Evening star., 1938-02-24
TAX-REWS|ONB|LL
HELDBUS|NESSA|D
Vinson Sees Inequities Re.
moved With Revenue Still
Available.
~ the Associated Press.

~ the Associated Press.
=. Representative VinSon, Democrat, of
Kentucky said today the tax revision
bill tentatively approved by the House
Ways and Means Committee would
ease materially the tax burden on
virtually all corporations and busi-
nesses.
THE bill will not keep firms from
expanding and branching out and pro-
viding employment-if they really
want to do it," he said in an inter-
view.
"Our objective was to relieve hard
ships and inequities and to raise the
same amount Of revenue, and think
the bill will do that"
The legislation, drafted by a sub
committee which Representative Vim
son headed, would modify the undis-
tributed profits and capital gains taxes
and put a new surtax on family or
closely-held corporations.
Crowther Sees No Issue Left.
{ A minority member of the subcom-
mittee, Representative Crowther, Re-
publican, of New York asserted there
was mo great issue left in the bill"
THE undistributed profits tax has
almost been destroyed" he explained.
1--WE have taken the $4,000 corpora
tions and said, You're out. We ex-
empt YOU
Some Of the small corporations
would pay a little more normal tax.
but they would have the privilege Of
complete discretion over use of earn
ings and dividend policies"
Most of the bigger companies. Rep
reSentative Crowther said also would
have that same discretion, but would
be charged per cent tax on their
undiStributed earnings.
Taxpayer Relieved. He says.
1--WE are coaxing instead of COM
pelling dividend distribution" Repre-
sentative Crowther summarized. land
In the main we have greatly relieved
the taxpayer
But we Republicans still believe
the undistributed profits tax should be
repealed, the surtax on closely held
corporations eliminated and capital
gains taxed at perhaps a fiat 1917 per
cent rate"
Representative Vinson said the high
est tax applicable to any corporation
under existing law is 32.4 per cent.
The biggest rate proposed in the new
bill for ordinary corporations is 20
per cent. Thus, he said. there is 40
per cent differential between the old
and new top rates.
The highest tax proposed for any
corporation with earnings of $25.O00
or less, Representative Vinson said, is
14.1 per cent, while those with net in
comes up to $4,000 would pay 12a
per cent at the most A provision for
allowing deductions for property de-
appreciation, he continued, allows very
material relief"
Garry Over of Losses.
Then there is a carry-over of op-
Grating losses in the succeeding year,
to be used to reduce either the undis-
trlbuted profits tax on big corporations
d. the surtax on closely-held corpora
ton, or both.
This tax on closely-held or family
corporations-called the 1B tax-is
generally misunderstood. While the
rate is 20 per cent, the amount Of in
come to which it is applied is ma
terially reduced from the original net
income, and at no time would it pos
sibly be what some folks consider q
second 20 per cent tax"
The 20 per cent surtax would apply
only to income remaining after
closely-held corporation had paid its
normal taxes. deducted the amount
OF dividends and then subtracted one
OF these three: $60,000 30 per cent
or the amount used for debts, which,
ever was greatest.
Only firms with more than so Der
cent in value of outstanding stock
owned by one individual or up to IS
per cent owned by 10 or less individ-
uals would be classed as closely held.
Few to Be Affected.
I'm understanding this 1B tax"
Representative Vinson went on, 1T is
drst necessary to realize that it does
not affect any corporation unless its
net income is more than $4,000. It
will not affact any corporation that
distributes as much as SIS per cent Of
It's net income"
The Treasury estimates there will be
only 300 to 600 subjected to the tax,
In the final analysis, he said
Discussing the capital gains tax, he
explained the bill would retain the
principle of graduating the loss or