The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-06-28
Huge Fortunes Facing
Doom in New Tax Bill

under present income tax laws give
just a hint at the legal complica-
tons that may attend a still more
drastic law.
Mr. Mellon may perhaps be the
richest man in the country today,
even above Ford or Rockefeller. His
personal holdings outside his in
dustrial interests were disclosed at
the tax hearings to be estimated at
SGT OGO, 900 today.
Already he is making efforts to
transfer these vast holdings to his
son and daughter The government,
even under the present laws, will
take a big slice out of that at his
death. If the rates are greatly in
creased, it is quite possible that
what with division among heirs, the
concentration in single control
might be effectively broken.
This happened to the famous
fortune of Jay Gould. Between
so heirs and the lawyers, $4,000 900
went glimmering, and none of the
Goulds is reckoned rich today.
COnfiscatiOn in Taxes
No rates for the new higher in
come taxes have yet been definitely
proposed, but it is not improbable
that on incomes of over a million
dollars a year they will approach
cOnfiscation. There were only 46
such incomes in 1888. They tOtaled
taxable income of S81.558,981 and
paid S25,84S,O46 in taxes at the
highest rate of SO per cent which
begins at S1,OO0,000. But these are
depression figures. In 1929 there
were 513 incomes over a million dol
lars, receiving more than a bill
lion dollars.
On inheritance taxes, 1873 estates
of more than a million apiece were
inherited in 1898. Their net tax
able worth totaled S284OO0,O0O, and
they paid S29O0O,OOO in taxes. Even
if the government had taken them
all, 100 per cent (Which nobody pro-
poSes), the gain in revenue would
rot go far toward balancing the
budget.
The Ford estate represents a
practical problem which would be
met continually if estate taxes be-
came confscatory. Henry and
Edsel Fords property. largely now
in control of Edsel, it is supposed,
is not money in vaults, but con-
trolling stock in the Ford Motor Co.
Let us suppose both men died,
and at their death the Ford Motor
Co. was appraised at S5O,000,000
Now any such appraisal is a
guess. For Ford Motor Co. stock
is very valuable when the Ford
Motor Co. is paying dividends.
When the company is losing
money the stock is worth but little,
and then only because Of the hope
that it may make money later.
Big Jolt to Business
Say the government demanded
S4O,OOOOOO in estate taxes. The
heirs could do one of two things
1. Give up. and say, Here you
are, Uncle Sam. Take the stock
and the motor company" 2. Try to
sell the company for more than
s4O.O0OOO0 or borrow at least that
much on it to pay the taxes. In
either case there would be consid-
cradle diSlocation Of the business.
The holdings of John D. Rookie
teller Jr.. in Standard Oil COM
panies were recently reported 10
the SEC as valued at S250,000, 900
Under rates which have been dis
cusSed in connection with the
Roosevelt proposals, it might be
taxed S213OO0,00O, leaving only
S37. 100000 if all went to a single
heir. The liquidations incident to
paying any such taxes as that
might profoundly upset security
markets and the conduct Of the
business.
The J. p. Morgan fortune is not
what it was. and recent sale by Nor
gan of art treasures worth S1.500,0 900
is believed to be his effort to get
cash ready to meet possible estate
taxes.