Evening star., 1938-04-23
BY JOHN C. HENRY.

10y JoAAN ~.
Conviction that the undistributec
corporate profits tax is facing certain
death by the end of 1899 was freely
expressed In the Capitol today as
results of yesterdays conference com.
promise on the Revenue Act of 1895
were reviewed.
Meanwhile the conferees resumed
consideration of other provisions in
the bill with the expectation that they
would not complete their task until
early IN the week. At yesterdays ses-
sion 1t was decided to retain the un-
distributed profits tax in greatly re-
stI1cted form through the end of
1889 and to apply fiat rate tax sched-
ule 10 long-term capital gains.
Inc most uncondition prediction of
demise for the profits tax was made
today by Senator Vandenberg of
Michigan. Republican conferee. who
said there was mo doubt of its death
in two years"
Reversion to Sanity" Hailed.
The Michigan Senator said he felt
fairly well satisfied" with the results
OF yesterdays meeting hailing partic-
ularly the agreement on capital gains
as almost complete reversion to san.
ity." To all practical purposes, he
said, the undistributed profits tax will
virtually disappear after application
OF the cushions agreed on yesterday.
Questioned about the part which the
tax controversy might play in the fall
elections, Senator vandenbere said he
thought the real issue would be the
Presidents intrusion into the confer
ence deliberations rather than the law
itself. Referring to the letter which
the President wrote asking retention
Of the profits tax, the Michigan SEN
ator said 1t showed IAN unyielding
fidelity to a tax philosophy universally
condemned throughout the country
The compromise reached yesterday
came at the end of a session un-
precedented in length and in charac-
ter. Meeting shortly after 10 am, the
conferees stayed at their job without
interruption until nearly S o'clock. Al
most their first decision was to exclude
all but the actual members Of the con-
ference committee and for the full
seven hours nearly score of technical
aides and consultants, including I'm
dersecretary Of Treasury Roswell Ma
gill, sat outside the conference room,
Agreement Held "Stand-off."
When it was announced, the agree
ment was considered pretty much a
stand-of as far as degree of surrender
by the two factions was concerned since
q middle ground was reached in both
the important provisions.
With regard to the undistributed
corporate profits tax, it was agreed to
discard the Senate plan for fiat l8
per cent corporate income tax rate and
to retain the penalty principle in a
degree modified beyond the House bill.
In other words, where the House pro-
vides for a corporate tax ranging from
16 to 20 per cent, depending upon pro-
portion of income distributed, the COM
promise would apply a tax ranging
from l612 to l9 per cent. In effect.
the present law applies rates ranging
from Is to 1924 per cent.
Under the compromise, corporations
Will receive reduction of rs OF 1
per cent for each 10 per cent of net
income distributed.
In addition, the conferees accepted
the House treatment of corporations
netting under $25,00O by which thev
would be taxed on a graduated scale
with no application of the penalty tax
regardless of whether there is dis
tribution Of income. The Senate bill
also gave preferential treatment to
such corporations, the choice merely
being one of formula since both bills
exempted such companies from the
profits levy
As concessions to the Senate group
Tor agreeing to retain this principle
IN the case Of large corporations, the
House conferees agreed to two special
allowances, one for corporate income
withheld for use in debt retirement
(see TAXES, Page A-s)