CIashings

The Tax Reduction Bill went into joint conference. The conference committee decided to hold its sessions in secret--no doubt wisely. There were a great many delicate questions to be disposed of. The two provisions, in the Senate version of the bill, which are most irritating to regular Republicans--which are likely to evoke a Presidential veto if they are finally adopted are: 1) the publicity of tax returns and 2) the graduated tax on undistributed profits of corporations. The provisions were inserted by the combination of Democrats and Republican insurgents in the Senate. However, when it came to appointing members of the Joint Conference Committee, the Senate allotted its five places, as usual, to three Republicans and two Democrats. If the joint conference, with Republicans in the majority, strikes out these provisions there is bound to be trouble when the conference report is submitted to the Senate. Meanwhile the two provisions had engendered extra legislative controversy. It was objected to the graduated tax on undistributed profits that it would penalize corporate thrift, place young and growing corporations at a disadvantage, and prevent the proceeds of a fat year from being conserved for the inevitable lean year to follow. The fight over the publicity provision was even more bitter. Senator Norris, Republican insurgent declared : "I can see no reason why income tax returns should not be made public the same as other public records. The honest man will make the proper returns anyhow, so will have no objections to having his returns scanned. It will prevent the dishonest man from making false returns, thereby impelling honest returns and increasing the revenues." To this Secretary Mellon rejoined: "With publicity of returns, however, the temptation to conceal income would be much greater, and I venture to say that with such a provision in the law, millions of dollars of income which would otherwise be reported will be concealed, to the great loss in revenue to the Government. Far from being the means of increasing revenue, publicity will destroy revenue."

Senator Carter Glass, Democrat, remarked : "I voted for this provision because I knew an infinitely more mischievous one was being held in reserve. I believe no good can be accomplished by it and that not a single dollar of additional revenue will be added to the Treasury."

Secretary Hoover added: "Large corporations already publish these facts through reports to stockholders, and this requirement therefore does not materially affect them.

"Such publication would be likely to become the basis of credit rating in the smaller businesses and the vital factor of character and reputation will be undermined by the tax return of any bad year, thus working grave injustice on firms undergoing momentary losses or those that are unavoidable in times of depression.

"It will enable strong competitors to take advantage of a temporary weak condition of smaller concerns. And, on the other hand, fraudulent concerns would gladly pay a few thousand dollars a year, falsely disguised as profit, in order to mislead the public. People who wish to disguise their wealth will be stimulated to further evasion. It can add nothing to revenue returns."