Evening star., 1934-02-21
Republicans Fail in Attempt
to Cut First-CIaSs
Postal Rate.
PROVIDES d PCT. FLAT
RATE UNDER $4,000
Capital Gains and Loss Provision
Expected to Raise $30,OOO,OO0
More.
BY the Associated Press.

BY the Associated Press
The s258,OOO,OOO revenue bill was
passed today by the House after a
Republican move to reduce the Scent
first-class postage rate to 2 cents was
defeated, 272 to 1872.
The Senate now gets this measure,
aimed primarily at strengthening the
tax laws rather than raising new
revenue. Its main purpose is to pre-
vent tax avoidance by wealthy persons.
BY a revision of the income rate
structure, persons of small incomes
are benefited, and those in higher
brackets are levied on more heavily
than at present.
Although aimed at the higher
brackets, actually individuals of small
incomes are benefited by revision Of
the income tax rate structure, lower
rates for second-claSs mail, and by
repeal of the bank check stamp tax
effective January /, 1885
The bills major provisions are:
l. Revision of the income rate Struc-
ture, estimated to yield S28000,000 in
new revenue annually, by imposing a
fat normal rate of per cent, with a
surtax starting on net incomes of
$4,000 at per cent, and ranging in
20 graduated brackets TO 50 per cent
on those in excess of 81 900, ,0OO A
10 per cent credit for earned income
on those not in excess of So, 900 is
allowed. while partially tax-exempt
securities are subjected to the SurtaX.
Tighten Deductions.
q Tightening of deductions for de-
probation and depletion taken by cor
porations from net income, estimated
to produce $85, ,0o0, 900.
3. Revision of the capital gains and
loss provisions under a new system,
designed to prevent capital losses from
diminishing ordinary income and plac-
ing a levy on capital gains, expected
to return $50, 900 900.
4. Imposition of a IS per cent tax
on personal holding companies un-
distributed earnings-S25, 100000.
5. Revamping OF the Exchange and
reorganization provisions of the in
come tax law so corporations and in
dividual stockholders cannot reor-
ganize to evade taxation-Sl0,000. 900.
6. Dividends paid out of corporate
earnings made prior to March l, 1918,
are made subject to SurtaxeS of share
holders-s6,0OO,OO
7. Credits for taxes paid foreign
governments by American corpora
tons and individuals operating abroad
are reduced so per cent-$5,000,0 900.
Consolidated Returns Penalty.
8. The penalty tax on corporations
for filing consolidated returns is in
creased from l to per cent, leaving
the single corporate tax at l3& per
cent and increasing the consolidated
from 1434 to 15S4 per cent-S20,0 ,000,-
oOo
9. Curtailment of partnership al
lowances for losses by permitting the
deduction of losses on the sale of cap
ital assets only to the extent of gains
from such sales-S5, 100000.
10. Administrative changes in coll
lections of the existing 1-cent-a-gal-
Ion tax on gasoline and cents gall
Ion on lubricating oil whereby the
first manufacturer shall pay the levy
Unsteady of the second or the dis
tributor-S20, 900, 900.
Numerous miscellaneous provisions
Of the bill are estimated to yield a
total of S24,000,000 more.
Republican members of the House
already have notified the Democratic
majority they would seek to cut the
postage rates in the measure.
Although the Post Office Depart
ment estimated a return to the 2-cent
rate would mean loss of S75,000,0O0
in revenue next year, Representative
Treadway of Massachusetts,, ranking
Republican on the Ways and Means
Committee, termed the Scent rate a
serious blunder."
In this, the Republicans have sup
port from Chairman Mead of the
Post Office Committee, who said a re-
turn to the 2-cent rate would increase
the volume to make up eventually for
the loss of revenue due to the higher
rate