Evening star., 1936-03-07

First OF these ,uas necessity of
financing neW farm program to
replace that inpalidated by court.
Second ,oas cash settlement OF
bonus obligation. passed by Con-
greSs ouer Deto OF President.
Result 1Dds request by President
for 1,e1D tar repenue calculated to
Offset these obligations; suggestion
being made that leuy might be i'm
posed upon undistributed corpo-
rate profits.
BY the Associated Press.
In guarded comment on the Roose-
welt tax program, the Chamber of
Commerce of the United States said
today it would turn upside down" es-
tablished methods of producing reve-
nue. and cause important problems"
for taxpayers.
The chamber, in its Washington
review, urged the administration to
present its full 1887 budget before
voting taxes, contending that If the
budget was kept within bounds, it
would be unnecessary to produce any,
thing like the new millions now pro-
posed"
Before the chamber spoke, House
leaders, encouraged by evidences OF
crystallization of Democratic senti-
ment back of the Presidents proposal
for taxing undistributed corporation
profits, forecast its adoption.
Indications Of Difficulties.
The chamber did not pass final
Judgment on the plan, contending 1.-The
outlines of this gigantic undertaking
are still too sketchy to- permit Of de-
termining its broad sweep" But it
said there were indications OF many
difficulties"
There is much doubt of their feasi-
bility," the chamber added, in COM
menting on the Presidents proposals.
Searching questions are being asked
as to this or that possible effect and
as to methods of protecting business
firms and the country from possible
dangers"
The country must be assured, the
organized business group said, that the
plan will not contribute to instability
by accentuating booms and depres-
sions." There must also be protection,
1t said, against "any effort of Govern
ment to take such proportion of the
net earnings of private enterprise as
will seriously cripple the production Of
new wealth and income"
House chieftains were not yet ready
to forecast the exact form in which
the proposal for drastic tax on un-
distributed corporation profits would
be framed. but they expressed conf
dence the basic features would be ap-
proved.
Chief point Of attack on the Presi-
dents proposal for raising $500 900 900
annually was that it would discourage
corporation from setting up reserves
to tide them over lean years.
In reply. Democratic leaders con-
tended that even with an average tax
of 33l2 per cent on undistributed
profits. corporations which laid aside
a third of their income for rainy
day would pay less taxes under the
Presidents proposal than they do at
the present time with an average tax
Of about Is per cent on all profits.
Would End Corporate Tax.
The administration program would
repeal present corporate income taxes
and certain other levies. It would seek
to induce corporations to distribute
profits in dividend form, by laying a
tax, perhaps averaging 331s per cent,
on undivided profits held in the treas
ury. Once in the stockholders hands,
the dividends would be subject to in
come and surtaxes.
Clashing views on the program
were expressed last night by Chair
man Doughton, Democrat, of North
Carolina, of the House Ways and
Means Committee. and Representa-
tive Smell, Republican, of New York,
minority leader.
Doughton said In a radio speech:
THE existing system is unfair and
expensive to the majority of stock
holders. and majority Of corporations.
1t prevents the small stock
holder from receiving a fair annual
return on his investment"
Smell declared the new plan was
zone more verse in the New Deals
unchanging theme-'soak the saver Al"
It Is impossible, he said, to balance
the budget by political vegeance." :"
The Nation needs curtailment Of ex-
penditures, he declared.
In some quarters there were de-
mands for modification of the Presi-
dents proposal to permit corporations
to retain moderate proportion Of
their profits in their treasures, with
out being penalized.
Under one plan, which has the
backing Of Representative Vinson,
Democrat, of Kentucky, a member Of
the subcommittee studying the tax
program, q tax Of is per cent might
be levied against the first 10 per
cent Of profits withheld from distribu-
tion. The next 10 per cent would
pay a higher rate, up to perhaps q
maximum of 40 per cent for all be-
yond a certain percentage such as
80 per cent.
Corporations now pay income and
other taxes aggregating about 16 per
cent of all their income.
Claims Wealthy Escape.
In proposing that these existing
taxes be repealed, President Roosevelt
contends they have permitted wealthy
stockholders to escape levies by leaving
profits in the corporations instead OF
taking them out as dividends and pay
ing high bracket income taxes on them.
In drawing up suggestions for Con-
gress, Treasury experts favored sched-
ules ranging from 20 or IS per cent on
the first $4,000 Of undistributed profits
up to IS or 40 per cent on all over
10000 year. They have opposed
any exemptions. .s.
"ONCE A POLICEMAN"