Evening star., 1938-02-27

House Ways and Means Committee,
Dhose bill is scheduled to come up
in House Thursday. Senate
Finance Committee, now consider
ing measure, tDiH get to work on it
after House Dote.
BY the Associated Press.
Strong sentiment developed yester-
day in the Senate Finance Commit
tee for downward revision of rates
in the acknowledgement tax re-
vision bill.
The hope Of encouraging business
and OF ultimately obtaining more rev.
enue for the Government was said
to be at the bottom of this movement.
While committee members were re-
luctant to discuss details of the meas
ure they said opponents of the pro-
posed tax on family or closely held"
corporations might succeed in killing
that section of the bill in committee.
Outright repeal of the undistributed
profits tax, the existing levy that has
drawn most business criticism. has
been advocated by several members
Of the committee. Leaders said, how
ever. it was likely that its form would
be maintained, although the Senate
group might make even sharper re-
visions than those voted by a House
Tax Committee.
Assurance for Business.
Sentiment also was apparent for q
lowering of the adjusted rates on
capital gains fixed by the House
committee. Senators pointed out,
however. that their intentions were
indefinite. as the House has not yet
acted on the bill, and changes may be
made by that body.
The House Ways and Means Com
mittee agreed finally on the measure
yesterday after defeating Republican
proposals for last-minute changes.
Members said the House group voted,
18 to 7, against a Republican motion
to repeal instead Of modify the un-
distributed profits levy. It turned
down by the same margin, they said,
a Republican proposal for a fiat 1872
per cent tax on capital gains.
Chairman Doughton of the House
committee commented to reporters:
ANY cause for hesitation on the
part Of business to go forward. so far
as taxes are concerned, should now
disappear"
He said business now has assurance
that inequities and unjust burdens
have been removed, along with
grounds for complaint against the
undistributed profits tax
Reductions.
The bill, which Mr.. Doughton said
would be brought up on the House
floor Thursday, provides for modi-
fication of the undistributed profits
and capital gains taxes and imposition
of the new surtax on large income
corporations controlled by family or
few individuals.
1t would exempt from the undis-
tributed profits tax all corporations
having incomes of $4,000 or less a
year. Corporations earning more than
$25,000 would pay 20 per cent on
their profits, but would get credits
for dividends declared which would
make possible a reduction of the rate
of l6 per cent if their profits were
distributed 100 per cent.
Advocates of the measure said it
also would smooth out" the capital
gains levy so that it should offer
no barrier to the investment of capi-
tai in productive enterprise
eli
emptions from the estate and gift
taxes and repeal several excise and
so-called nuisance" levies.
Family Firm" Tax Hit.
Senator George, Democrat, Of Geor-
gia told reporters he was satisfied
that sentiment in the Senate COM
mittee, which will 60 to work on the
bill after the House votes on it, was
strongly in favor Of reducing rates
where that was possible.
He said members believed stimu-
lated business activity would bring
in as much revenue as the Treas
ury now receives.
Senator George said he thought
penalty" taxes, which he said were
exemplified by the proposed special
surtax on closely-held corporation, were
economically unsound.
Advocates of this levy say 1t is
designed to discourage use of corpora
tions for tax evasion.
If the Senate committee struck out
this section of the measure. the con-
sequent revenue loss would not be
more than 45,0oo,000, some members
estimated.
Profits Tax Hit.
Although Senator George said the
committee might be inclined to ac-
cept the House version Of the un-
distributed profits tax, Senator Brown,
Democrat, of Michigan indicated he
favored outright repeal of that por-
tion OF the existing tax law.
Senator Bailey, Democrat. Of North
Carloina said he believed at least eight
members of the Senate committee op-
posed the principle Of the undistrib-
uted profits levy.
Senator Connally, Democrat, of
Texas said he hoped the committee
could revise the bill to eliminate some
of the Objectionable" features OF
the present tax law, pointing to the
profits and the capital
gains taxes as such features.
Senator Byrd, Democrat, Of Vir-
gina urged fiat repeal of the surplus
tax.