Evening star., 1935-08-09
i. S. TAX FIGURES
HELD DECEPTIVE
Vast Number of Stockhold-
ers in 618 Corporations
Listed by Jackson.
BY DAVID LAWRENCE.
Figures can do startling things when

the Internal Revenue Bureau, has told
the Senate Finance Committee IN con-
nection with the pending tax bill that
6l8 corporations in 1882 owned more
than So per cent Of the value of all
assets disclosed in 1892 tax returns
by all corporations.
On its face this looks like a small
proportion OF the corporations, and
Mr.. Jackson carries the calculation,
which he calls startling" even fur
ther when he works 1t out in per-
centages. For on that basis it shows
that these 61s corporations are only
two-tentns of per cent Of the total
corporations
First of all, the mere number OF
corporations in existence Is no more
a measure of the amount OF wealth
in America than the number OF gon
or country clubs. There are approx
mately 472,00O corporations which
have taken out charters. Half OF them
are dormant or inactive. If Mr.. Jack
son had been so disposed, he could
have said that only 6l8 out of 472,oOO
corporations owned half the wealth
of the country. That, too, would have
been startling.
More Important Point.
But there is a much more important
point that Mr.. jackson omitted to
explain. Just how many persons are
represented in the 6l8 corporations
which own half the wealth? Just how
many stockholders and how many
bondholderS are there in each cor
poration? AND, incidentally, how
many people are employed and what
is the total pay roll of those 6l8 COM
panies?
This is very essential information.
For instance, take the American Tele-
phone g. Telegraph Co. It has assets
running into the billions, for 1t owns
all the telephone companies and their
plants, reaching into $4,000 different
places. Yet in Mr.. Jackscn'S list OF
corporations reporting Federal in
come the A. T g. T. probably Is claSsi-
fled as only one corporation. This is
because in 1882 there was permitted
by law a consolidation Of income tax
returns for all corporations owned by
a parent company.
Now, how many persons own the
A. T. & T? The latest figures show
that approximately $4,000 persons
own the company.
Take General Motors and General
Electric. These are companies also
with hundreds Of thousands Of stock
holders. And the statistics show that
many persons own Just few shares
apiece. Indeed, In not one OF these
big companies does any man or group
of men afiliated with ore another
own as much as 10 per cent Of that
company.
1t is reasonable to suppose, there
fore, that Of the 6l8 corporations
owning half of the wealth or assets
Of all corporations we may have any
where from 100000 to 10000, 900
people as the real owners. Some esti-
mates place the number Of preferred
and common stockholders up around
$4,000, ,ooo
Millions of Stockholders.
The larger corporations are the ones
that float stock and bond isues to the
public, so it is a fair assumption that
almost all of these millions of stock
holders belong in the 6l8 corporations
which own half the wealth of the
country. Mr. Jackson says that in
1882 so per cent of the income went
to POI corporations. This must mean
that the other AIT corporations didn't
have any taxable income or pay divi-
dends on their investment. Millions
of stockholders know this, of course,
because they didn't get dividends and
lots of them didn't get interest either.
Wealth and income are two differ
ent things. For wealth isn't subject
to distribution overnight and the mere
fact that a man owned share of
stock or a claim check on a big plant
didn't mean he converted that share
Of stock into cash in 1882 unless he
wanted to take loss on his original
investment. Market values were at
their low point that year.
So the statement that 618 corpora
tions or their stockholders owned half
the wealth of all corporations didn't
mean they had such an amount to
spend on themselves or their families
or on their hobbies.
The distribution of the income re-
ceived from the corporations which
did earn profit is an important
matter on which, unfortunately, not
enough information is available. If
the Internal Revenue Bureau would
trace what happens to all the corpora
tion dividends, and particularly those
POI corporations which had half the
taxable income of the country in 1882,
some more startling" disclosures
would be made.
Charity and Philanthropy.
The probabilities are the Treasury
would find that substantial amount
went to charity and philanthropy,
that large amount went to the life
insurance companies to take care of
the contingent demands of millions
Of policy holders, either through
death payments or loans, that many
millions OF dollars Of profits went
into new enterprises or aided in sup
porting going concerns that needed
capital, thereby Increasing employ
ment or preserving jobs for many
who already had them.
1t is always the alleged crime of the
profit side that is emphasized by the
administration here. Mr.. jackson
spoke of the 1921 corporations that
had reported taxable incomes in 1882.
He didn't mention the tens of thou
sands of corporations which lost
money and dug into capital and re-
serves to keep their plants going. The
latest figures, for instance, show that
in 1882 the amount lost by American
corporations was $7,796, ,686.752. while
the amount of profit by another more
fortunate group of corporations
amounted to $2,153,ll2,819. Here we
see the profit and loss system In act
ual operation.
Taxes and the threat Of pyramiding
more taxes have much to do with the
failure Of businesses, for 1t gives them