The midland journal. (Rising Sun, Md.) 1885-1947, 1935-04-26


Nye Inquiry to light. 1t is seek
ing the honor of
drafting legislation which will give 1t
a historical standing as the group of
men who first moved to remove the
incentive Of profit as provocative of
war. In presenting its proposal to this
end, however, the committee Is regard
ed as having started something" which
1t is unlikely can be finished by the
group of individual senators making
up that committee.
When the investigating resolution
was adopted by the senate, Its spon-
sors made much fuss about conditions
In the munitions industry. There were
many speeches made by Senator Nye
(Rep, N. d. concerning the wicked
ness of munitions manufacturers, and
in the course of those speeches, which
were made in a score of different COM
munities, Senator Nye announced con-
illusions which apparently have not
been supported by evidence adduced
by the committee investigators. Fur
Their, the senator announced plans to
disclose alleged corruption among the
munitions manufacturers and stated
definitely that the purpose of the in
quiry was to provide the basis for laws
which would control them.
Now, after seven months, we look
back on the committees record and
find that 1t has played a game of
hop-skip-and-jump from one subject to
another and, 1 believe, the consensus
is that little of real value either to
the senate or as public information
has been developed.
Since there was the minimum of pub
licity resulting from the inquiry into
munitions plants, shipbuilding yards
and the aircraft industry, the commit
tee has taken another tack. Selling
upon President Roosevelt's phrase that
profits must be taken out Of war, Sen
ator Nye and his colleagues turned
their so-called experts" loose on the
track of those Elusive profits. The re-
suit is a piece of proposed legislation
that goes beyond anything ever offered
before. in the way of tax legislation.
OF course, it Is entirely likely that
nothing at all will come Of the Nye
bill insofar as improvement of our tax
alton methods is concerned. But its
radical and altogether unavoidable
character Is looked upon as necessi-
tating a frank examination of its pro-
visions.
Because the committee started out to
investigate the munitions industry and
Notwithstanding the fact that since 1t
has wandered all over the surface of
the earth with its inquiry there is a
widespread belief that its tax bill will
apply only to the munitions industry
during war time. Such is not the case.
1t goes far beyond the munitions in
dustry and, indeed, 1t affects every
corporation and every individual with
an income of $1,000 or more.
Probably the Flynn-Nye tax proposal
won't get anywhere at all. Certainly
it will not be enacted
FLynn-Nye in this session of con-
Tax Bill gress. Nevertheless,
when a senate COM
mittee seriously introduces bill that
would limit income of corporation
to per cent of its peace-time CAPT.
talization-the government would take
the rest by taxation-it is regarded by
many as time to call a halt. 1t ought
to be added here that obviously the
country is faced with the highest taxes
it has ever known in consequence of
the tremendous spending that has been
going ON during the last two years and
which is to be continued. Those taxes
are due to come along within another
year or two.
I referred above to the 8 per cent
limit on incomes of corporations. This
is brought about through tax Of 30
per cent on the first per cent Of
earnings of every corporation. Above
the per cent earnings, it is proposed
in the Flynn-Nye bill to take 100 per
cent of the total.
Tucked away in one section of the
bill is language that is ordinarily re-
ferred to as "joker." 1t represents
the first attempt by congress, rather
by the sponsors of this legislation, to
circumvent exemption of government
securities from taxation. The federal,
state, municipal, county and other gov
ernmental jurisdictions have the power
to issue bonds and other securities
free from taxation. This makes such
securities attractive. For quite a
while there has been agitation to do
away with this tax exemption privi-
lege. Nobody has found way, how
ever, to get legislative bodies to enact
the necessary provisions into law. So,
we have something like fifty billions of
dollars in securities of this type out
standing. II this income we're taxable,
of course, 1t would represent a con-
siderable increase in revenue to the
federal government through income
levies. Thus 1t is stated the Flynn-Nye
proposal is attempting to reach that In
come without actually violating the
contract which the issuing government
made with the buyers of those securi-
ties.