Evening star., 1936-04-30


in the Presidents budget message, we
shall need to provide additional con-
tinuing revenue of $500. 900 900 an
nually to meet these expenditures.
We shall also have to find means of
recouping approximately s517 900, 900
of revenue sacrificed in the current
fiscal year because of the invalidation
Of the agricultural adjustment act.
Suggests Three Sources.
The President in outlining these
needs suggested three sources of
revenue which could be made avail
able for the purpose. One of these
suggestions was for processing taxes
on agricultural products, at lower
rates and distributed over a broader
base than the similar taxes under the
agricultural adjustment act. Another
was for special form Of income tax,
described as "windfall' tax, on the
unjust enrichment accruing to some
suit of their escape from the payment
Of processing taxes. The amount of
the processing taxes due prior to jan
uary which had thus escaped was
approximately s237, 7,00o, 900.
The third suggestion, and the one
Of major importance, was for a re-
vision Of our system of corporation
taxes. 1t was proposed by the Presi-
dent that the three existing forms
of corporate taxes be repealed. These
include the capital stock tax, the ex-
cess profits tax and the corporation
income tax. The President proposed
that there be substituted for these
taxes tax upon that portion of
corporation income which is not cur
rently distributed to stockholders in
dividends and that at the same time
the present exemption from the normal
income tax of per cent of dividends
received by individuals from corpora
tions be repealed
House Passes Measure.
The status of the Presidents pro-
posals today is that the House has
passed a bill to give effect to two Of
them. The House bill Is estimated by
the Treasury to yield additional
revenue as follows:
(a) Net continuing revenue Of $685.
100000 yearly from tax on corporate
earnings, and (b) net temporary
revenue of sl80,0O0,000 from an un-
just enrichment tax and temporary
extension of the capital stock tax,
divided as follows: From the unjust
enrichment tax, 100000, 900; from
the extension of the capital stock tax
for one year at one-half of the present
rate, $80,000,000.
The bill thus fully provides the
$500, 900, 600 needed to take care of
the permanent agricultural program
and the annual financing of the pay
ment of the soldiers bonus. 1t also
provides for the first year of three
year program for recouping the loss
of $517 ,000,0 900 of processing taxes lost
during the fiscal year 1896. However,
1t does not provide any temporary
revenues for the two succeeding years
to make up the balance of $337, ,000,-
600 of temporary revenues desired.
The estimated yield of 1928 200, 900
from the tax on corporate earnings is
the amount of additional revenue to
be derived from the application of the
rates and schedules in the House bill
to corporate income for the present
canendar year 1886. 1t must be rec
ognized that the choice of an income
tax as the means for raising addition
al revenue necessarily involves a delay
in realization of increased receipts.
Receipts from taxes on corporate in
comes for the calendar year 1886 will
be collected in the main during the
calendar year 1887 and will be di-
vided between the two fiscal years,
the fiscal year 1887, ending June 80,
1887, and the fiscal year 1898. The
net additional revenue to be expected
from the application of the corporate
income tax is estimated to be $780,
100000 in the fiscal year 1887. The
full additional annual revenue would
be collected in the fiscal year 1898.
Follows Roosevelt Suggestion.
The House bill follows the Presi-
dents suggestions in providing for the
repeal Of the corporation income tax,
the capital stock tax and the excess
profits tax and by making dividends
received by individuals subject to the
normal tax Of per cent. In place
Of the repealed taxes 1t substitutes q
new form of tax on corporation income
with rates based on the percentage re-
tanned by the corporation. The esti-
mated annual yield Of s623, 1000, 900 is
the amount by which It is expected
taxes paid by corporations and indi-
viduals under the proposed plan will
exceed the yield Of corporate sand indi-
vidual taxes under the present law.
It Is to be noted that the bill as
passed by the House Of Representatives,
while failing, according, to- our ses-
ttmatek to raise tempoceryS revenues