The Daily Alaska empire., 1941-02-24

the theory behind the Federal Gov ernments, as understood by min ng operators, was that it allowed companies to build up a fund for necessary development and future work
 Harsch's reply was that he had 10 knowledge of the theory in back of the law, that he considered 1t a concession to the mining indus try on the part of Congress and | definite departure from the de- 0letion theory.
 Rep. J. V. Davis called atten- ton to the fact that to encourage mining development some coun- tries allowed up to 50 percent de- oletion to mining companies, bas- ng this allowance on the cost of prospecting and development.
 Effect on Capital
 Asking if the Territory's less liberal law would not tend to have lettering effect upon the en- rance of capital into Alaska for development, Judge w. c. Arnold wanted further information re- garding any deviation of states rom the more liberal depletion clauses of the Federal act and Mir Harsch said that he knew Of no State income tax law that depart cd from the Federal law in this circumstance.
 Chairman Den Carlos Brownell called to appear before the com mittee Judge E. F Medley, oldtime Alaskan, but now practicing attor- ney in Seattle where, after years of practice in the Territory he is now representing Capt A E. Lathrop, who has extensive investments in alaska and whose business brought Judge Medley to Juneau at this tme.
 Confining his remarks about the proposed income tax bill to its legal md practical effects, Judge Medley, sanding on the flcor of the Senate divulged to the committee Of the @hole a study of the bill from it's Dremable to final sections.
 Preamble Not Excepted
 Questioning the exempting section of the bill, Medley called attention to the fact that it failed to exempt in legal effect, the preamble. A preamble, he said, usually lays "the basis for some act whose constitu- tionality may be questioned'' and he questioned the preamble's descrip- tion of the Territory's tax structure as an outmeded survival of frontier days before Territorial government existed
 Throughout the proposed Territor- ial net income tax measure. the tendency was, Judge Medley said, when there was any deviation from the Federal law to deviate on the side of severity on the part of the Territorial law This was evident in the section pertaining to personal losses, to exemptions, to errors on the part of corporations in making returns and to deductions of taxes, he said
 A further question was brought up by Judge Medley regarding the ire quent references. in the law to the Federal Internal Revenue Code- If all references to the Federal statutes included in the Territorial law had been set down he said the Terri torial act would be twice as long as it's present 97 pages, but this he urged should be done for the sake Of clarity and for the benefit of the taxpayers, to whom copies of the Federal code might not be available
 Deductions Discussed
 In the matter of deductions of net income taxes, not allowed by the Territorial law, (the Federal law al- lows the deductions from Federal net income taxes of any other in come tax except the Federal tax that is State or city or Territorial deviation from the theory of the Federal law. Judge Medley gave this example:
 Under the proposed Territorial law. a mining company which he cited as having paid on a $65O,0OO income in 1940, net income tax of S156,000 and excise tax of $156,0OO