Evening star., 1936-04-30

Continued From First Page)
incomes for the calendar year 1886
will be collected in the main during
the calendar year 1887 and will be
divided between the two fiscal years.
the fiscal year 1887, ending June 80,
1887. and the fiscal year 1888.
The net additional revenue to be
expected from the application of the
corporate income tax is estimated to
be s310.000,000 in the fiscal year 1887.
The full additional annual revenue
would be collected in the fiscal year
1888"
Morgenthau was accompanied by a
half-dozen aides. Among these were
Herman Oliphant Treasury general
counsel; Guy T. Helvering commits
sioner of internal revenue and George
c. Haas, director of research.
Helvering Explains Bill.
After Morgenthau concluded, Hell
vering was called and read a prepared
statement explaining the bill in more
detail.
He said the new proposal for taxing
corporations would place the burden
OF taxation primarily on those who
are now able to avoid their just share
Of the burden Of income taxation by
holding income e-producing property in
the corporate form. and by having
their corporations retain very large
proportions of these earnings, subject
only to the ordinary corporation in
come tax"
Helvering estimated that if all cor
porate earnings for 1886 were distrib-
uted, the income of individuals would
be increased by more than four and
a half billions, of which about four
billions would be taxable. OF this,
SLAB, 100000 would go to individuals
whose effective surtax liability on the
additional income would be less than
Is per cent, the present corporation
tax level. and S2,567 900, 900 would go
to those whose Surtaxes would be
higher.
1T is estimated" he explained
further, that more than II per cent
of the increase in taxable income
would be received by individuals with
net incomes of more than $25, 1000
year, and that about As per cent would
be received by individuals with net in
comes in excess of 100000 year"
Helvering said the effect of the new
tax plan would be Ito lower taxes for
a great many, perhaps the great ma
jority, of our corporations, and to
lower them also for very large pro-
portion of corporation stockholders"
Tax Avoidance Claimed.
Without referring specifically to
plans of some Senators-notably La
Toilette, progressive. of Wisconsin and
King. Democrat, of Utah-to propose
q general boost in individual income
taxes. Morgenthau said:
What are the dimensions of tax
avoidance with which we are dealing?
A few simple figures tell the story. 1t
has been estimated by the Treasury
Department that under the present
tax law the income tax liability of
corporations on the basis of 1895 earn
ings would approximate 1854 900 600.
The department has also estimated
that under the present law more than
four and one-half billion dollars of
corporation income in the calendar
year 1896 will be withheld from stock
holders and that if this income were
fully distributed to the individual own
ers OF the stock represented in these
corporations the resultant yield in |
additional individual income taxes
would be about one billion three hun
dred millions.
Wants Leak Stopped.
with tax avoidance occurring on
the scale indicated by the figures
have cited, I do not see how any
increase in individual income tax rates
ton could be justified until this leak
in our tax system is stopped.
whatever may be the debatable
considerations that may enter into
the preparation of particular sched-
ules, it will be well to bear in mind |
at all times that this is purely and
simply proposal to put all taxes on
business profits essentially on the
same equitable basis; to give no ad-
Fdutd6C dAO W lulpUSC IlU pcIldltlcS |
upon corporation stockholders that are
not given to and imposed upon the in
dividual taxpayer who alone or as a
partner derives his income from busi-
ness profits"
Morgenthau began by saying that as
Secretary of the Treasury he felt "a
special responsibility to do all in my |
power to maintain the integrity of the |
Presidents budget of January 3. 1896, |
and therefore. to urge that the sup
Elemental revenues made necessary by |
the developments of the past few
months be provided"
"The Treasury" he added. "has
been able to borrow readily the
amounts necessary to finance the re-
covery program and has been able to
obtain these loans at steadily decreas-
ing interest rates. The continuance Of
this satisfactory situation. however,
4