| Show MAJOR TAX LAW LA CHANGES y DEMANDED J J BY ROOSEVELT Request Sent to Congress For New Levy on Undivided Profits of Corporations M Message Recommends Repeal of Other Imposts By Associated Press WASHINGTON March 3 3 Sweeping tax law changes including in I eluding imposition of a tax on on undistributed t corporation or po ra t ion profits and nd repeal of the thep pres present es ent graduated corporation in income in come tax were recommended recommend d. d to to congress today by President Ro Roosevelt sevelt The message was sent on the eve of f the presidents president's de dents dent's t fourth year in the White House He estimated the tax on undistributed undistributed corporation pJ profits n would oui yield annually In a momentous message recommending mending A thorough revision of tz th Text of lot Message 1 on Page 24 national to taX system the tho president also aLo proposed Processing taxes spread broader broade and thinner th than n the old levies evies outlawed out out- wed by y the supreme court Windfall Tax A windfall tax to recover recover-a a considerable con con- part of ot the old taxes which were returned to the taxpayers I or on which they refused payment I I Repeal of ot the existing existing- capital Istock stock ta tax which was waa estimated to yield in the fiscal year 1937 Repeal of at th the tho corporation excess excell profits tax which was estimated to yield in 1937 Repeal of ot the exemption of ot dividends divi from the normal tax on Individual indivIdual Indi indi- vidual incomes The graduated corporation income tax which the president proposed to repeal was wa estimated to yield in the fiscal year 1937 Tre Treasury ury experts were were understood to estimate that the proposed new levy on undistributed corporation profits would not only replace the taxes which would be repealed but would provide an additional ad ad- revenue of ot on 1936 corporation incomes Leaves a D Deficit The president told congress Invalidation in invalidation tn- tn validation of at the processing taxes left a deficit in the budget of 1017 and that the cash bonus bill would add an annual ann charge of ot a a. year We Weare are aro caned called upon therefore he said to raise by some form torm of ot permanent taxation an annual amount of It may bo ho said truthfully and correctly that of this amount represents represents represents substitute taxes in place of ot the old processing taxes and that only represents new new- taxes taxes' not hitherto levied Quoting from Irom his budget message statement that the increase In revenues would ultimately meet and pass the declining cost of at relief Mr Roosevelt said If we are to maintain this clear- clear I cut cul and sound policy policy- it is incumbent incura- incura bent ent upon us to make good to the federal treasury both the lou loss of revenue caused by th the supreme court decision and the Increase in expenses caused by tho the adjusted compensation payment act I emphasize that adherence to Continued on Page Two Tiro Column Oae MAJOR TAXES VISION REVISION ASKED 5 Continued from toni Pact One S. S It consistent policy polley calls calL for tor such ac- ac tIon 5 5 rhe chief executive said ho was t 4 leaving tO tho the discretion of cont con con- con con- t gres the formulation n of appropriate ate fe taxes But ho he invited the attention at at- te-nUon te of congress to a Cia form of oft tax tax tax- which would accomplish an n t 1 reform remove two major majo inequalities In our tax stop leaks in present sur sur- taxes S Mr Roosevelt then proposed the tax on undistributed corporate in- in domes graduated and so ao fixed as asS asto S to yield approximately the tho dameS same dame revenue as wo would ld be yielded If corporate cor cor- S profits were distributed and t taxed in tho the hands of stockholders The president did not mention A specific rate but said tho the treasury would submit estimates by which the desired yield could be realized It was understood the treasury's proposal was for tor a graduated tax averaging about 33 per por cent t I The president made it plain that he expected tho the new corporation tax not Dot only to cover the repealed taxes but to raise tho the which he he lc characterized as as' as permanent levies S. S r To Cover Loss Losi Ho Ro proposed the windfall tax and 5 temporary processing taxes to cover the which the government government govern govern- ment nent lost Jost in this years year's processing taxes The first would seek leek to re reg regain regain re- re g gain in unpaid pr processing ce taxes taxes from rom beneficiaries unfairly enriched by bythe bythe the return or payment non II of the tho levies The second was that an excise o on the tte pr processing of certain agricultural products The president in his message and tr treasury sury experts in unofficial amplification am am- of the program took the View I w that tile the proposals would eliminate nate pate the greatest leak in the pres ent nt tax taIC structure would establish quality equality in taX taxation between recipients enu of business profits from carF corporate cor car F orate an and sources simplify the tax system for the taxpayers tax tax- payers ayers as well as the government S and nd eliminate taxes entirely on corporations cor cor- which distributed all their income S Sa I a The president also proposed that the present exemption of dividends from tron the normal tax on individual i incomes comes be repealed S Bc Reflects eds Theory S This point reflected the theory of ef t the new new ew tax plan That instead ef Cf taxing corporation profits the tho reven revenue should be raised by taxing these thee profits profit as they are reflected in individual income tax returns from those who get the profit profiL i Explaining this thi prop proposition os ItI n tax experts said that a man holding 60 per Set cent of ot the stock of a corpora corpora- lion pon has in tho o p past t frequently Uy left leftt t tho 1110 o profits profit In the the form orni orm of ot surplus rather than dividing divid divid- ing ng them and nd thus subjecting them to o. o taxation I While the Ige er did not need th this money experts said daid the theother theother other ther and nd smaller stockholders sto kJ J it ht hs have n eAt adl the hew flew tax w would force t tsuch f such surplus income it would not Only l increase cre e rev revenues nu s they said tout ut w would uld provide new purchasing ng S m power for the sm smaller s ld rs 5 Treasury experts explained that the proposed proposed new graduated l tax for undistributed net profits profi of f corporations corpor corpor- would not not apply to reserves I g accumulated in the past but only to income currently allocated t trese to rese reserves reserves Will ViII Be Taxed They said however that any current current current cur cur- rent income that was undistributed would be taxed regardless of Df the use to which It was put They added as asan asan asan an example that if a corporation orpo put of current income into expansion n of ot its plant this money would be taxed 1 It was as suggested that corporations corpora corpora- might get money for expansion by issuing rights to stockholders and getting their consent to retain the pr profits fits for expansion purposes The effect of this would be the thc same same it was was said as though the money noney bad had actually been paid over overto to the stockholder in profits and andr r reinvested by him The stockholder wo would ld have to report his paid tax on one the e Jn income me |
