The Daily Alaska empire Newspaper, February 9, 1945, Page 5

IRIDAY, FEBRUARY 9, 1945 THL DAILY ALASKA EMPIRE - JU | Senate Hears Harsch Anent of a resident is subject to the c H tax. | The tax rate applied to individual incomes varies from 2 per cent on net incomes of $2,000 or less, up to 4 per cent on incomes in excess of $10,000. The rate on corporations {and banks is a flat 4 per cent of will the effectiveness of the act. There can be great variation. 1 admit the appropriation reached for inclusion in this bill was not based on adequate detailed figures. (In |response to a question from another {Senator) I do not think ‘that 10 per cent of collections would be an Incomes Levy Tax Counselor Explains| Tax Bill to Committee of Whole Senate " That question “Who is Harsch prepounded to his fellow solons by Senator O. D. Cochran. Yesterday afternoon,, before pack- ed galleries, the question was ans- wered by the gentleman himself. A1-| fred Harsch not only established his identity before the Territorial Sen- ate, sitting as a Committee of the Whole a hear him, but also estab- lished that he knows a very great deal about the proposed Alaska In- come Tax Act, Senate Bill No. 12. In reply to queries by Senator Al- len Shattuck, Prof. Harsch describ- | ed his background in taxation prob-| lems as including: 17 years in the| tax field, for three years counsel for| the Washington State Tax Commis-} sion, at present on leave from thel! Umvt':sny of Washington faculty,/ where he teaches taxation courses in the School of Law. Senator | Shattuck’s question as to how he| happened to have come north to frame an income tax bill for the| Territory of ‘Alaska was somehow | overlooked, without answer, | Prof. Harsch's ~presence before the Senate yesterday afternoon came about through considerable | parliamentary jockeying during the morning meeting of the body; and,! another skirmish took place before Y2 commeniced his testimony. Gordon ‘Wants Steno i Vith ‘Senater Cochran appointed | vy Senate President Edward D, Coffey, to fill the chair for the com-| mittee hearing, Senator Frank Gor- don, sponsor of the tax measure,| moved that a stenographic trans- cription be made of the proceedings; of the hearing. He stated as his| reason for the motion that he be- lieved that Prof. Harsch's remarks| on the bill should be available for|such laws have been enacted, two of the computed tax. reference. With objections heard from Sen- ators Coffey and Leo W. Rogge, the motion was altered to provide onlyi for stenographic recording of such| general statements as Prof. Harsch| might make and questions address- | ed to Him and his answers. Im that form the motion carried and Lawrence Kerr, Clerk to the Sen-| ate Judjeciary Committee, was draft-% ed for the stenographic chore. Naoj provision:for paying Mr. Kerr for the additional duties was made at the time, and that question is now causing Senators some unease. Harsch Explains i Prof. Harseh’s explanation of the| proposed bill was at considerable length, as is the bill, siid there fol- lows here only'the highlights from his statement and the more salient questions adgressed to him and his replies, given in substance: Prof. Harsch’s introductory state- ment—The proposed Senate Bill No. 12 adheres as closely as possible to the Federal Income Tax law, in par- ticular as regards the establishing of gross income and deductions al- lowed. The personal exemption cre- dits allowed are very nearly equal to $1,000 each for the taxpayer a spouse and for dependents. The individual tax rates proposed are} substantially one-tenth of the Fed- eral surtax rates. +Enforcement The enforcement = provisions are very similar to those of the Feder- al law, al Majot feature of the bill is the adobtion of the”Federal plan for application’ of the tax to individuals through optional "tables —the “short form”. ‘The tables pro- vide an easy-way of determining the amount of an individual's tax. The proposed net income tax sup- plants, to a, large degree Territorial licepse taxes and most of them are repealed, as are the taxes on net incomes of mines and salmon can- neries. Withholding Feature A withholding feature 1s incorpor- ated in the bill, patterned in large degree after the Federal pro- visions, including tables for calcu- lating amounts to be withheld, which will be approximately equal in total to the tax on a total year's income. The bill is so set up that the tables, both for computing tax and for withholding, are useable for al- most every taxpayer, regardless of the amount of gross income. They