Evening star., 1936-05-14
HARRISON REPORTS
PROGRESS ON TAX
MEASURE CHANGE
Flat Levies on Corporate
Incomes May Be Included
in Revised Bill.
MORGENTHAU GIVES
ADDITIONAL TESTIMONY
Treasury Schedules Disclose Man
ner in Which Big Corpora
tions Would Be Affected.
BACKGROUND

To the diSpleaSure OF members OF
Congress tOho DiSh for an early re-
cess, so they can go home and cam
pdtgn for reelection, the tar bill
goes on and on. President RooSe-
Uelt asked for it March 3 as means
of paying the bonus and of honor
ing crop control contracts to farm
erS cooperating in the outlawed A.
A. A. The House Uithin sir weeks
passed a bill conforming to the
White House tUiSheS, but the Sen
ate Finance Committee has shoUr
no disposition to rush. The Pres
ident meanwhile has informed Con-
gress to raise the $500 900, 900 he
wistes as it sees fit, as long as the
money is raised.
BY the Associated Press.
The Senate Finance Committee. ap-
parently bent on wide revision of the
House tax bill, today received Treasury
schedules through which $623, 600. 900
could be raised by imposing fiat tax
on corporate income, with graduated
levy superimposed on the basis of un-
distributed profits.
Chairman Harrison, after two-hour
closed session in which Secretary Nor
genthau again was questioned, told re-
porters:
I'VE are getting to the place where
the committee can pass on matters Of
policy"
Harrison has suggested a plan by
which corporations would be taxed IS
per cent on net income, with gradu-
ated rates ranging up to As per cent
on income, in excess Of 80 per cent Of
the total, withheld from distribution
to stockholders.
Declines to Quote Experts.
He declined to say whether Treasury
experts had said his particular
formula would raise the s623, ,0oo,o 900
of additional permanent revenue.
"I am interested" he said, "in get
ting the money through process like
that and we found out We could
The bill as passed by the House
provided merely for a graduated tax
on corporations, based on percentages
of income withheld from distribution.
The top rate would be 42l2 per cent.
Harrison disclosed that additional
figures had been received from the
Treasury on the manner in which
big corporations would be affected by
the revenue bill as it now stands. One
set of statistics, he said. showed that
rs corporations with net income Of
81 ,000, 900 or more in 1884, which paid
taxes of S27000,000, would have paid
$96,000,000 under the House tax plan.
The chairman added that SO mil
lion-dollar" corporations which dis
tributed less than As per cent of their
earnings and actually paid S35, 1000. 900
in taxes would have paid $4,000, 900
under the House corporate tax pro-
vision
Morgenthau Gave Figures.
Yesterday. Morgenthau submitted
figures to the committee which Sen
ator Byrd, Democrat, of Virginia, said
supported his contention that big
firms would be benefited and small
corporations affected adversely by the
new tax bill.
They showed that out of 600 million
dollar corporations 283 would have
paid at least so per cent less in taxes
and 1873 would have paid none at all
Harrison said, too, that more data
had been requested from the Treas
ury on how certain stockholders ir
large corporations would be affected
by the House tax bill, with compari-
sons as to tax payments under the
existing tax system and the House
plan.
James M. lands, chairman Of the
Securities Commission, testified to the
committee about the cost and time re-
quired for the issuance Of new Sc
curitieS by corporations.
His testimony was in connection
with the administration contention
that small companies under the un-
distributed profits tax could distribute
their earnings, thus escaping taxes
and provide new capital through sale
Of stock.
Critics of this plan contended il
would be too costly for small com.
panies because of the restrictions i'm
posed by the Securities Commission
Senator Couzens, Republican, OF
Michigan said in a recent public
hearing that for a small company to
issue 100000 of stock the cost in
preparing data for the commission
would be $4,000.
Lands told the committee today the
average cost. of issuing stock was
about per cent of the face value Of
the issue, but that 1t averaged IL per
cent for small issues and 0.6 per cent
for large. On that basis. for small
company to issue 100000 of new
stock, he said the cost would be about
/ e1 Tn0