The Waterbury Democrat., 1936-03-03
NEW TAX BILL
 SENT CONGRESS

(Continued from Page l) paid and returned processing taxes coupled with temporary reimposi- ton of processing taxes at lower rates and on a broader base. Yield of these two taxes would be approx imately $517,000,000.
 Treasury officials explained tnat the proposed tax on undistributeo corporate income would not be re. troactive, but would apply to l9S6 and future income.
 The president said the intention of the proposed corporate tax should be to tax undistributed corporate income so that 1t would yield ap- proximately the same revenue as If it were distributed and had been taxed after 1t got into the hands Of the individual stockholder.
 He said he was informed by the treasury that during the calendar year 1886 some $4,600, ,000, 900 in cor porate income would be withheld from stockholders.
 If" said the president, "this un- distributed income were distributed, it would be added to the income of stockholders and there taxed as is other personal income. .
 But as matters now stand, 1t will be withheld from stockholders by those in control of these corpora tions. Tn one year alone, the govern ment will be deprived of revenues amounting to over one billion three hundred million dollars"
 The taxes which would be repealed under MT. Roosevelt's suggestion had the following annual yield:
 Estimated Yield
 Capital stock tax $l63, 100000.
 Corporate excess profits tax $5,- 100000.
 Corporate income tax (tseimated 193D $827, 100000.
 Total s904, 100000.
 Mir. Roosevelt said the treasury be- lieved the new proposed tax would yield that sum plus the $620, ,000, 900 in permanent revenue which would be needed to finance @ continued farm program and the increased amortization costs due to immediate payment of the bonus.
 MT. Roosevelt criticized present corporate taxes as containing "in- equalities" and "leaks."
 "The accumulation of surplus iii corporations controlled by taxpayers with large incomes is encouraged by the present freedom of undistributed corporate income from surtaxes," he declared.
 Equality of Burden
 The president said that, since stockholders are the beneficial owners of both distributed and un- distributed corporate income, the aim, as a matter of fundamental equity, should be to seek equality of tax burden on all corporate income whether distributed or withheld from the beneficial owners.
 "As the law now stands our cor- porate taxes dip too deeply into the shares of corporate earnings going to stockholders who need the dis of dividends; while the shares of stockholders who can af- ford to leave earnings undistributed escape current surtaxes altogether"
 Past Difficulties
 MT. Roosevelt pointed to past difficulties with this problem and asserted that repeated attempts by the congress to prevent this form of evasion have not been success full"
 "The evil" he said, "has been a growing one. It has now reached disturbing proportions from the standpoint of the inequality 1t rep- regents and of it's serious effect on the federal revenue"
 The president emphasized that his proposal should be treated as 4 suggestion but said that "the treasury department will be glad to submit It's estimates to the congress showing that this simplification and removal of inequalities can. without unfairness. be put into practice So as Co yield the full amount Of Six hundred and twenty million dollars the amount have indicated above as being necessary"
 Applies To AlI Profits
 In connection with the corporate tax, the treasury explained that the proposal applied 10 al profits with the exception of those distributed to stoekholders but not to accumil. lated sirplllses Of previous years.
 The treasury pointed out that the proposal might be expected to iIls crease personal income tax returns since corporate earnings distributed ln the form of dividends tsould be taxed as reported by individual aeHs payers,