davidaulloa/AmericanStories huggingface dataset:
Evening star., 1935-07-31
MINORITY REPORTS "SOAK RICH" TAX

are burden on production and can
be paid only by production. II ex-
cessive, they are reflected In idle fac
tories. tax-sold farms. and, hence in
hordes of the hungry tramping the
streets and seeking jobs In vain.
Our workers may never see q tax
bill, but they pay in deductions from
wages, In increased cost Of what they
buy. or as now, In broad cessation Of
employment.
There is not an unemployed man
there is not q struggling farmer
whose interest in this subject Is not
direct and vital"
~
"We deem it mistake not to have
provided an exemption from the cor
poration income tax on gifts made by
corporations 70 community chests and
other charities. 1t Is the announced
policy of the administration to throw
the burden Of caring for unemploy-
ables back on the States and local
communities. When this occurs there
are only two ways they can be pro-
vided for. One is by direct taxation
on the people Of the local communities
through taxation of homes, farms and
other real estate; the other is through
private charity. If corporations are
public spirited enough to make con-
tributions to charities, we believe their
contributions for such purposes should
be exempt from taxation exactly as
Is done in the case of individuals"
+ y
THE adverse effect of such a tax
in the case of an estate such as that
of certain well-known automobile
manufacturer is quite evident. This
gentleman has plants in various parts
of the country employing thousands
of people and indirectly giving en-
ployment to thousands of others. His
wealth consists almost exclusively of
physical properties. Assuming for the
sake of argument that their value
was 100000 900, and of course they
are worth many times this amount,
the present Federal and State death
taxes would amount to little less
than 1000 900. Assuming, further,
that an only son were the sole bene-
ficiary Of the estate, the $4,000, 900
which he would be entitled to receive
would be taxed a little less than $780,
900, 900, leaving a balance Of approx
mately $10,000,000 out of the $780,
! 100000 estate. How the $4,000, 900
tax could be paid without the Fed
eral Government taking over the
plants is problematical This tax pol
| icy followed over a period of years
would automatically take us into
socialism"
The expediency of making so radi-
cal change in the present excess
profits tax, even If a redeclaration OF
value were allowed, is at least ques-
tionables Businesses have been oper-
ating at loss for many years. The
losses which they have suffered in
past years are not deductible in COM
putting their taxable income in current
years. Hence, it would seem unfair
to make them pay so great an excess
profits tax on these earnings at this
time in addition to the regular cor
| poration income tax. The time to
impose an excess profits tax is when
conditions are prosperous, not when
Evening star., 1935-07-31

industry is struggling to get on Its
feet. What the country needs is not
more tax on income, but more income
to tax.
I'm response to the Presidents de-
mand for a wider distribution Of
wealth. there has been included In
the bill proposed new tax on In
heritances, to be levied in addition to
the present Federal and State taxes
on estates and inheritances. Tie ex-
tsting death taxes take as much as
so per cent of an estate before dis
trtbution, and the pending bill pro-
poses to take up to rs per cent Of
what is left when distributed To the
beneficiaries."
ANY tax which practically confs-
Gates private capital is fundamentally
wrong. unless We are to adopt the
communistic system. 1t is private
capital that makes up the national
wealth. 1t is private capital that
gives employment to labor. II this
capital is to be consumed in paying
the running expenses Of the Govern
ment, then the pending tax measure
becomes not bill to redistribute
wealth, but bill TO redistribute
poverty"
Evening star., 1935-07-31
therefore your committee, In section
102 (a) of the bill, Is recommending
only a very moderate graduation.

