and depreciation allowed corporations
in making income tax returns was de-
cided upon at the insistence OF the
The Hill subcommittee revision OF
the capital gains and losses provisions
of the income tax law was adopted
with a slight modification. 1t was es-
tlmated to return S30,000,000 annually
It provides as revised:
TO measure the gain or loss from
the sale of property by an individual
according to the length Of time he mas
held the property, the following per.
centages of gain or loss are recognized
for tax purposes:
"One hundred per cent if the capita
asset has been held for more than one
year.
Eighty per cent if the capital asse
has been held for more than one yea
but not more than two years.
Sixty per cent if the capital asse
has been held for more than two year.
but not more than five years.
Forty per cent if the capital asse
has been held for more than 'flv'
years"
Excess Losses Disallowed.
In the cases where the losses a.
computed above exceed the gains 81
computed the excess losses are en-
tirely diSalloWed.
In the case of corporations the grad
uated percentage reduction OF gain
and losses does not apply. However
capital losses sustained by corpora
tions are allowed only to the eXten
of capital gains Under present lay
corporations are allowed to offset capi
tai losses against ordinary losses.
The capital gains and losses plan
not made applicable to stock in trade o
property which is included in the tax
payers inventory.
In adopting the new income tax pro
gram, the committee approved al
amendment offered by Representativ
Bacharach, Republican, of New Jersey
to allow a 10 per cent reduction OF
earned incomes up to $4,000.
The taxpayer is allowed $4,000 10
earned income but any amount betWee
that and $4,000 as earned income WI
have to be proved by him.
The committee also adopted the HI
recommendation for 35 per cent lev
on "undistributed adjusted net income
of personal holding companies. est
mated to bring in $25,000,000 annual!
Secretary Morgenthau indicated to
day the Treasury and the Ways an
Means Committee had agreed on mos
of the major provisions IN the reVenu
revision bill.
The Treasury head conferred wit
committee members for 80 minute
He declined to discuss what took plat
at the conference.
Morgenthau was called after tt
Democratic members last night con
promised their own differences on Il
measure. which probably will be r.
ported out next week.
The revision on personal income u
rates, estimated to bring IN S36.000.u'
additional revenue. was only one OF tt
several actions taken. More revision
remain to be made, so it cannot "
be said how the entire bill will con
pare with existing law in revenue pr
ducing.
The changes detailed above, howeve
representatives estimated to mean II
treasury will take in 200,00O.OOO mo
revenue than now, as compared VII
the $4,000 900 additional that hs
been estimated as the bill stood IN
previous committee stage.