Evening star., 1935-08-13
Committee Turns Out Draft
Conforming Generally to
RooseveIt's Suggestions.
$780, ,000,0 900 IS SLASHED
FROM ESTIMATED YIELD
Increase Provided in Surtax Rate
on Adjusted Net Income of Per-
sonal Holding Companies.
BY JOHN c. HENRY.

legislation at this session of Congress
were brighter today as the Senate
made ready to take Up for considera-
ton the much-revised Finance Com
mittee draft of the measure already
approved. by the House.
Slashing more than 5000. 100000 in
estimated yield from the bill as they
had rewritten it last week, the Sen
ate committee yesterday reversed it.
self on several major provisions and
finally turned out a bill in reasonable
conformance to the recommendations
of President Roosevelt on June 19.
AS it now stands the measure Is
calculated to raise about $3.50, 100000
additional revenue. figure close to
that of the House bill, although i'm
portant differences exist between the
two measures.
Most striking of these differences
is the absence of an inheritance tax
section from the Senate bill and the
addition of increased estate taxes
wider graduation of corporation in
come taxes. increase of the capital
stock tax, addition of tax on inter-
corporate dividends and the addition
Of new section increasing the sur
tax rate on the adjusted net income
of personal holding companies.
Rate Is 20 to so Per Cent.
The existence of this latter provi-
sion was not made known last night,
but was discovered with the release o.
the newly printed bill today. BY its
terms section 351 of the revenue act
of 1884 is amended to increase the
surtax rate on the undistributed ad-
justed net income of every personal
holding company.
The new rate is placed at 40 per
cent of the amount not in excess OF
1000, 80 per cent of the amount not
in excess Of 100000, 40 per cent from
there to S500.000, so per cent from
there to 81 900 900 and so per cent o.
such income above sl,000,000.
The present law imposes two rates
only, those being 80 per cent of the
amount not in excess of 100000 and
40 per cent on all over that figure.
The revision would lower the rate
on the bracket below $4,000, but would
substantially increase the levy on all
above 100000 reaching a point where
the tax is double the present rate
above s1,000,000.
Although no estimate of the prob
able yield Of this change could be
gained this morning, it was said the
principal effect would be punitive
rather than revenue-raising In other
words, the formation of personal hold
ing companies solely for the purpose
OF piling up income without paying
excessive Surtax rates will be dis
couraged
La Toilette Schedule Scrapped.
Principal action of the Senate
committee yesterday. however, was
that Of Scrapping the So-called La
Toilette schedule Of lower normal in
come tax exemptions and increased
rates in the lower surtax brackets
These provisions, written into the bin
last week at the insistence of the Wis
consin Progressive, would have broad
ened the base of the tax structure
sufficiently to bring in about 10000
more income taxpayers and an esti-
mated added revenue of 1920. 10000
from this section alone. A storm of
political protest arose, however, and
presumably led to the change yester-
day.
Although skeleton report in which
the Finance Committee recommends
the bill for passage was filed last night,
the real report of the committee has
not yet been completed. Tax con-
sultants of the committee are prepar-
ing this today in the hope of submit
ting it to the Senate either late this
afternoon or tomorrow morning.
Consideration Of the legislation in
the Senate is expected to begin to-
morrow Senator Harrison, Democrat,
Of Mississippi. chairman of the FL
nance Committee, already has an
nounced the possibility of holding
some night sessions in an effort to
expedite passage of the measure in the
Senate.
Tax on High Bracket Boosted.
In its much-rewritten form the bill
now contains the following major
provisions:
% An increase in surtax rates for
all net income above S1,000,000 per
year. Between $l,O00,000 and $780,
600 the new rate would be go per
cent. The graduation then increases
to a point where a levy of rs per
cent is placed against incomes over
100000
Under the present law such gradu-
alton ceases at the 81 100000 bracket
(See TAX, Page So