Evening star., 1942-08-20
ABA Urges Exemption
NStock, Bond Owners
From Withholding Tax
Study and Alternative
PIun Given Senate
Finance Committee
BY HAROLD B. ROGERS.

Favoring the general philosophy"
OF the proposed withholding tax,
pending in the current tax bill, the
American Bankers Association is
opposing its application to the
owners of stocks and of bonds, be-
cause the administrative problems
involved would be so costly and diff
f1cult as to be almost insurmount-
able"
Instead, the ABA. through it's
spokesman Charles H. Mylander,
chairman of the Taxation Commit
tee, has laid before the Senate FL
| nance Committee detailed analysis
of the situation, based on survey,
and has recommended an alternate
plan.
In order to overcome difficulties
charged by the bankers to be in
herent in practical administration
of the bill as it now stands, the ABA
contends that withholding in gross
is the proper procedure
BY this it is explained, the with
holding tax should be applied
against all dividends and interest,
and no attempt should be made to
figure out in advance whether the
owner would be exempt from any
part Of the tax. The taxpayer, later
on, could apply for refund from
the Government, based on the re-
suits of working out his income tax
return.
One of the principle troubles of
the present bill, Mr.. Mylander points
out, is the attempt to prove owner
ship of securities, through sys-
tenn of ownership certificates.
Application of the withholding
tax to wages and salaries would not
be difficult, he explains, because
adjustments can be made readily
on the pay roll records of employers
and proper withholding made.
But" he warned, when exemp-
tions of any kind from withholding
on dividends or bond interest paid
are allowed, administrative difficult
ties pile up until they seem almost
insurmountable."
Summarizes Reasons.
The bills proposals for such with
holdings are unavoidable, Mr.. My
lander charged, for the following
summarized reasons:
q. Because of the provision for
exemption certificates for a rela-
lively small number of stockholders
and bond owners;
20. Because of the requirement
that each stockholder and each bond
owner be given receipt for the
amount of the tax which may be
withheld from him upon payment to
him of dividends and bond interest;
"3. Because of the fact that adop-
ton of the system proposed in the
bill will destroy the street name and
nominee systems of registration of
corporate securities;
q. Because to prepare the receipts
and other details will require much
additional machinery and equip
ment which is not now available
to corporations and their paying
agents; and
IS. Because of the difficulty, under
present conditions, of obtaining ade-
quate trained personnel to operate
this machinery"
Proposes Second Plan.
Admitting that some objections
would be raised to the gross with
holding" from all persons regardless
Of their personal exemptions, Mr..
Mylander put forward as his second
choice, another system, if the gross
withholding should not be found
feasible" by the Congress.
He urged that the method pro-
posed in the bill for sole proprietors,
professional men, ETC., be adopted
for accelerating the collection of
taxes on bond interest and dividend
income.
That is" he explained, that
there be no Withholding at the
source of any percentage tax on
bond interest and dividends, but
that the taxpayer be required to pay
on March IS, in addition to one
fourth Of the tax computed on his
total income, tax of at least
per cent in 1943, and 10 per cent in
1914, and thereafter upon his bond
interest and dividend income"
Preston on Vacation.
Ord Preston, president of Union
Trust Co., has left for a months
vacation in California.
Donald H. McKnew, vice presi-
dent of Barrett Herrick & Co., re-
Gently was commissioned captain
In the Army Air Force and is tenn
porarily stationed in Washington.
The local Office of the company in
the National Savings & Trust
Building will continue under man
agement of John T. Dunbar.
w. T. Van Doren, vice president
and cashier of Liberty National
Bank, was being congratulated by
friends today on his birthday ami
versary.
Named Trust Assistant.
B. Bruce Frantz has been elected
assistant trust investment officer of
the American Security e. Trust Co.,
it was announced today
Born August 5, 1905, in Washing
ton, he attended Mckinley Manual
Training High School and the
Emerson Institute. He is a grad
uate of Benjamin Franklin Uni
versity and received his LII. B. de-
gree from the National University
in 194l.
Mr.. Frantz has been with the
company since 1926, where he served
in the auditing department and as
manager of the analysis depart
ment At the time of his election
he was chief clerk of the invest
ment unit of the trust department.
He has been active in the work
of Washington Chapter, American
Institute of Banking, and at the
present time is its second vice presi-
dent.
Mergenthaler Linotype sold today
at 35is on the Washington Stock
Exchange. Washington Gas COM
mon went at 1914.