Show Questions and Answers On Ou Corpo Corporate ate Tax Plan WASHINGTON v March 4 UP Questions and answers concerning concerning concerning con con- President Roosevelt's Roosevelt new v corporate tax plan Q What Is tho the proposed tax tat called A. A A tax on undistributed corporate cof- cof co net Income Q What Is this Income A. A This represents profits earned by a corporation over and above reserves for tor contingencies which are aree not distributed immediately immediately imme imme- to stockholders in the form of dividends Q Why did President Roosevelt Roosevelt Roose Roose- velt suggest that they be taxed A. A Because ho declared these profits are escaping the taxation which would be bc levied upon them in the form torm of ot income taxes If they were paid out as as dividends to stockholders Q How largo a a. sum Bum would be affected b by these new taxes A. A The treasury estimates that In 1936 in corporate corporate- I Income will be withheld stockholders Q To what purpose would President Roosevelt devote the taxes us raised from this source A. A They would be used to lo pay the cost of ot a a. permanent farm program and the additional amortization costs involved in paying the tho bonus this year ear instead Instead in instead In- In stead of 1945 1915 Q How much does the treasury need for these two purposes A. A a R. year ear Q How much does the treasury estimate the tax on undistributed corporate income will raise A A. A Q But that is a lot Jot more than needed for farm tarm and bonus costs A. A Yes but the president suggested suggested sug sug- that other corporate taxes which now yield be bo repealed The new tax would cover that yield and the fresh need for revenue as well Q How would this tax effect affect a a. small stockholder in a corporation corporation corpora corpora- tion A. A If the corporation had a big undivided surplus it probably would release the money in the tho form of dividends to the benefit of the stockholder Q How about the larger stockholders stockholders stockholders stock stock- holders A. A The president suggested that the large stockholders ml might ht be responsible for of ot considerable sums of these surpluses surpluses surpluses sur sur- pluses because they didn't need the money and wanted to avoid higher Income brackets where heavy taxes would take most of or orthe the money they would receive in inthe inthe the tho form of dividends Q How about the tho taxes on tho the small stockholder A. A His tax rate rato is low Jow and tax experts believe he would be bound to gain more in dividends than he would have to pay in taxes Q Corporations would not be forced to his mone money inthe in inthe inthe the form of or dividends dividend would they A. A No But the tax would be bo beso beso boso so high that probably not many of them would want to hold holdback back surpluses They could pass the tho money out as dividends pay ay higher high high- er wages lower prices or employ the money in some ome other way if they desired Q What tax rate would be bo placed on these surpluses A. A The president suggested a a. graduated tax but gave no definite definite deft deft- nite figure The tax would have to be high however it was thought that a largo large share of the revenue actually would come como in m inthe the tho form torm of ol income taxes on dividends divi divi- dividends paid to avoid the high raton rate rat on undivided surpluses Q Would the tax apply to surpluses surpluses surpluses sur sur- pluses already piled up by corporations corporations cor cor- A. A No It would be effective only on 1936 Income and that of future futuro years ears |