Show tock Stock Dividends Are Wrong T By By Ira C. C Tichenor Tichenor- HE United States supreme court has decided in an opinion opinio showing a division of five to four that the provisions of f. f the 16 6 income tax act t taxing xing as in income ome stock divid dividends made ade by V orations o out t of e earnings an and profits A pro as accruing after March Mardi 1 I are unconstitutional As s a result of oC the decision the federal government must must refund millions dollars ollars in taxes colle colleted collected ted on stock dividends dl since the 1916 law became While many will wih regret ret that such a decision was reached by the highest of ot the land landS there i is a possibility that hat it will result In In gre great good 1 bringing t to the attention of oC lawmakers the the d d decidedly wrong rong practice of ot suIng leg additional certificates to stockholders under under the guise of ot dividends dl or ora T v 5 dividends a The rhe be majority opinion of oC the supreme court court court- only argues from from the point to whether r the stockholders stockholder's additional stoc stock Is an an in Income ome within th the theof of ot the sixteenth amendment and the the court court decides s that it Is not an Income me within such meaning 1 i iThe The court however howe does doe not from the nature of ot t the te e case consider the ue tIon as to whether stock dividends re result in weakening the companies such dividends That such companies are are weakened by this thIs' pian plan proven by the remark of or the court that ha n nothing could more C re early Jearly show that to tax a stock dividend Is S to tax a a capital Increase e and Income practically in every Instance the strength of oC any company is demon- demon l orated to at least a certain extent by the amount of ot shares remaining in treasury as a bulwark against ag the time when I more Emore ore capital l might be for expansion or to tide over ovel unprofitable seasons Should all ajl the stock of any ny company be d distributed in the fal form of or dividends and it itC L C me necessary to raise funds lunds the only would be th the increase in with the Issue of ot still Mill tIll more stock and aid an increase e in profits I order to pay dividends on the increased issue vs as well as upon that dis- dis b ted In th the form of dividends di S J I There are already too m many ways ways in which stocks can can cai be juggled jugged to the of ot original stockholders rs and also of ot the he consumers consumers of oC t arlous 5 ducts S t I The rhe decision of ot the supreme c court urt is absolute proof proof that a law hould should Ite e enacted not only prohibiting the declaration of stock t c dividends but bu makIE mak- mak S i IE such action a a. felony elon |