The Waterbury Democrat., 1934-04-14

| wv OL dhJ NSLAbC 10 GACthVt 1EoIl federal taxation. No credits are al- states. The present comparable rates carry an exemption of $50,000 and range from one per cent 0n the first $10,000 of net estate to 45 per cont on that part of estates in
 excess of $10,0eo,000.
 Another present schedule, not disturbed in the new law, ranges from one per cent on, the first $s0.- 000 of net estate to 26 per cent on the net estate in excess of $10,- | 000, 900, against which q credit of 80 per cent Is allowed for estate taxes paid to the states. This car
 ries an exemption of $100,e0o. The higher levies are known as the Super estate taxes" Other principal features of the new bill:
 Personal Income Taxes Senate bflI-NormaI tax, per cent. Exemptions. $2,500 for mar
 ried persons; $1,000 for single per- sons; $400 for each dependent. De- duction of 10 per cent for earned | income is allowed up to $20,000. The surtax begins with per cent on net incomes of between 5000 and Ss,oe0. ranging upward to 59 per cent on net incomes in excess of $1,000,000. Exemptions and credits for dependents may be taken against surtax as well as against normal tax.
 House bill-Same as the senate
 bill for normal tax except that $8.- 900 is the limit of earned income. The house surtax rates began with per cent on net incomes of be- tween $4,000 and $6,000. ranging upward to 59 per cent on incomes in excess of $1,00O,000.
 Present law-4 per cent normal
 tax on first 5000 of net income,
 plus per cent on balance above $4,0OO. Same exemptions as in sen- ate and house bill but no credit for earned income.
 The present surtax begins with one per cent on net incomes of more than $6,000 and extends to 55 per cent on net incomes of more than $1,89e. 600.
 Capital Stock Tax
 Senate bill---A tax of 1-10 of per cent on the adjusted declared value of the capital stock of each corporation. An excess profits tax of five per cent on the earnings in excess of IF 1-2 per cent of the de-
 clared value of the corporations stock.
 House bi1HNo change from present law. which has q capital stock tax expiring June 30. 1894. The excess profits tax was repealed by presidential proclamation as of
 Dec. 31, 1883. . Personal Holding Companies Senate bill-A special surtax of 90 per cent on the first $100,000 of undistributed adjusted net in- come of personal holding com panies, plus 40 per cent on all over that amount.
 This is one of the loophole closing devices. A personal hold ing company is formed as an "in- corporated pocketbook" and has been used to shift securities to avoid tax. A personal holding
 company Is defined as any corpora
 ton. 80 per cent of whose gross
 income is derived from royalties. dividends, interest. annuities and gains from sales of securities and
 more than 50 per cent of whose outstanding voting stock is owned by not more than five persons. House bill-Imposes a nat rate
 of 35 per cent on all undistributed
 adjusted net income of personal holding companies.
 Present law-No provision for
 such a tax.
 Capital Gains asd Losses
  from taxable income of capital
 losses only to the extent of sim
 liar gains, with the exception that $2.0O0 of any excess loss may be
 charged off from ordinary income. One hundred per cent on the gains on capital assets may he taxed if
 the asset is held for less than one year; 30 per cent If held from ] to years; 50 per cent If held from 2 to years; 40 per cent if held
 from to 10 years; 30 per cent If held for more than 10 years.
 House bill--Limits deductions for losses strictly to gains in similar year.
 ton the same as in the senate bill. cAccpt tHdt bdoS oidChct-SV DST cent if held for more than 10 years
 -is not included.
 Present law-Special treatment for gains and losses on capital as- sets held for more than two years.
 providing limitation on taxes of gains to IF 1-2 per cent with corA
 responding limitation on the amount of deductabie losses. IL
 capital assets are held for less than two years the gains realized on them .are taxed is full and the
 losses allowed in full except that
 with stocks and bonds losses are deductable only to the extent of gains in similar transactions.
 Corporate Consolidated Returns
 Senate bill - Senate adopted
 Borah amendment eliminating returns for affiliated corporations. Senator William E.. Borah. repub. lican. Idaho, estimated this would
 add at least $15O,000.0O0 in rev.
 enue, but government tax experts
 said there would not be appreciable difference fin revenue. House bill Imposes a 2 per
 cent penalty tax on corporations filing consolidated returns for sub- salaries and affiliates. making the
 tax of sucA corporations 1S 3-4
 per cent. This provision probably
 will be carried into the cofnpIete1 I
 P.snt ,av r,ausxee rer cent