Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-08-03
Furnishing Bigness.

In his tax message the President pro-
posed a sliding scale OF taxation on
corporation incomes beginning at ten
and three quarters and reaching
maximum of sixteen and three-quartefS
per cent. The President would substitute
that principle for the current practice
of taxing such incomes at the fiat rate
of thirteen and three-quarters per cent.
The House bill modified the proposal TO
the extent of grading the tax between
thirteen and a quarter and fourteenano
a half per cent. Some corporations Will
pay more, some less, the net gain IN
revenue being estimated at about
sl500o,00o.
The principle, rather than the rate
If such taxation has been attacked for
this reason: 1t is a punitive tax on
bigness and it is inequitable in its erect
For instance, corporation with many
hundreds of millions Of dollars invested
may earn several million dollars, repre-
senting a return on investment OF two
or three per cent. A corporation with
a much smaller capital investment might
earn several thousand dollars, represent
ing a return on investment OF twenty
five or thirty per cent. But the large
corporation would be taxed at hlgher
rate than the small corporation. though
the individual stockholders in the large
corporation may include more persons
of small means than those in small
corporations. And they would pay, in
directly, higher taxes on the returns
from their investment.
In debate on the tax bill yesterday
Representative Hill, ranking majority
member of the Ways and Means Com
rittee, sought to draw a parallel be-
tween the graded tax on corporation IN
comes and the graded tax on individual
incomes, making the point that both are
based on ability to pay. The comparison
is not convincing, because of the mani
fest inequity of the graded corporation
tax principle pointed out above.
But Mr. Hill made his main defense
of the sliding corporation tax principle
on ground utterly unrelated to the i'm
position of taxation in order to raise
Federal revenue. There is the further
consideration, which has not been recog-
nized by those opposing the graduated
corporation income tax, namely, that
the bigger the corporation, the more
economic power it has, the greater its
advantages as an economic unit, as a
business agency, the greater influence
it has in controlling competition or
sitting competition and in promoting
monopoly the greater power it has in
influencing political action"
There you have the candid statement
OF reasons for introducing principle
of taxation hitherto regarded as in
equitable, and the reason is to punish
bigness. OF course, there are many
advantages in bigness which Mr.. Hill
= does not mention as offsetting factors.
The larger corporations are the greatest
employers of labor. They have made
possible most of the industrial develop
ment, the comforts and conveniences of
modern civilization. When they abuse
their power there are effective methods
of curbing them and Furnishing them.
The antitrust laws were designed to
prevent some of the abuses of bigness.
But to inject an inequitable principle
of taxation into revenue measure to
punish bigness in the abstract is an
other thing entirely. The effect of the
House rates may not be injurious. The
effect Of giving recognition to the prin-
ciple represented in those rates is
dangerous.