Evening star., 1936-03-03
Taxes.
Continued From First Page.)

was understood the Treasury's pro.
posal was for graduated tax averag.
ing about 1912 per cent.
The President made it plain he ex-
pected the new corporation tax not
only to cover the repealed taxes, but
to raise the s620,00O,000 which he
characterized as permanent levies.
He proposed the windfall tax and
temporary processing taxes to cover
the $517000,000 which the Govern
ment lost in this years processing
taxes. The first would seek to regain
unpaid processing taxes from bene-
flciaries unfairly enriched by the re-
turn or non-payment" of the levies.
The second was that IAN excise on the
processing of certain agricultural
products"
The President in his message, and
Treasury experts in unofficial ampli-
flcation of the program, took the view
that the proposals would eliminate the
greatest leak" in the present tax
structure, would establish equality in
taxation between recipients of busi-
ness profits from corporate and nom
corporate sources. simplify the tax
system for the taxpayers as we'll as the
Government, and eliminate taxes en-
tirely on corporations which distrib-
uted all their income.
The present law, Treasury experts
advised the President, make 1t difficult
for small business to be incorporated
because of the corporation taxes in
addition to personal income taxes paid
by owners.
Exemption Repeal Urged.
AS part of the tax reform, the
President also proposed that the pres.
ent exemption of dividends from the
normal tax on individual incomes be
repealed.
This point reflected the theory Of
the new tax plan - that instead OF
taxing corporation profits, the revenue
should be raised by taxing these
profits as they are reflected in in
dividual income tax returns from
those who get the profit.
The President, in explaining his
proposals to Congress, said:
Extended study of methods of inn
proving present taxes on income from
business warrants the consideration of
changes to provide fairer distribu-
tion OF the tax load among all the
beneficial owners of business profits,
whether derived from unincorporated
enterprises or from incorporated busi-
aud rf,h ofhnr fr;h fal ~ he
real owners as earned or withheld from
them. The existing difference between
corporate taxes and those imposed on
owners of unincorporated businesses
renders incorporation of small busi-
nesses difficult or impossible.
THE accumulation of surplus in
corporations controlled by taxpayers
with large incomes is encouraged by
the present freedom of undistributed
corporate income from surtaxes. Since
stockholders are the beneficial owners
of both distributed and undistributed
corporate income, the aim, as mat
ter of fundamental equity, should be
to seek equality of tax burdens on all
corporate income, whether distributed
or withheld from the beneficial owners.
Stockholders Suffer Now.
Gas the law now stands, our cor
porate taxes dip too deeply into the
shares of corporate earnings going to
stockholders who need the disburse-
ment of dividends; while the shares
of stockholders who can afford to
leave earnings undistributed escape
current surtaxes altogether"
Explaining this proposition, tax ex-
perts said that a man holding 60 per
cent of the stock of corporation has
in the past frequently left the profits
in the corporation in the form of sur
plus rather than dividing them and
thus subjecting them to taxation.
While the big stockholder did not
need this money, experts said, the
other and smaller stockholders might
have needed it badly. If the new tax
would force the distribution Of such
surplus income, it would not only in
crease revenues. they said, but would
provide new purchasing power for
the smaller stockholders.