Evening star., 1939-06-18
Tuxes
Continued From First Page.)

reduction of $2OOO,O0O 900 in the
capital obligations. Since the aver
age rate of interest is about Az
per cent, you would have an annual
saving there of s9OOOO,GOO, which
would be a tremendous help to a
hard pressed industry"
Questioned as to where the dis
tressed carriers might obtain funds
for this refinancing. Judge Fletcher
expressed the opinion that much of
the necessary sum could be OBJ
tained from private sources, and
much of it from the Reconstruc-
ton Finance Corporation. AS to
the latter possibility, he quoted
Jesse Jones, R. F. c. chairman, as
approving this manner of aiding
the railroad industry.
At the same time, Judge Fletcher
contended the Government would
lose no tax revenue by granting
the exemption, since none of the
distressed carriers at present is
taking advantage of currently de-
pressed prices of bonds to reduce
Indebtedness.
Redemption Provisions.
Although the railroads are the
largest single class of industry likely
to benefit from this provision, un-
official estimates are that if other
corporations eligible should take
advantage of the opportunity an
additional aggregate saving of $50,-
10000 yearly might be effected.
BY the terms of the bill. the priv
ileged redemption must take place
in taxable year beginning prior
to January /, 1943, and may apply
only to indebtedness existing before
June l, 1899.
While the entire bill was drafted
and is being rushed to passage pri-
marily as an encouragement to
business, the United States Cham
ber of Commerce yesterday accorded
it only qualified Endorsement be-
cause of its variations from their
recommendations.
In special release dealing with
the legislation, the chamber took
particular exception to the pro-
posed 18 per cent fiat rate on COR
porate incomes above $25,0OO. At
present such income is taxable at
rates ranging from 1872 to 10 per
cent, the 212 per cent variable being
the so-called undistributed profits
tax which is being allowed under
the pending bill to expire at tf(
end of this year. In it's place the
chamber had recommended fiat
IS per cent levy.
Rate Declared Too High.
The proposed 18 per cent rate,
the chamber said yesterday, lis dis
couragingly high and will tend to
Illustrate the avowed objective of
tax revision, that is, to stimulate
business activity. From the stand
point OF revenues, lower rate that
would stimulate business, with the
resulting larger tax base, would in
crease the present tax yield"
Continuing. the chamber said:
The permission to carry operat-
ing losses forward reintroduces an
equitable feature in the law which
Will be encouraging to business and
Will afford some needed tax relief.
The proposed treatment of long
term corporate gains and losses is
distinct improvement over pres
ent law, although restrictions on
short-term gains and losses intro
duce some complexities and may
operate inequitably."
The bill provides for carving net
operating losses forward for two
years and directs that long-term
capital gains and losses be treated
as ordinary income and losses,
With the bill containing provi-
slons to extend existing nuisance
taxes due to expire on June 30
House leaders plan to push the
legislation through tomorrow in or
der that Senate Committee consid-
Grafton may begin by midweek.