Evening star., 1936-04-22
Taxes
Continued From First Page.)


when it comes into full operation.
In that respect, the report said the
bill meets the Presidents request fol
permanent taxes to finance the new
farm program and the additional cost
of prepayment of the bonus.
But the report showed that instead
of producing S517,000,000 temporarily
over the next three years as requested
by Mr.. Roosevelt. it would bring ir
only s183,OO0,0O0 in the 1887 fiscal
year.
The committee said this would take
care of the Presidents request until
next session of Congress, which can
then act more intelligently in the light
of conditions then existing"
The program contemplates obtain
ing Sl00000,000 from "windfall" tax
on professors who avoided payment
of A. A. A. processing levies and S83.-
100000 from temporary retention uf
capital stock in excess profits taxes.
In defense of the proposed new cor
poration tax plan, at which the COM
mittee Republicans had leveled their
bitterest criticism, the majority report
said:
1T is well recognized that the cor
porate form of doing business enjoys
certain advantages over individual
and partnership businesses The ex-
isting law creates purely artificial ad-
ditiOpal aSvaptoUes II, coy,oo cosec opd
artificial disadvantages in others. de-
pending upon the size of the enter
prise and character of ownership.
Role of Corporations.
individuals and partnerships can
not minimize their taxes by failure to
distribute their business earnings.
Corporations should not be permitted
to withhold from the beneficial share
holders unneeded corporate income at
the expense of the revenues of the
United States and to the detriment
of the shareholder.
The bill proposes to remove many
of these inequities by relieving from
tax corporations which distribute all
their net earnings annually as earned
and by taxing corporations accumulat-
ing their net income at rate to COM
pensate to a large extent for the
amount of tax on shareholders in
come lost by reason of failure to make
complete distribution"
The ma jority report said that in the
opinion of the committee the new
corporate tax would not prevent re-
tention of earnings sufficient for legit-
innate corporate needs, but would dis
courage accumulation for which there
is no sound reason.
A small corporation, the report said,
could accumulate about 40 per cent
of its net income without paying a
greater tax than under existing law,
and a large corporation about 80 per
cent.
The most important change in the
new plan in respect to individuals,
the report said is that dividends re-
ceived by stockholders will be sub
jected to the normal income tax OF
per cent. Dividends now are sub
ject only to income surtaxes.
The minority members argued the
plan should arouse suspicion" be-
cause, they said. it is in line with Rex
ford G. Tugwell's ideas for forcing
the distribution of corporate sur
pluses.
Bill Called Farce.
The Republicans labeled the 249-
page bill as vicious" Oppressive"
and a farce" in the minority re-
port.
The minority report said that:
"Our basis of opposition is two-fold.
81. We do not favor the imposition
of any new taxes until the waste OF
public monies is stopped.
"2. The proposed bill is unsound In
principle, will undermine business sta
bility and is another step toward the
regimentation of all business. It Is
not designed to raised revenue, but is
admittedly another New Deal expert
ment."
The 25-page report said that the
Republicans recognize vital neces-
sity of putting the Government on a
pay-as-you-go basis. but do not con-
cede the bill to be serious attempt
toward that end.
GAS a face-saving, penitent gesture
at budget balancing" the report said,
"the bill is as much farce as was the
Presidents so-called share-the-wealth
measure of last session"
Anxious, nevertheless, to dispose Of
one of the two major barriers to ad-
journment, House leaders planned to
take the bill to the floor tomorrow,
rush it through general debate by next
Thursday and pass it by the following
Friday.
indicative of the fight awaiting the
appearance of the bill on the floor was
the fact that the Ways and Means
Committee failed to hold all its
Democrats in line in approving the
measure.
The 15-to-8 committee vote aligned
the seven Republicans solidly against
the legislation along with Represent
ative Lamneck, Democrat, of Ohio,
who went on record by proxy. Two
Democrats. Representatives McCor-
mack of Massachusetts, and Lewis Of
Maryland, were absent.
The heart of the bill is new system
of corporation taxing. Rates gradu-
ated according to proportions Of cor.
porate income withheld from distribu-
ton to stockholders would be applied
against corporation earnings.