Evening star., 1938-04-06

fOT past L1CO years business HHS
complained that NeD Deal theories
OF taration ,Dere sitting Nation
economically, in last sir months
blaming them particularly for cur
rent depression. House, Dith ad-
ministration consent. enacted SEP
eral notifications, but Senate FL
nance Committee Went far beyond
this point. Eventual result 1Uill be
compromise betlUeen t1UO bills.
BY JOHN c. HENRY.
Prevented temporarily from taking
the floor as the Senate became en-
broiled anew in its differences over
the War Department appropriation
bill. Chairman Harrison of the Finance
Committee was prepared to make a
personal appeal late today for the i'm
mediate scrapping of several New Deal
theories of taxation.
DESTROYS of passage before the week
end Of rewritten Revenue Act OF
1888 which would completely elimin-
ate the undistributed corporate profits
tax and take long-term capital gains
out Of the heavy personal income clas-
siflcation, Senator Harrison already
is on record as believing the Senate
committee revisions would be an ef-
fective incentive to business recovery
In the place of the much-criticized
levy, the bill before the Senate would
apply fiat rates. The measure as
passed by the House retains the pres
ent principle in each case although
modifying the current rates.
Amendments Approved.
Meeting this morning the Finance
Committee decided on several amend
ments which will be offered with its
support. Among these is a provision
to waive interest and other penalties
on income taxes declared collectible
for the years 1917 through 1920, on
American residents in the Philippines
This solution, II finally enacted, would
leave the affected individuals owing
only the principle of their taxes for
those years. Payment would be re-
quired before June 30, 1899.
The committee also decided to offer
an amendment removing the 10 per
cent cosmetics tax on articles sold by
the manufacturer for cents or
under.
Another committee amendment
would apply the admission tax for
legitimate theaters to actual price
paid for tickets rather than to the
advertised price. Another would ex-
empt certain types of companies from
the personal holding company classi-
flcatlon where income is derived main
ly from royalties and patent fees.
Under present conditions" the
committee report on the bill stated, lit
seems OF the utmost importance to
bring about greater business activity
and freer flow of capital into produc-
tive enterprises.
If this can be done the number OF
unemployed will rapidly decrease.
Moreover, such a result is vital
to the revenue. High rates Of income
tax are ineffective in producing reve-
nue. when there is little income to tax.
II business goes ahead. and there is
no reason why 1t should not 20 ahead
under the provisions of the bill as
reported. then there will result more
taxable net income, with a consequent
increase in the revenue,
In making its recommendations
the committee has also given special
attention to changes which will SIM
plify the law and increase its GER
talnty. This also is important to
business. Finally, every effort has been
made to adopt measures which will
free frozen capital and allow it again
to be productivity employed
Under business conditions such as
are estimated for the calendar year
1888 the bill as reported will produce
about s20000,000 in revenue more
than the House bill if it is assumed
that all the changes proposed have
come into full operation But this
estimate leaves out of account any
added revenue which your committee
is certain will result from increased
business activity
Fights are anticipated on the floor
on the committees action in elimi-
mating the undistributed profits tax
on proposed schedule Of processing
taxes, on several proposed import
taxes and on the plan of Senator
La Toilette, Progressive, of Wisconsin
to lower the income tax exemptions.
Although only narrowly defeated in
committee, the idea of lowered ex-
emptions is expected to encounter
particular opposition during an elec-
ton year.