Evening star., 1938-05-12
TAX BILL AWAITS
ROOSEVELT 0. K.
Treasury Sees Prospects
Of so Million Reduction
in Estimates.
BACKGROUND

T,oo years Of steady criticism OF
capital 0dins tar and penalty levy
on undtstributed corporate profits
resulted In recommendation last
trtnter By special House committee
for modification of both. House
tollo,Oed committee proposals. but
Senate went far beyond to change
whole theory OF capital gains tar
and to modify drasticallv the profits
tar. In conference, Senate ap-
parently gained better bargain.
By the Associated Press.
Final congressional approval of
the new tax program left Treasury
officials today with prospects of about
$50,000.000 less income for next year
than they had anticipated.
Original estimates provided for S.
330,000,000 revenue in the bill, but one
Federal expert declared the lower level
of business and the resultant decline
in corporation profits would reduce
that figure.
President Roosevelt was expected to
give quick approval to the legislation,
which greatly modifles the present un-
distributed profits and capital gains
levies-targets of business criticism.
Treasury officials, however, said pri-
vately, they were not fully satisfied
with the new provisions, adopted as q
compromise after the Senate had elm
mated the entire undistributed profits
tax. One expert slid the new rates
might enable some very rich persons to
avoid paying as heavy income taxes as
under the present law.
Choice for Taxpayer.
The new capital gains provision per-
mits . taxpayer to elect whether he
will pay that tax Immediately or hold
his taxable assets more than two years
and pay nat IS per cent.
A Treasury oflicial said wealthy cor
poration investors could take advantage
Of the provision to avoid huge sur
taxes by holding their profits in the
corporation for the two-year period
and paying the fiat Is per cent. Other
wise, he said. their incomes would be
pushed into higher brackets.
Rates in the new bill, which re-
enacts much of the present tax law,
will apply to this years corporation in
comes, and the levies will be payable
next March IS.
There were predictions that efforts
might be made next session to change
some of the features disliked by the
administration. A new tax schedule
will have to be framed either next year
or in 1910, because the one Just ap-
proved by Congress expires December
81, 1899.
Bill Passed, 242 to 50.
Before the House agreed yesterday
to the compromise legislation, 242 to
80, Republicans expressed once more
their opposition to including even q
remnant Of the undistributed profits
tax.
You are leaving in this bill the seed
of what may spring up again to injure
business" said Representative Tread
way. Republican. Massachusetts,. Il
think 1t Is . fatal mistake"
Representative vinson. Democrat,
Kentucky, who helped direct the de-
tailed work Of writing tho lesislatio
replied: e. .a.n 4s.
we have done our dead level best
to bring to the House a bill that will
be helpful to business"
Representative vinson then offered
his resignation from Congress to be-
come a Judge Of the Circuit Court of
Appeals for the District Of Columbia.
Provisions Of Measure.
Briefly. the measure provides:
An undistributed profits tax, ap-
plicable to corporations having more
than $25.000 income. ranging from
1612 to 10 per cent. depending on the
amount of profits distributed.
A graduated tax Of from 1915 to is
per cent on corporate incomes under
$25, 900.
A revision Of capital gains taxes,
setting nat Is per cent rate on gains
from assets held more than two years.
20 per cent Of those held from 1s
months to two years, and ordinary
income and surtax rates on those held
less than 1S months.
An increase in the hard liquor tax
from 81 a gallon to $225.
Repeal Of certain nuisance" taxes.
Estate and gift tax provisions un-