OCR Text |
Show mm thinks MELLON WRONG Demands Treasury Chief Put Tax on Huge Stock Dividends WASHINGTON, Oct :3. Secretary, Mellon was charged by Hepresontath o Knjar. Republican. Wisconsin, With overthrowing the potlOD of congress by his ruling that Section 2 20 of the revenue reve-nue law- c' -signed to reach large surpluses, sur-pluses, accumulated by corporations to prevent the payment of Individual surtaxes, was not applicable in the case of the projected -loo per cent stock dividend of tho Standard Oil company of New Jersey The charge was made In a letter to .Mr. Mellon, made public by the Wisconsin Wis-consin representuth e. The communl-i communl-i ttlpn was in reply to Mr. Mellon's re-spnn re-spnn ;e to one written by Mr. Frear calling attention to tbe reported stock dividend and urging that the. penalty provision be Invoked. Mr- Mellon wrote that Section L'20 had no rela tlon to stock dividends as that proposed pro-posed by the New Jersey OH company, but added that there had been and would be rrb laxity on the part ot the treasury In evoking that section "wherever there Is any basis for so rl i , i n or " PERSONAL i NTEKESTS. "Your letter' replied Mr. Frear, "Ignores and misapprehends the plain reading and purpose of the statute and your ruling assumes the prerogatives preroga-tives of the supremo court when It sets aside this law. "I trust that you are not under a misapprehension as to the question1 squarely present' d to you because tho press has been filled with announcements announce-ments that the purpose of the stock dividends to be Issued by the Standard Oil company and the proposed stock dividend of $500 000,000 In United States Steel) In which you are supposed sup-posed to be interested, Is for the pnr-poso pnr-poso of avoiding the surtaxes which vv.nild apply If these enormous amounts, aggregating over $1,000,000 -000 were distributed as cash dividend. Naturally as a man of great wealth. Interested In 60 or more corporations; affected by the ruling on stock dividends divi-dends and taxation, you will find your personal Interest Involved In any decision, de-cision, but I assume in your position posi-tion as a public officer you will be governed by the law and the Interests of the public rather than by any personal per-sonal consideration DUTY POINTFTO OUT. "In your letter to me jou say h corporation has paid Its full tax. This r- fers. r take it. to Section 230. but the penalty of 25 per cent Is imposed by congress In order to reach the unwarranted un-warranted surpluses that aro held by I corporations and not distributed BO I cash div idends in order to evade tho I tax payment under fie Individual sur- tax law. That is tho distinction so clearly made by conjrreM that It can not fairly bo misunderstood. It Is another way of reaching the tax on undistributed profits which Is undoubtedly un-doubtedly permitted under the law and the decision of the supreme cou-t in the stock dividend case. "Your effort to protect the government gov-ernment treasury in the past have not been directed toward collecting a tax upon larpe and powerful corpora-1 lions, and in the present emergency your action In overruling the express act of congress will result in a loss to the treasury of an amount reach-1 ing several hundred million dollars' annually. "I trust that you will reconsider your ruling." |