Evening star., 1938-03-26
BULLETIN.

BULLETIN.
The Senate Finance Committee
today rejected the amendment Of
Senator Davis of Pennsylvania to
allow increased deductions for
charitable institutions in individual
and corporate income tax returns
The proposal was designed to raise
the allowable charitable deduction
by individuals from IS to 20 per
cent of net income and by corpora
tions from S to 10 per cent.
By the Associated Press.
The Senate Finance Committee
studied today the possibility of "un-
freezing" investment capital by easing
taxes which, members said, were pre-
venting dissolution of many personal
holding companies.
Senator George, Democrat, of Geor-
gia. asserted that hundreds of mil
lions of dollars now are frozen" in
personal holding companies.
At present, he explained, personal
holding companies cannot feasibly
be iquidated because taxes eat up
most of the cash which might be dis
tributed to stockholders.
They are now paying very high
rates" he continued. I'VE are trying
to find some fair basis for dissolution
under which the taxes would be shifted
from the company to the shareholders
themselves"
Senator George said committee
members sought to curtail the taxes
on personal holding companies. en-
courage the distribution Of their as
sets to stockholders and then tax
stockholders at the regular income tax
rates ON their share of the funds re-
ceived.
Would Put Money to Work.
"The big idea is to unfreeze this
capital and put it to work again"
After a broad investigation into
''tax evasion and avoidance" a joint
congressional committee last summer
recommended higher rates on personal
holding companies. These rates sub
sequently were enacted.
Senator King, Democrat, OF Utah
said the Finance Committee should
give careful consideration" to modi-
flying income tax rates on personal
holding companies. The rates now
range up to about 10 per cent.
Another Finance Committee men,
ber Senator Walsh, Democrat, of Mas
sachusetts said some arrangement
should be made to permit the liquida-
ton of personal holding companies
without restrictive tax payments. 1T
ought to be done and it will be DONE"
he said.
The committee already has stricken
out the undistributed profits tax and
overhauled the capital gains levy in
the House-approved revenue bill.
Report Next Week Seen.
Chairman Harrison, Democrat, Of
Mississippi said he hoped to report the
tax revision bill early next week, but
Senator Barkley of Kentucky, COM
mittee member and the Democratic
leader, said the bill could not come up
for Senate consideration before the
latter part of the week.
The committee yesterday performed
another major operation on the
House-approved bill by removing its
gift and estate tax provisions.
Chairman Harrison said members
were swayed by arguments of State
officials that the House provisions
would lead the Federal Government
farther into State fields of taxation.
Rejecting the House levies, the
committee wrote into the bill those in
existing law.
The House bill would provide fiat
$4,000 exemption for both estate and
gift taxes, reduce separate annual
exemption for gift taxes from $4,000
to $4,000, and reduce credits allowed
for State gift and estate tax payments
from about Is per cent of the Federal
tax to 16.5 per cent.
The Senate committee recommended
retention of the present separate
$4,000 exemptions for both the estate
and gift levies. or a total Of $4,000,
and eliminated the other changes
voted by the House.
The Senate committee approved an
amendment by Senator Brown, Demo-
crat, of Michigan, to exempt banks
in liquidation from corporation in
come taxes.
Also approved was an amendment
by Senator Clark, Democrat, of Mis-
souri,, providing that corporations
which had started to liquidate sub
sidiaries under 1885 tax regulations
would not have to comply with later
regulations enacted in 1896.