are not limited to incomes of $5,000 or less, as are the Federal. A “long form” of tax return is, however, a- vailable to such taxpayers as may prefer it. An entirely different and sep- arate tax set-up is made for season- al workers — those who derive in- comes from within the Territory during a period of less than five months of the year. The total amount of their tax is withheld by their employer according to table, and they do not file an individual return, Tax Begins in 1946 Collection of the tax begins with the year 1946. The computation of net income is substantially the same as that for the Federal tax, with the exception that non-residents must report as taxable income only that part of their income which is derived from sources within the Territory. The entire gross income, from all sour-l yestarday forenoon rhetorically | { Where a tax arrived at by formula | isis of 1941 Federal collections the' net income, with insurance com- panies not subject’ to the net in-|tion costs in the first years. come tax, as, in accordance with| Senator Frank Whaley—Is there general procedure, they are taxed|any difference in rates of tax ap-| in gross premiums. plied to seasonal workers and resi- ' Partnerships dents; is there discrimination? Does | Partnerships must file returns, but|the tax rate “penalize” non-resi- |pay no tax; the tax being collected |dents? © {from the individual partners on| Prof. Harsch—There is no per-| |their distributed shares. The bill,}centage rate of tax applied to sea-: as concerns estates and trusts and/sonal workers, they are taxed by| accounting periods, follows Federal|income brackets. { |unreasonable figure for administra- provisions. The bill provides for| Senator Cochran—Would not an review of tax liabilities in dispute|“average” rate on seasonal work- and sets up an administrative de-|ers be about 2 per cent? |partment with a supervisor ap-| Prof. Harsch—Less than 2 per }pomted by the Governor with legis- {lative consent. Question by Senator Coffey—How |is it proposed to collect taxes from non-residents, such as wholesale (houses that do a large volume of | business in the Territory? Prof. Harsch—If they are aclual-l ly doing business within the Terri- tory or own properties within it they are subject to the jurisdiction of the Territory. Senator Coffey—Where a com- any does business in several states s well as Alaska, how is the a- mount of tax owed the Territory determined? cent, I believe. | Senator Coffey—Would the $25 fishing license tax and $5 school poll tax be eliminated for season- al workers? { Prof. Harsch—No. Reaching Tax Rates Senator Don Carlos Brownell— How were the rates of tax arriv- ed at? Prof. Harsch—They are the rates as most frequently applied in states having the inéome tax law. Senator Brownell—Were the rates influenced by anticipated over-all revenue? . Pref. Harsch—That was only one Company Tax {of many determining factors. Prof, Harsch—Where such- com-| Senator Brownell—-Why was not | panies keep separate accounting [the graduation of rates continued records of business within the Terri-|above $10,000? tory, those records are accepted to Prof. Harsch—That seemed a establish the tax. Where no sep-|reasonable figure and beyond that arate accounts are kept, there is a|amount it would not have been prac- forntula developed through exper-|tical to construct the computed tax fence in the 36 States already hay-|tables that were desired. ing income tax laws. The formula| Senator Joe Green—How does the is based on a comparative percen-|$20 exemption figure work? tage of the concern’s total net in- come; this bill incorporates the formula of the State of Minnesotay| which is recognized as successful | Prof. Harsch—In that instance we have departed from the Federal theory in order that the exemption will be equal for everyone, in actual tax dollars. Instead of allowing an cretion is left with the administra. €Xemption credit of $1,000 against tor to arrive at a fair tax. ithe net income to arrive at a tax- Senator Howard Lyng—You have @ble net income to which the tax been connected with the tax ad-|rates are applied—this bill adopts ministration in the State of Wash- & System whereby the tax rates ington. Does that State have an a'¢ applied to the entire net in- income tax? {come, then the exemption credit, of | {820 for the individual taxpayer, $20 does more for a spouse and each depen-| Three dent, is deducted from the amount | by the state legislature, one This system | by|is in use in several States and is initiative. They have been declared