Evening star., 1935-07-13
CUT IN EXPENSES
.ASKEDBYC. Of Gin
HITTING TAX PLAN
Levies on Corporate Profits
Called "vicious" by Trade
Witnesses.
COMMITTEE HEARS
ALV0RD ON INHERITANCE
House Group May Ask President
to Substitute Excess Profit
Tax.
By the Associated Press.

| BY the Associated Press
Suggesting that instead OF raising
$500 900, 900 to 100000 900 in new
revenue. the Government should cut
expenses by that amount. the Cham
Der of Commerce of the United States
today denounced the Presidents new
tax plan as disturbing and harmful"
Three witnesses took the chambers
attitude before the House Ways and
Means Committee. They were Fred
H. Clausen, Horizon. Wis. Roy C.
Osgood, Chicago, and z. C. Alvord,
Washington.
Clausen opposed the graduated cor
poration tax, Osgood higher personal
income levies and Alvord the proposed
Inheritance tax.
Insisting the suggestion that the
present fat tax on corporation ir-
comes be replaced with a progressive
levy failed to recognize the maxim
Of ability to pay, Clausen told the
| committee:
Taxation Of corporate profits solely
on the basis of income is so unsound
and wrong in principle that it be-
comes vicious.
"ShouId Cut Tax"
I'm view of the present heavy Fed
eral taxes on corporations and the ex-
ceedingly heavy additional taxes which
will shortly be placed on them under
| the provisions of the social secIritv
legislation, plans should now be made
to reduce rather than increase the
| corporate tax"
Osgood asserted:
ANY large fortune passing TO ons
who is in fact not good custodian of
wealth-in a proper sense-works its
own cure. 1t disappears"
ClauSen and Representative Tread
way, Republican, of Massachusetts,,
agreed that the effect Of a wealth :e-
distribution plan would be to put per-
sons of superior and inferior INTEL
lectual ability on the same tasis.
II don't think business men are
much concerned about the brain
trust" Clausen replied TO a question
by Treadway.
Sees Upward Trend.
Clausen agreed with Representative
Cooper, Democrat. Of Tennessee. that
business was on the upward trend"
| Before today's hearing, sentiment
for stiff tax on excess profits rather
than a progressive tax on corporation
incomes appeared to be developing in
the Ways and Means Committee.
One member said privately the
President might be asked whether he
would accept the substitution. Chair
man Doughton remarked he had "al-
| ways thought" there was merit" to
the idea of taxing excess profits.
Talk of that substitution was en-
gendered by repeated criticisms before
the committee of the plan originally
advanced by the President. The ad-
! ministration plan would replace the
existing fat 1884 per cent tax on
corporation income with graduated
tax starting at 1924 and rising TO 1884
per cent.
| Tacitly. the committee had agreed
to consider a graduated rate of 10 to
ILL., per cent. It received from Sec
retary of the Treasury Morgenthau
estimates that a tax of 10 per cent on
the first $4,000 of corporate income
increased by steps to a levy Of l7l2
per cent on all income over Sl,000.000
would bring s102 100000 a year into
the Treasury.
Plan Held Destructive.
But the Chamber of Commerce has
described such a plan as destructive
and confiscatory and the National As
sociation of Manufacturers has termed
it "unsound" from q social, economic
and taxation philosophy standpoint.
In his message to Congress on the
new tax plan the President asserted
the Government wisely" had decided
on the individual income tax plan be-
cause it was based on ability to pay
Critics of the corporate income tax
idea insisted that violated the prin-
ciple Of the ability &c pay.
Noel Sargent, economist for the Ma
tional Association OF Manufacturers,
yesterday quoted Senator McAdoo.
Democrat, of California as having said
when he was Secretary of the Treas
ury in 1918:
ANY graduated tax upon corpora
tions is indefensiole in theory, for
corporations are only aggregations of
individuals, and Dy such a tax the
numerous small stockholders OF
great corporation NAV be taxed at q
higher rate than tie very wealthy
| large stockholders OF a relatively small
| corporation"
Exemptions Cited.
Proponents Of the idea of an excess
profits tax point out that the individ-
ual income tax is not levied on all
income. There are first the exemp-
tions, and above that everybody pays
per cent. But imposed on top Of
that general per cent levy is a sur
tax" running from to SO per cent.
The same idea applied to corpora
tions. they contended, would put the
heavier burdens only on the concerns
which made excess profits. High
taxes on excess profits have long been
advocated by Senator Couzens, Re-
publican, of Michigan. and when the
new tax bill reaches the Senate such
an amendment will be offered even If
the House does nothing about 1t.
Among the critics of the tax plan
appearing before the Ways and Means
Committee yesterday were Robert L.
Lund. representing the National As
sociation of Manufacturers, and
George B. Chandler, secretary of the
Ohio Chamber of Commerce.
Lund's testimony followed session
started by Chandler when he referred
to the present orgy of spending" to
"wastefulness and untimelinsss," to
Congress being rubber stamp" and
o. La~ -