therefore your committee, In section
102 (a) of the bill, Is recommending
only a very moderate graduation.
Under existing law corporations pay
fiat tax Of 13% per cent on the entire
amount of their net income. No relief
is given to a corporation, no matter
how small its net income may be.
Your committee Is recommending
the substitution of the following
graduated tax on corporations in lieu
of the present uniform rate Of tax:
1914 per cent on the first $4,000 OF
the net income and 14k per cent on
the remainder.
The effect Of these graduated rates
will be that corporations with net in
comes up to $4,000 will pay less tax
than at present, and corporations with
net incomes in excess Of this amount
will pay slightly more tax. While no
statistics are available to show the
exact effect of these rates, statistics
are available to show the effect on
corporations having more or less than
$25, 900 net income. In 1882, 82,646
corporations reported taxable net in
comes. Out of this number, 76,216
showed taxable net incomes of less
than $25 1000. and 6,430 corporations
showed net incomes in excess OF $25,-
900. Therefore, it is obvious that less
than 8 per cent Of our corporations
having taxable net incomes under
present conditions will pay an added
tax through the imposition OF the
graduated rate schedule. On the
other hand, more than 90 per cent Of
bur corporations having taxable net
incomes will find their taxes some
what reduced by the operation OF this
schedule. It is equally obvious that If
statistics were available at the divid-
ing line of $4,000. they would show
that the number Of corporations whose
rates are reduced would be substan-
TALLY more than 90 per cent.
In spite of the small amount of
graduation and in spite OF the slight
increase of the tax burden on the
corporations with large net incomes,
considerable revenue is derived from
this graduated tax. This is because
of the fact that, while less than 8
per cent Of the corporations report
net incomes in excess Of $25 900, nev-
ertheless this same per cent of the
corporations have over 80 per cent
of the taxable net income. For ex-
ample. in 1882 corporations reporting
less than $25,oo0 of net income re-
ported a total net income of about
$2O5, 100000, while corporations with
net incomes in excess of $4,000 re-
ported net income Of $l.947, ,000, 900.
Section 102 (b) provides for the
rate of tax in the case Of railroads
filing consolidated returns. Under the
revenue act of 1884 only railroads
may file consolidated returns and
then only under certain conditions.
If permitted to file such returns,
and If they do so, they pay under
existing law rate of l54 per cent
instead of 13& per cent. Your COM
mittee is of the opinion that it is
unnecessary to provide for graduated
corporation tax on railroads if they
file consolidated return, and there
Evening star., 1935-07-31

Specific exemption to spouse and near
relatives. $4,000. Specific exemption to
all other, $4,000.
sAfter deduction of specific exemption.
tComputed on upper limit of bracket:
for example gift tax on $4,000 is $500.
The principle of consanguinity.
which is recognized in the Inheritance
tax, Is also reflected in the donee's
gift tax. An exemption is allowed on
net gifts of $4,000 in the case Of a
spouse, child (including a child
legally adopted before it attains the
age Of 2D, father, mother, brother or
sister (including a brother or sister Of
the half-blooD grandchild, grand
father or grandmother. In the case
Of all other donees SPECIFIC exemp-
ton Of $4,000 is allowed These ex-
emptions are not annual exemptions
and must be used as rapidly as pos
sible.
Gifts of the first $1,000 made to
any donee by any donor during the
calendar year (other than Of future
interests in property are exempt from
the gift tax on donees. A similar ex-
Evening star., 1935-07-31

1.-THE upmost brackets Of the sur
tax have already passed the point Of
productivity and the only consequence
Of any further increase would be to
drive possessors of these great in
comes more and more to place their
wealth in the billions Of dollars Of
wholly exempt securities heretofore
issued and still being issued by States
and municipalities, as well as those
heretofore issued by the United States.
This process not only destroys a source
Of revenue to the Federal Government,
but tends to withdraw the capital of
very rich men from the development
Of new enterprises and place it at the
disposal of State and municipal gov
ernments upon terms so easy to them
(the cost of exemptions from taxation
falling more heavily upon the Federal
Government) as to stimulate wasteful
and non-productive expenditure by
State and municipal governments
THE following year, another Demo-
cratic Secretary of the Treasury, David
F. Houston, who succeeded Secretary
Glass to that office, also commented
on the adverse affects of the higher
surtax brackets. and said:
"It seems idle to speculate in the
abstract as to whether or not a
progressive income tax schedule ris-
ing to rates in excess of 70 Der cent
is lustifiable. We are confronted
with a condition, not a theory. The
fact is that such rates cannot be sue
cessfully collected
Since, as Secretary Houston has
said, excessive surtaxes cannot be sue
cessfully collected" and since their ten
dency is to drive investments from
the channels of trade and industry
into tax-exempt securities, the re-
suit of their imposition actually will
be to decrease, rather than increase
revenue, and necessitate the imposi-
ton of additional burdens on the less
well-to-do. Thus, the -the-rich
proposal Of the President will in the
end result in unloading an increased
tax burden on those of small earn
ings.
I'VE believe that the fallacy of the
theory that exorbitantly high income
taxes put the burden Of taxation on
the rich and relieve the poor has
been clearly demonstrated. We COM
mend to the large masses of people
to whom this bill is intended to ap-
peal the wise words of the present
OCCUPANT of the White House when he
was q candidate for the presidency
which evidently he has since forgot
ten. Speaking at Pittsburgh on Octo-
Der 10, 1882, Mr.. Roosevelt said:
Taxes are paid in the sweat of
every man who labors because they
Evening star., 1935-07-31

