Evening star., 1936-03-22
CORPORATION TAX
MAY Be EXTENDED
TO NET INCOMES
Levy Would Be Fixed on
Basis of Earnings Kept
Out of Dividends.
HEARINGS ON MEASURE
ARE SET FOR MARCH 80
Tentative Agreement on Program
Reached at Conference
of Leaders.
BACKGROUND

bAJhUhOUND-
Enactment OF nep farm program
and legislation tor June payment
OF soldiers bonus brought request
from President Roosevelt for ne1D
tar bill. Proposal ,oas TOR leUy on
nndistributed corporate profits to
take place of present tdres on cor
pordte income, eIcess profits and
capital stock. Yearly yield sought
is $620, 900 900.
President also suggested three
year total of $4,000, 900 through
processing and ,DindtdH tdres.
By the Associated Press.
Tentative agreement upon a plar
to tax the ent'-e net income of cor
porations upon the basis of earnings
withheld from dividends last night
paved the way for starting open hear
ings March 80 on new tax legisla-
tion.
The new proposal, designed to avoid
tax on taxes" was regarded as o
sharp departure mecha 'cally from
President Roosevelt's original proposal
but as capable of carrying out his aims
to force more c. porate funds into cir
culation as well as raising $500, 900 ,00(
annually in additional revenue.
1t also contemplates. through q
graduated rate based upon the size
of corporate earnings, helping small
business build up depression reserves
while at the same time enabling large
corporations to maintain what were
described as adequate" surpluses fol
hard times.
The schedule was worked out Fri.
day night at a conference of Guy T
Helvering. commissioner of interna
revenue: Chairman Doughton, Demo
crat, of North Carolina OF the HOUSE
Ways and Means Committee, and Rep
resentative Vinson, Democrat, of Ken
tucky. 9 committee member.
VinSon Finds Joker"
Vinson, who discovered what he
called q Joker" in the tax on taxes
feature of original schedules, said the
new plan had the Treasury's approval
Tentative agreement upon it also was
reached at q meeting yesterday of the
Ways and Means Taxation Subcom-
mittee headed by Representative Sam
uel B. Hill, Democrat, of Washington
Under proposals hitherto under con-
sideration, existing corporate taxes
would have been replaced by levies
imposed only upon earnings not dis
tributed to stockholders in dividends.
That was the form OF tax suggested in
President Roosevelt's message.
Vinson. however, discovered recent
ly that this would have forced pay
ment of taxes not only upon the un-
divided income, but also on profits
withheld from disbursement to stock
holders to pay such taxes.
The new proposal would substitute
for the present corporate income tax,
averaging 1854 per cent, new taxes on
statutory net income, but graduated
according to the amount of such in
come withheld from dividends as cor
porate reserves.
Few Have $4,000 Net Income.
Hill and Vinson explained that out
Of $4,000 corporations paying Fed
eral taxes, 214,000 have statutory net
income of $4,000 or less.
I'VE have a tentative schedule for
those with net income of $4,000 or
under, based on their withholding 10
20, 80, 40, so, so and 70 per cent OF
net income in reserves" they said.
For a corporation in this class
holding back 80 per cent of its net in
come for reserves, which has beer
about the average for Is years, the rate
would be ia per cent on the total net
income, as against 20 per cent oil
total net income under our old tenta.
tive schedule.
"A corporation Gn the SIC, 900 class
could put almost SO per cent of the
(See TAXES, Page A-14.)