Evening star., 1936-04-12
Move to Block
One Avenue
of Escape.
DELAY in DRAFT
SEEN BY HILL
i. S. Chamber Cites
Upper House
Changes.
BACKGROUND

tng Supreme Court tor creating
necessity of raising nep funds for
farm benefits, President Roosevelt
in February requested enactment
OF neU tar legislation.
Proposal tUaS for heavy tar on
undiStributed profits of corporations
NTH companion prouiSion bring
ing individual income from dipi-
dendS under normal income tar
liability. At same time, eTceSS
profits, capital stock and corporate
income leuieS Mould be repealed.
After hearings on modified draft,
House committee is now draw-
ing BILL
Ey the Associated Press.
While predictions were made
by business SpokeSmen that the
$799,000,000 tax program would
be substantially changed in the
Senate, House tax experts con-
centrated yesterday on stopping
what they termed the biggest
revenue leaks in the plan.
Proceeding cautiously, since
they conceded matter of con-
stitutionality might be involved,
Democrats on the House Ways
and Means Tax Subcommittee
agreed to tax certain kinds of
corporation dividends paid in the
form of stock rather than in
cash, a move calculated to block
one potential avenue of escape
Coincidentally. the Chamber of
Commerce of the United States, the
most vigorous critic of the revenue
plan at hearings before the full Ways
and Means Committee, asserted there
was evidence in the Senate Of grow
ing sentiment against the expert
mental plan. largely because of doubts
as to its yield"
In its weekly Washington review
the chamber said it was believed
that an increasing number of Sena-
tors favor retention of the present
corporate tax system, supplemented
by moderate tax on undistributed
corporate earnings"
A proposal along that line by Rep
resentative Lewis, Democrat, of Mary
land was beaten down in the House
committee.
Hill Sees Long Delay.
Fresh "puzzlers" that have cropped
up before the Tax Subcommittee led
Chairman Hill to predict that it would
be lucky if tax bill reached the
House floor before April 81. Speaker
Byrns said it looks like week from
Wednesday,"
Studying the income tax amend
ment to the Constitution and Su-
preme Court ruling that stock divi-
dends are not income and hence not
taxable, the subcommittee agreed that
stock dividends which altered the in
terest of stockholder in a corpora
tion would not fall within the scope
of the court decision.
What the yield would be from in
come taxes on such dividends was
uncertain. Hill said, however, well
catch lot if they (the corporations)
don't change their methods"
Hill said the Democratic members
also agreed that taxes could be as
sessed when corporation offers a
stockholder:
1. A choice Of a dividend in cash |
or stock.
2. Obligations such as bonds, or |
promises to pay, instead of cash.
3. Dividends in kind, such as prop |
erty, or products of the corporation.
Formula Not Necessary.
Then, to simplify the job of the
taxpayers, the subcommitte decided |
to round out the tax schedules so
corporations would not have to use
An "algebraic formula" to find out |
how much money must be paid the
Government.
Hill said no decision had been |
reached on puzzling question of how
to prevent tax avoidance by pyramid
ing corporations, with one corpora
tion declaring all its earnings in divi-
dends to a parent firm, and the parent |
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