fore it is recommended that, if the
railroads file consolidated return,
they be required to pay a fiat tax of
15A per cent on their entire net
income. OF course, If they do not
file the consolidated return, then they
will be subject to the graduated rates
of 1874 and 14A per cent. 1t will
be noted that the rate required on
the consolidated return Of 15% per
cent is still substantially above the
maximum rate of lax per cent re-
quired to be paid by corporations not
filing consolidated returns. The bill
makes no change in the present law
as to the exercise Of the privilege
of filing consolidated returns.
Sections 103 and 104 Of the bill
provide new rates Of tax on life in
surance companies and on insurance
companies other than life or mutual.
The effect of the proposed amend-
ments is to require these insurance
companies to pay under the graduated
schedule of rates instead Of under
the fat rate of 13% per cent which
is at present applicable to them.
The President suggested that it
might be well to consider imposing
small tax on intercorporate divi-
dends in order to prevent the evasion
Of the graduated tax by means Of a
Net Incomes of Over s50,ooo).
Evening star., 1935-07-31

1881 3S,S89 19,847 7,738 1874
multiplicity of corporations. In view
Of the moderate graduation provided
for in this bill, your committee does
not believe that such q tax is neces-
sary to prevent evasion, but 1t pro-
poses at a later date to consider the
proposition on its merits in connec-
ton with discouraging chains Of hold
ing companies.
Excess Profits Tax.
Section los of title I of the bill
proposes revision of our existing
excess profits tax by substituting grad
uated rates for uniform per cent
rate. This tax was not specifically
mentioned by the President, but your
committee feels that it is In line with
his general policy to tax those with
ability to pay, whether they be indi-
viduals or corporations. Moreover, a
large amount Of revenue may be
equitably obtained from the imposi-
ton Of such tax.
The excess profits tax Is based on
the ratio Of the net income Of the
corporation to the adjusted declared
value of its capital stock as provided
for under section 70l Of the revenue
act of 1884. The graduated rates now
proposed are as follows:
Per cent.
Net incomes not in excess of 8
per cent Of the adjusted de-
clared value -------------No tax
Portion Of net income In excess
of 8 per cent and not in ex-
cess of II per cent OF the
adjusted declared value----- 5
Portion Of net income In excess
Evening star., 1935-07-31

1t is to be kept in mind, of course,
that in addition to the surtax there
Is normal tax of 4 per cent on the
net income Of an individual, in excess
of certain credits. The credits are the
personal exemption, the credit for de-
pendents, earned income credit, credit
for dividends, and credit for interest
exempt from normal tax. The bill
proposes no change in this normal tax.
The total tax increase Is indicated in
the above table by the difference be-
tween the proposed surtax and the
existing surtax For example, an in
dividual with a surtaX net income of
100000 will pay $4,000 more tax
under the proposed rates than under
existing law, while an individual with
a surtax net income Of $1,000, 900 will
pay 100000 more tax.
1t will be noted that in the proposed
schedule Of rates the graduation is
extended to surtax net incomes up to
$5,000,00 whereas under present law
graduation ceases at s1,000,000. This
corrects the defect In this respect
pointed out by the President in his
message.
The number of individuals affected
by the proposed surtax increases is not
large, as may be seen from the fol-
lowing table:
Number Of Individual Returns
Evening star., 1935-07-31

