Evening star., 1947-12-04
Big Spectators
Taxes,
Anderson Says
646 Traders Listed
In Deals Involving
Income Liability
BY the Associored Press

The Agriculture Department
appealed to Congress and to the
Internal Revenue. Bureau today
to help stamp out shady trans
actions on the commodity ex-
changes by Americans and
wealthy refugees seeking to
dodge income taxes.
Secretary of Agriculture Ander-
son charged that an examination of
accounts on August 80 showed 646
traders with holdings of $150,000, 900
involved in deals indicating pur.
pose in most cases to affect tax
President Truman has asked Con-
gress- for legislation to help curb
speculative trading in grain and
cotton on the ground it is factor
in the high cost of living.
Mr.. Anderson's blast came while
congressional committees were hear
ing administration and opposition
arguments on such controls. Off
cials Of the grain exchanges have
entered a vigorous denial that spec
ulation has caused commodities to
soar. blaming instead Government
purchases for shipment abroad.
Seek Control of Margins.
Legislation sought by the admin
istration would permit the, Agri-
culture Departments Commodity
Exchange Administration to fix mar
gins on speculative transactions.
The margin is the amount of
money a trader must deposit with
his broker to hold commodity future
contracts. In the case of grain, the
margin requirement is one-third of
the price of the grain. The markets
themselves now set the margin.
In formal statement issued last
night, Secretary Anderson said a
CEA investigation of commodity fu-
lures accounts disclosed the trading
practices which could be used for
the purpose of postponing, reducing,
or even completely avoiding payment
of income taxes.
In an accompanying report, the
CEA said there is evidence that these
practices are being used for such
purpose.
The CEA added:
These transactions have no con-
nection with the hedging or market
ing of any actual commodity.
Trading Positions Not Changed.
Many of them are executed in
such manner as to make it appear
that market position is being
taken when, in effect, no change in
the actual market position of the
trader is involved.
"As would be expected, most of
these individuals are rather active
traders. Many are citizens of for
eign countries who sought refuge
here during the war and have been
active in attempting to profitably
invest the funds which they brought
with them"
Neither Mr.. Anderson nor the
CEA attempted to say whether the
deals actually violated income tax
laws. The Secretary did state, how
ever, that his department is taking
steps to initiate such corrective
measures as are possible under the
Commodity Exchange Act"
Suggesting that additional legis-
lation may be necessary, Mr.. An
derson said some aspects of the
problem will need the consideration
of other branches of the Govern
ment and of Congress. A CEA Off
cial said Secretary Anderson's ref
erence to other branches of the
Government apparently meant the
tax-collecting Internal Revenue
Bureau.
Found to Increase Speculation.
The Secretary said "the fact" that
spectators may avoid income taxes
on profits has contributed to the
heavy increase in speculative activ-
ity in the grain markets.
The CEA report said that, while
there is "a wide variety" of ways
to do it, most of the deals investi-
gated were for one of the following
purposes:
81. To shift profits from the tax
able year in which they are earned
to some subsequent year when tax
rates may be lower or the trader S
income is reduced.
20. To convert profits from short
term fully taxable items, into long
term capital net gains, taxable at
a lower rate.
"3. To convert an actually real
lied profit into the appearance OF
a net loss for tax purposes"
Long-Term Profits Shown.
The CEA cited a provision Of the
tax law under which profits from
the sale of commodity futures held
more than six months are cut in
half for tax purposes.
Thus, trader who makes $4,000
on transaction completed in less
than six months has to pay taxes on
the full profit. If the transaction
lasted longer, he is taxed on only
IS 900.
The CEA gave this example OF
0See SPECULATION, Page A-4.)