Evening star., 1942-04-07
Ex-Governor Of Texas
Favors Tax Credit :
For Debt Payments
W. P. Hobby, Publisher,
Asks House Group to
Aid Small Business
By the Associated Press.

By the Associated Press.
w. P. Hobby. publisher Of the
Houston Post and former Governor
Of Texas. urged the House Ways
and Means Committee today to in
clude In the new tax bill a pro-
vision allowing small businesses
having no war contracts to credit
against income taxes amounts paid
on debts incurred prior to January
/, 1910.
Such action, Mr.. Hobby told the
committee, will not hurt the Treas
ury, but really help 1t in the long
run and at the same time prevent
q sentence of death being passed
on thousands Of businesses IN this
country"
The credit he proposed would be
limited to per cent annually OF
the total indebtedness incurred prior
to January l, 1910.
The Texan asserted many busi-
ness concerns went into debt be
fore any one in this country Wis
ualized huge war appropriations.
which have become necessary
and must be financed by increased
taxes" and the arrangements un-
der which they were incurred were
based upon the old tax rates. with
the expectation that any increase
would be only normal one"
Nothing Left for Debts.
After paying taxes contemplated
to finance the war. Mr.. Hobby said,
the business involved will have
nothing left to apply on their legiti-
mate debts and, therefore, will face
the bitter alternative Of foreclosure,
liquidation or bankruptcy"
The publisher told the committee
"the same principle was recognized
by Congress in granting to war in
dustries the right to amortize In
five years for tax purposes their
investments in new war production
facilities"
"The incentive for granting relief
for the businesses for which I speak"
he said, seems much greater. These
firms have no war contracts and
no prospects Of getting such taxes.
On the contrary they face this year
and in succeeding years greatly
reduced revenues in the face of in
creasing costs and rapidly rising
taxes.
They are trying to find some way
to avoid being hurt so badly they
will not be able to pay taxes at
all. With them 1t Is matter OF
life or death and they want to
live"
Referring to the recent suspension
of publication of the Dallas Journal
and the Kansas City Journal, Mr..
Hobby said he did not contend
that taxes alone killed these news
papers, but a combination of taxes,
rising costs and shrinking revenue
did kill them"
Their death is sympomatic," he
added.
Questioned by Representative
Treadway. Republican, Of Mas
sachusetts. Mr. Hobby said Presi-
dent Roosevelt's goal of $1,000, ,000,-
900 in new taxes probably could not
be achieved without hurting busi-
ness and putting a great many Of
them out of business"
Mr.. Treadway asked the witness
OF he had any recommendations for
raising that amount of revenue
other than those proposed by the
Treasury.
II think sales tax Is preferable,
Mr.. Hobby said. adding that he
believed the people of Texas would
approve such a levy.
IT think that the people would
prefer to pay a sales tax rather
than have businesses 90 down." Mr..
Hobby explained. II think it ought
to be q retail sales tax"
John w. Brooks, vice president and
treasurer of Pass & Seymour, Inc,
Syracuse, N. Y, urged that smaller
companies be allowed to retain
enough of their earnings to finance
expansion programs necessary to
provide employment after the war.
Graduated Scale Urged.
He suggested that invested capital
credit be on graduated scale for
smaller companies so they may be
permitted to survive" and accumu-
late funds with which to win the
peace, after winning the war" as ne
expressed doubt that many small
businesses "can survive" under taxes
proposed by the Treasury.
The excess profit credit he pro-
posed. computed on the basis of in
vested capital. would range from IS
per cent on the first $500, 900 of net
invested capital to 8 per cent on
capital in excess Of $2,500,0O0.
Reduction of the tax on safe de-
posit boxes from 20 to II per cent
was requested by George r. Parton,
New York. president Of the New
York State Safe Deposit Associa-
ton.
The 20 per cent tax levied in the
1e41 tax bill, Mr.. Parton said, "is
neither fair nor equitable" and is
highly discriminatory"
OF the 11,000, 900 boxes in the
United States, Mr.. Parton said, less
than so per cent are rented with the
average rental price of the small
depositor's box being 81 a year.
Many renters, he said, have given
up their boxes rather than pay the
new tax, and "the law of diminish
ing returns Is taking effect"
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