Specific exemption to spouse and near
relatives, $5o;09oc SPECIFIC exemption to
AFTER deduction of specific exemption.
tComputed on upper limit OF bracket;
for example. inheritance tax on Slo'ooo
The property subject to the in
heritance tax Is, in general, the same
as that which is subject to the exist
ing estate taxes. However, dover and
curtesy interests, estates in lieu there
of. or an equivalent amount Of prop
erty elected by the surviving spouse
after death in lieu Of such interests
are not subject to the inheritance tax.
The inheritance tax is imposed with
respect to all property received from
a citizen or resident decedent, except
real property located abroad. If the
beneficiary inheritS the property from
a nonresident decedent, the transfer
is taxable only if the property Is Sit
uated within the United States. The
bill exempts from the tax transfers to
certain charitable or other organiza-
tions, as well as transfers to or for
the use of the United States or the
States for exclusively public purposes.
The value of the beneficial interests
transferred to each beneficiary Is de-
termined as of the date of the dece-
dents death. To prevent any undue
hardship arising from a decline in
value after the date Of death, a spe-
cial deduction is allowed for net
shrinkage, based upon the difference
between the value of assets on the
date of death and one year thereafter
Cor the date of sale or axchange in
the case of assets sold or exchanged
during such periodD.
Your committee has given recogni-
ton to the principle Of consanguinity
by allowing as deduction the follow
ing specific exemptions: Q) $4,000 in
the case Of an inheritance passing to
a surviving spouse, child dncluding
child legally adopted before it at
tanned the age Of 2D, father, mother,
brother or sister Cncluding a brother
or sister of the half-blooO, grand
child, grandfather or grandmother;
and (2) $4,000 in the case Of an in
heritance passing to any other person.
In determining the net value Of the
beneficial interests, certain deductions
are allowed for funeral expenses. ad-
ministration expenses, etc. In general,
these deductions are the same as those
allowed for the purpose of the Federal
estate taxes. However, amounts
actually paid on account Of estate,
succession, legacy or inheritance taxes
imposed by any State, Territory OF the
District of Columbia are also allowed
as q deduction as well as amounts paid
for Federal estate taxes.
The statute provides special rules
for taxation of interests which are
subject to . contingency. The com.
missioner, with the approval Of the
secretary. Is authorized to compromise
a tax which cannot be determined be-
cause Of Q contingency. II conn
promise Is not made and . bond tc
Evening star., 1935-07-31
STRIKE ON MEAT
PRICES BROADENS
Mayor of Detroit Suburb Backs
Housewives in Boycott to
Gain Lower Rates.
BY the Associated Press.

By the Associated Press.
DETROIT, July 31-The house
wives strike against meat prices,
which started week ago amidst tur-
bulent street scenes in Hamtramck,
spread yesterday to Highland Park.
At the busiest intersection in the
suburbs, committee of women set
up headquarters to launch a boycott
on meat purchases with the active ap-
proval of Mayor Jasper M. Howard,
a meat market proprietor, and Police
Chief Charles H. Barker.
The mayor was the first 10 sign a
pledge to support the boycott. He de-
clared that the campaign was serving
a good purpose, and that he could
not sell pork chops and other cuts of
meat in quantity until the prices were
reduced.
Spokesmen for meat packers In De-
troit interviewed by housewives COM
mittee from the week-old meat strike
sector in Hamtramck have blamed
the status of prices on the A. A. A.
processing taxes.
In the suburb Of Lincoln Park an
other meat boycott was under way.
However, the meat price campaigns in
Highland and Lincoln Parks differ
from the campaign in Hamtramck in
that there is no disorder and no
picketing of meat shops.
Evening star., 1935-07-31

Your committee believes that the
proposed excess profits tax at the
moderate rates suggested will in each
full year Of operation under improv-
ing business conditions bring in about
100000, 900 Of additional revenue.
Effective Date Of Amendments
in Title 1.
Section 106 of title l Of the bill sets
forth the taxable years which will
first be affected by all the amend
ments made in this title.
The increased surtax will apply only
to taxable years beginning after De-
cember 81, 1885. In other words the
increase in tax is entirely prospective
and no 1885 income will be subject to
the increased rates.
In the case Of the graduated cor
poratoin tax, a similar policy is pur-
sued and no 1885 income will be SUBJ
ject to tax at the new rates.
In the case of the excess profits tax,
this will apply to income-tax taxable
years ending after June 80, 1886.
The great majority of corporations file
on the calendar-year basis, and in this
case they will pay the new graduated
excess-profits tax only on their cal
endar-year 1886 profits. In the case
of fiscal years ending on or after July
81, 1886, and on or before November
80, 1886, it is possible that the new
rates will apply to that portion of the
1885 income accruing after July 81.
Inheritance Tax.
Title of the bill provides for an
inheritance tax in addition to existing
Federal estate taxes. The inheritance
tax is imposed upon the net value Of
the beneficial interests transferred by
reason Of the death Of a decedent
dying after the bill is enacted into
law to each beneficiary at the rates
shown in the following table:
Inherita nee Tar Rates and AmountS
Evening star., 1935-07-31

