Evening star., 1937-06-19

2, the Associated Press.
Treasury officials, digging out new
names and evidence for the congress
eional tax-dodging inquiry, suggested
today major loophole might be
plugged by increasing the tax on
income earned in America but sent
abroad.
They suggested an increase in the
present 10 per cent Withholding tax"
on income received from this country
by nonresident individuals and for
eign corporations.
If the withholding tax" were
lifted to IS per cent, some authori-
ties said, taxpayers abroad might be
given the option of paying this levy
or the ordinary American income tax
This alternative, they declared.
probably would lead many to pay
the regular income tax rates, placing
them on the same basis as citizens
who pay standard income taxes.
May Urge Pro Rata Tax.
As another method OF reaching
persons who transfer assets to for
eign corporations, officials said they
could urge Congress to place pro
rata tax on incorporators who live
In this country.
II foreign corporation had 10
stockholders with 10 shares Of stock
each. they explained, each would
have 70 pay 4 tax on one-tenth OF the
corporations income annually.
Representative Vinson, Democrat Of
Kentucky \ member Of the committee,
said the present IS per cent penalty
tax on any transfer of assets designed
to reduce tax liability might be in
creased
Present tax rates on domestic hold
ing companies might be raised to deter
their use for tax avoidance. revenue
authorities said. The rates now range
from 8 to 48 per cent on undistributed
net income. and officials said 4 range
from 20 to so per cent might be
preferable.
Another Problem Faced.
To meet another problem, they said
It would be Advisable to enact law
requiring that the individual who
earned the income in family should
report 1t in full.
This would override the community
property laws Of eight States
California, Washington, New Mexico.
Idaho, Arizona, louisiana Texas and
Nevada-which permit division Of
family income between husband and
wife for taxing purposes.
Under the community property"
arrangement. married individuals are
able to take advantage Of lower
bracket tax rates.
Another loophole- plugging proposal,
advanced by Secretary Morgenthau.
would restrict tax deductions which
oil and mining companies may take
over depletion OF wells or mines
The first burst of publicity on in
dividual taxpayers yesterday placed
before the joint Senate House In
vestigating Committee the names Of
= half dozen persons.
Trey Describes Methods.
Elmer L. Trey, veteran chief OF the
Treasury's tax investigation unit.
said those named had reduced or
eliminated Federal tax payments
through the formation OF foreign
holding companies, to which they
transferred assets.
The committee, adjourning hear
ines until Tuesday morning, ordered
the Treasury to supply additional
names as individual cases are de-
veloped from tax records.
Representative Vinson said the
committee might issue subpoenas for
the incorporators Of more than 100
foreign companies which the Treas
ury listed yesterday.
Chairman Doughton OF the COM
mittee expressed the opinion pub
licity would bring a reduction in the
number Of such corporations Or
Eanized by Americans.
Some Of the taxpayers named in
the hearings, he asserted, may be
politely invited" to testify. II they
refuse, he said, then the committee
NAV consider Issuing suhnoAnaS