Evening star., 1938-04-14
LENGTHY |MPASSE
ON TAXES IS SEEN
Senate Conferees Firm in
Opposition to Profits
and Gains LevieS,
BY JOHN c. HENRY.


A drawn-out deadlock was in pros
pect today for conferees on the
Revenue Act of 1888 as they recessed
after an hours session this morning
with no reported progress.
Abiding by their determination not
to yield on Senate elimination of the
undistributed corporate profits tax and
major modification of the capital
gains tax, the Senate conferees en-
erged first with the terse announce
ment that nothing had been accom-
plished beyond agreement that these
two issues must be settled before other
differences can be considered.
We discussed these provisions, y
Chairman Harrison Of the Senate
Finance Committee said, but We ap-
preached no agreement. We will meet
again tomorrow morning"
Doughton Pessimistic.
Chairman Doughton of the House
Ways and Means Committee sounded
equally hopeless.
We discussed the whole Situa ton
he said, but We didn't agree on any
thing, We didn't vote on anything and
we didn't do anything
Asked if any sign had been given
that either faction would yield. Mr..
Doughton declared emphatically there
had been not tho slightest
mo bill can be constructed until
these two provisions are disposed Of"
Senator Walsh, Democrat, of Massa-
chusettS told reporters. by the Sen
ate treatment of these two issues We
were able to reject the liquor tax in
crease of the House bill and to reduce
such excise taxes as those on automo-
bile tires and yet leave an estima ted
revenue yield of s20,000000 more
than the House measure.
If we should retreat on the two
controversial items. the whole bill
would be thrown out of balance and
would require restoration of the excise
levieS."
Roosevelt Letter Aired.
Senator Walsh admitted that yes
terday's letter from President Roose-
velt, urging acceptance of the House
provisions on these two major sec
tions, had been discussed in "asides"
at today's session.
AS the conference stalemate de-
veloped, backfire in support of the
Senate provisions apparently was get
ting under way in the House chamber
under the leadership of Representative
O'Connor, Democrat, of New York.
Commenting specifically with regard
to the Presidents relief message. Mr..
O'Connor stressed that a most de-
sirable course of action would be the
enactment at once of the tax bill sub
stantially as it passed the Senate,
thus eliminating the Objectionable cor
porate undistributed profits tax and
modifying the capital gains tax"
The House bill modifies the present
undistributed corporate profits tax by
reducing the range of the penalty
rates and makes new graduations in
the portion of capital gains to be
taxed as income. The Senate bill
eliminates the profits levy in favor
of fiat income rate Of 18 per cent
and likewise applies a fat Is per cent
rate to long-term capital gains.
Notifications Stressed.
In his letter yesterday, President
Roosevelt emphasized particularly the
desirability of House notifications OF
the undistributed profits tax, but made
clear his wish that the penalty princi-
pal not be discarded The major in
justice of the present law he con.
ceded is in its application to small
corporations which would get prefer.
entail treatment under the HOUSE
bill.
He presented also a defense of thu
theory of considering capital gains a!
ordinary income, declaring that pref.
erential treatment for this type O.
earnings would be an injustice to thoss
who depend upon salaries and divi
dends
BY and large he concluded bushes.
would be helped rather than adversel,
affected by the House measure as ar
alternative to the Senate version.