Under present conditions less than
100000 returns are filed annually by
individuals, Of which less than 2,000,-
900 are taxable returns. 1t can be
seen from the table last submitted that
we now have only about 5000 returns
annually showing net income in excess
of $4,000. Thus, the proposed surtax
increases will affect only two-tenths
of per cent of the number of returns
filed, and four -tenths of per cent Of
the number of taxable returns filed.
1t should be noted that the larger in
creases in surtax occur in the case of
surtax net incomes in excess of 81 ,000,-
600. In 1888 there were only 46 indi-
viduals with net incomes in excess of
the last-named amount. Since there
was only one individual In 1888 who
had a net income in excess of $5,000,-
600, it did not appear necessary to
your committee to graduate the tax
beyond the So, 1000, 900 point.
An income of $4,000 per annum. if
from investments at 5 per cent, repre-
sents a capital of $1,000,000. Your
committee is of the opinion that the
surtax rates proposed, starting at
$50,0O0 and graduated to 00,o0o.
carry out the general policy expressed
In the Presidents message.
Graduated Income Tax ON
Corporations.
The President recommended the
substitution of graduated income tax
on corporations in lieu Of the present
income tax imposed at uniform rate.
This Is new principle which has
never been used In this country, and
Evening star., 1935-07-31
RATES EXPLAINED
BY COMMITTEE
Democratic Members Give
Their Version of Effect
of New lmposts.

The majority report OF the House
WAYS and Means Committee on the
tax bill, submitted to the House yes
terday, was made public this morn
ing.
After quoting the Presidents tax
message the report is as follows:
The bill as reported consists Of four
titles. Title contains certain amend
ments to the revenue act of 1884 and
provides for higher surtaxes on surtax
net incomes in excess Of $50 900; for
q graduated income tax on corpora
tions in lieu of the present uniform
rate: and for a graduated excess
profits tax on corporations in lieu
of the present excess-proflts tax OF
per cent Title II proposed an in
heritance tax, in addition to the
existing estate taxes. Title III pro-
poses a gift tax on donees in addi-
ton to the existing gift tax on donors.
Title w contains certain general pro-
visions. 1t is hoped that the enact
ment of these titles into law will REM
edy some of the defects of our present
tax system, will provide substantial
revenue, and will carry out the major
policies recommended by the Presi-
dent in his message. 1t Is believed
that in full year of operation, under
present improving business conditions,
the annual additional revenue which
will be secured from the enactment
of the bill will be as follows:
Source of revenue and estimated
Evening star., 1935-07-31

of II per cent and not in ex-
cess of 16 per cent Of the
adjusted declared Value 10
Portion Of net income In excess
of 16 per cent and not in ex-
cess of Is per cent of the
adjusted declared Value is
Portion of net income in excess
of rs per cent Of the adjusted
declared value ---- 20
The adjusted declared value Of the
capital stock of a corporation has
already been provided for under the
revenue act of 1884. In the first in
stance, the corporation was permitted
to declare any value for its stock
which It saw fit. Having declared
such q value on its capital stock,
the value may be increased or dimin-
ished only on account of bona flde
additions to or subtractions from its
capital. The present combination
capital stock and excess profits tax
was first imposed by the national in
dustrial recovery act Of 1888. The
taxes were reimposed by the revenue
act of 1884 and new declared value
allowed. Your committee does not
provide in this bill for another origi-
nal declared value. being of the opin-
ion that since the corporations have
already had two opportunities to set
q proper value on their capital stock
1t would be unnecessary from an
equitable standpoint to provide an
other original declaration.
The excess profits tax is sound
tax and 1t is believed that in future
years it will be productive Of very
considerable revenue. The excess
profits and war profits taxes imposed
during the war period were similar in
character and produced the following
revenues in addition TO the normal
Evening star., 1935-07-31

Alcohol Used as Fuel.
Use of alcohol as motor fuel Is de-
clared to be a success III Germany.
Evening star., 1935-07-31
Proposed Present Proposed Pres
bracket rate total sur total


$4,000 S11 $50, Sl48o.
Evening star., 1935-07-31
Calendar year.

Total number of returns with
1851 $3.50 1s847 773s 1874