Evening star., 1935-07-14

OF from pOSSIUly ~ W 1 pei SCAA0' IAA-
smaller corporations paying the small
er tax.
Organized business has charged the
effect would be to check large, eft1-
cient corporations, in which the saw
ings of thousands Of small stock
holders are invested, and nullify the
business of "the smart man, bringing
him down to the level Of the man OF
less business acumen."
The argument against the grad
uated corporation tax which carried
most weight with the dominating side
of the committee, a Democratic leader
confided, was the following by Noel
Sargent, secretary and StatiStician OF
the National Association Of Manu-
facturers:
Henry Robinson invests 81 900 in
s50O,000,000 corporation, which
earns a per cent profit, or total OF
S25,000,000. Considering now only the
first proposed table of corporation in
come taxes, we find that the $50
earned upon Robinson's $1,000 invest
ment would be taxed at 171a per cent,
or S875, before he would be entitled
to receive any dividend.
Tax Less on Lower Income.
Erred Adams, his neighbor, with the
same annual income, invests $1,000 in
100000 corporation, which also
earns S per cent on It's capital invest
ment, but because the total corpora
tion profit in this case is much small
er, the $50 earned on Adams $1,000
investment will be taxed only II per
cent. or Sc, before he is entitled to
receive a dividend.
Here are two men, with equal in
comes, equal investments and equal
earnings on their investments. yet
under this proposal the man will be
penalized who has invested in the
large company"
1t was apparent that Chairman
Doughton and other Democratic lead
ers on the committee are sensitive
to the criticism that they are trying
to railroad the bill through without
adequate hearings. Chairman Dough-
ton denied a bill has been sent
down" to the committee by the ad-
lninistration and in this connection
sought to minimize talk Of must"
orders from the White House.
In the course of wrangling between
the chairman and the Ohio member.
MIR. Jenkins asked why the Ways and
Means Committee had waited since
January and done nothing on taxa
ton until recently. Chairman Dough-
ton admitted he did not know why
the President had waited until re-
Gently to send in his tax message.
Revenue Guesses Continue.
AS the hearings drew to an end,
guesses as to the total revenue to be
raised continued, but seemed to have
little more foundation than hereto
fore
The final hearings today were
marked by vigorous attacks on the
proposals of the administration by
representatives of organized business.
The sliding scale corporation income
tax was especially attacked.
Appearing before the committee to-
day representatives of the Chamber of
Commerce of the United States were
Fred c. Clausen, Horizon, Wis, man
Itacturer; Roy G. Osgood, Chicago
benker, and E. c. Alvord, economist.
Mr.. Clausen warned that the Gov
ernment through loans and advances
had s1,7o0, 100000 stake in corpora
tions of various kinds and that in
equitable taxes might endanger inter-
est and principal payments.
Mr.. Osgood proposed that present
estate taxes be lifted if new revenue
was needed instead of the Federal
Government going into the inheritance
tax, which, he said, If of confiscatory
character would remove incentive to
thrift and endeavor."
Plant Shutd0wns Feared.
''In this connection I make bold to
say" Mr. Osgood said, that the best
justification of capitalistic system
is the fact that, by and large, wealth
tends to come into the possession of
people who are the best custodians for
it." He concluded with a warning
that such taxes might discourage en-
terprise and cause shutdown of in
dustrial plants.
George McCaffrey, research director
OF the Merchants Association of New
York, contended that enactment at
this session of Congress Of any Of the
proposed plans now under considera-
tion by the committee or any other
proposal for the So-called distribution
of wealth would be most imprudent
and unwise." He urged, instead, that
new taxes, which he recognized as Gin
evitable," be deferred until such taxes
may be duly considered and enacted as
part of a properly co-ordinated plan
for balancing the Federal budget"
"In recommending to this commit
tee that it refrain form proposing any
tax program such as has been sug-
gested during the present session." he
said, "let us suggest very strongly that
this country solve the problem Of bal
ancing its budget on the basis OF
economics rather than under the whip
Of politics"
Mr. Alvord asserted the present
graduated personal income tax should
be preserved and not discredited by
rates or other provisions Of inequitable
or punitive character" in hitting at