Evening star., 1936-05-15
Face Stiff Battle in Move
for Compromise-DiScard
of Measure Predicted.
DOZEN NEW PROGRAMS.
BEFORE COMMITTEE
Difficulty Found in Deciding on
0ne-Row May Reach
Senate Floor.
BACKGROUND

mutee mas hedTG concerted dttdcE
upon measure by business interests,
NTH conservative members OF group
swinging away from proposed re-
Uision of corporate tar structure.
Compromise non seems assured,
although long battle may be fought
before legislation finally is ap-
proved.
BY the Associated Press.
Administration leaders in the Sen
ate have abandoned President Roose-
velts suggestion that corporations be
taxed only on their undistributed
profits and are battling now to save
what they term the philosophy of his
revenue program.
The Senate Firance Committee de-
termined today to retain the present
corporate tax structure instead OF
abolishing it as suggested by Mr..
Roosevelt. The Presidents lieutenants
were seeking to add a surtax on un-
distributed profits and were facing q
stiff fight even on this compromise.
One member OF the committee, a
Republican, forecast that the entire
administration plan would be dis
carded but most Democrats said its
essence would be retained in the
form Of a surtax above the present
fiat taxes on net income of corpora
tions.
Many Plans Proposed.
lo1a,, nIonS for raising
the $500 ZOO, 900 of permanent revenue
asked by the President were before
the committee today. They were so
varied that the leaders were having
difficulty rallying a majority around
any one compromise.
Chairman Harrison was still hoping
for a compromise, but conceded the
possibility that the committee might
be unable to agree and have to carry
the fight to the floor of the Senate.
Committee members seemed to
agree on only two things today after
the first executive session in which
the merits of the various proposals
we're discussed They were that a
fiat tax of about Is per cent on all
corporate income probably would be
approved, and that dividends would
be subjected to the normal income tax
rate of per cent.
The Is per cent tax would be SINH
lar to one in existing law, but the
dividend levy would be new de-
parture, and would be in accord with
one of Mr.. Roosevelt's suggestions.
At present dividends are subject to
surtaxes, but not to normal income
taxes.
Major Issue Undecided.
The two virtual agreements left un-
decided the major issue-whether
corporations should also be taxed ac-
cording to how much of their income
they failed to distribute Mr.. Roose-
welt. in urging that they be SO taxed
said many stockholders evade sur
taxes by leaving earnings in corpora
tions instead of taking them out as
dividends.
The tax bill, as it recently passed
the House, would have abolished the
fiat corporate taxes and levied gradu-
ated taxes up to 42l2 per cent on
corporations. depending on how much
of their income they withheld from
dividends. It was designed to raise
$500 ,000,0 more than the present
corporate taxes.
Chairman Harrison offered to the
Senate committee compromise
which Treasury experts estimated
would raise $626.00o, 600. 1t would
impose a fiat tax Of Is per cent on
all corporations. If more than 80 per
cent of profits were undistributed
they would be taxes from 80 to As per
cent. Companies with total income
Of less than $4,000 would be exempt
on the first $1,000 retained.
Harrison also laid before the COM
mittee plan proposed by Mariner s.
Eccles, chairman of the Federal Re-
serve Board, to levy a fiat is per cent
tax, but permit all corporations to re-
tain up to $4,000 without further
taxes. If they withheld more than
tina they would be subjec to stiff sur
taxes ranging from 40 to go per cent
Senator Connally, Democrat, OF
Texas had similar plan, which would
raise $5Oo,000,000 with surtaxes from
10 to 20 per cent, or about $500, 1000, ,o00
with surtaxes from 20 to 40 per cent.
Another variation of this proposal
came from Senator George, Democrat,
of Georgia, who proposed the same fiat
tax with q surtax of 1 per cent on all
withheld income. This would raise
only $252 ,000,0 900.
Senator King, Democrat. of Utah
wanted to hike individual income and
fiat corporation rates to produce about
$S00, 900, ,000. His plan would include
lowering personal income tax exemp-
tions and increase the normal rate
from 4 to 5 per cent.