Evening star., 1935-08-07
Tax
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fense of administration tax plans as
begun yesterday. Jackson today con-
fined himself to the proposed corpora
ton income taxes.
Dealing first with the principle OF
graduating such taxes. the witness de-
clared that 95 per cent of corpora
tions paying taxes this year would
benefit by lower rates under the plan.
At the same time, he said, the total
revenue from this source would be
considerably higher than under the
present fiat rate.
1t is the opinion of the Treasury
Department, its spokesman said, that
larger corporations are, by reason OF
their more stable revenues, better able
to anticipate and bear the burdens. u
Concentration of corporation assets
"is startling" Jackson claimed, with
lover SO per cent of the value of all
assets owned by 618 corporations, only
two-tenths of l per cent of the num-
ber of corporations.
There is substantial evidence" he
continued, that the depression has
hastened the concentration Of cor
poration-owned wealth."
Effect on Common Stock.
In connection with the complaint
that graduated corporation taxes
would unduly affect common share
earnings, Jackson admitted that "it
is difficult to learn the exact practical
effect. The cost to common stock
holders would be greater In cases
where preferred stock is outstanding
The bureau counsel next turned tc
one of the departures of the House
bill from the presidential message, its
failure to provide for intercorporate
dividend taxes.
Terming this idea lone of the very
important recommendations" Jack
son declared dividends have long
been a favored source of income tc
both corporations and individuals. Sc
long as corporate earnings are re-
tanned by the earning corporation. OF
are passed about by corporations
which receive them free of tax, the
Governments tax on the earnings is
far from effective"
Assailing the part which holding
companies often play in evasion Of
taxes on earnings. jackson declared
their effect on the revenue system is
demoralizing and destructive of good
administration.
Hits Interfirm Exemption.
Probable effects of enactment Of q
tax on intercorporate dividends were
outlined by jackson as follows:
1T would implement the graduate
corporation income tax. If INTERIOR
porate dividends continue to be en-
tirely exempted from taxation. there
would be a powerful temptation fol
large corporations further to compn-
cate their capital structures.
"A partial withdrawal of the exemp-
ton would be desirable as a means OF
encouraging the simplification of cor
porate structures.
THE cost of this tax will be felt in
proportion to the abuse"
Coming to the increased excess
profits taxes, which were not recon-
mended by tine President, but were in
cluded in the House bill, the Treasury
official refused to recommend the in
crease despite attempts by Senator
King, Democrat. of Utah, to force him
into such poSitiofA
Il stand squarely on the Presidents S
recommendations" Jackson replied
II neither oppose nor urge an increase
in excess profits taxes
"As revenue producer the grad
uated corporation income tax is apt
to be far more stable than an excess
profits tax. The enjoyment of high
rates of profits by small concerns dur
ing prosperous periods enables them
better to withstand the heavier risks
to which they are subject. We do not
wish to discourage the growth of small
concerns"
McFarlane Urges Increase.
Representative McFarlane urged the
increase of inheritance and gift taxes
and the tightening Of terms of COL
lection Of these taxes as proposed
Wholesale evasion may be practiced
under the present and pending laws,
he said.
Mayor McNair Of Pittsburgh was
the first witness of the day to oppose
the legislation. The Federal Govern
ment took $79,000,000 out of Pitts
burgh last year and the new bill would
take twice as much, he said.
You should have mercy on u.s." he
pleaded. You are spending some of
this money, but in a way We don't
like. I saw Mr.. Ickes yesterday and
he told me we couldn't have any
money for projects until we put toll
charges on some of the old bridges.
"IIow are people going to live in
Pittsburgh or come to the city to shop
if we charge them to cross all the
bridges?"
when I levy taxes in Pittsburgh