considered equitable. It makes th(\+ unconstitutional by the courts, due number of dollars of tax exempted | to a peculiarity of the Washington'the same for all, big and little tax- | State Constitution. | payers alike. Federal Employees i3 Senator Coffey—How would the' It is the same as exempting the withholding provision of the bill be first $1,000 of income. By this sys- effective regarding Federal Govern-|!em the exemption credits are tak- ment employees in the Territory? | out of the bottom tax bracket, Prof. Harsch—It is my _under-|¥hich all pay; the Federal system standing, though I do not know this takes the exemptions off the top first hand. that the Federal with- bracket and gives the large tax- holding act makes provision : ‘for payer a larger actual tax dollars ex- | withholding of State taxes. If it emption. .~ ‘i) does not, they would make a return Senator Coriey—What p'.osmtl to i he: fited: with. their tax paymem‘l““s would be repealed if this bill on the March 15 following the end Passes? | of the tax year. E Prof. Harsch—Territorial license | 1 Senator CO“%]-":“;: 3:‘_‘;‘““°t£ taxes—a long list; the mining net bi;x t}lx‘:v:‘pu::l :rmfremtcr:a; “’;‘:melincume tax and the net income tax | i on salmon fisheries. taxes under this bill? Senator Cochran—This bill would Prof. Harsch — Approxlmately‘nm affect the present 3. per —cent| $286,000 per, year. lgross tax on the income of gold Senator Coffey—At what amount pineco do you estimate the revenue re-| prof Harsch—No, turn to the Territory under this tayes on salmon. bill? Senator Cochran—Would the gold ‘and salmon taxes be deduct- able? Prof. Harch—No. Senator Yyng—Is there any dang- ‘er, that, if this act passes, it might be declared unconstitutional by the courts? Prof. Harsch—Under your En- would seem to be inequitable, dis- Pref. Harsch—Washington not have a net income tax. nor the case! Prof, Harsch—There are no fig- ures on which to determine that except very roughly. On the ba-‘ { yield from individual incomes would be about $400,000. However, these collection figures do not show filings from addresses outside the ’rerri-.! 3 tory, as the Federal collections are |2bling Act, there would seem to be reported by collection districts. Also, (1 dancer of such occurrence. such credits as are allowed for the| Senator Coffey—Must all dents make a return? School Poll Tax, etc., would be de- £ | aJ Prof. Harsch—All residents with ducted from that amount. , Territory To Benefit gross income of $800 or more must file a return. Senator Coffey—Then, if we take = 4 in $400,000 from this tax and by it| Senator Coffey—Whdt is this pro- eliminate $286,000 that we are now| vision regarding estimated returns? getting, and pay out $62,500 per yem.|Are estimates of income required, for administration (according to the same as for the Federal In- $125,000 appropriation for the bien- come Tax? nium) the Territory stands to bene-{ Prof. Harsch—Only if the Gover- fit from this proposed tax approxi-|or of the Territory should so dir- mately only $50,000. Is not that €ct by proclamation. Lo R R o e W B R S TR S Prof. Harsch—The $400,000 per| year yield is only from individual| incomes. In addition it is estimated that between $300,000 and $500,000 from corporate earnings will be re- ceived. . From that figure, again however, must be deducted credits allowed for Federal License tax- es paid. = Senator - Walker—1 have heard that during the war years the amount of Federal spending alone in the Territory has amounted to two and one-half billions of dollars. The Territory should receive ten million dollars from the tax on these war contractors alone. Senator Coffey—This tax does not begin to be collected until 1946. By 1946 the war may be over. To get back to my question Prof, Harsch, is not about $50,000 all the Territory would have left? Prof. Harsch—It is' contemplated that the tax will yield between $700,000 and $900,0000 annually; less credits of about $300,000 for Fed- eral Licenses, also less the poll tax and some other deductions. The appropriation for administration is $125,000 for two years. There is an additional appropriation of $100,000 to cover possible tax refunds. Administrative Costs * Senator Coffey—What would be the number of employees necessary to administer the law? Prof. Harsch—The costs of admin- istration will depend on the ability of the administrator appointed, as resi- A \ ) Fly FAIRBANKS WHITEHORSE JUNEAU SEATTLE PASSENGERS . EX Y 135 So. Franklin St. \before adjourning until \Parsons-McLean PAN AMERICAN -\ & L AMIRWAYS SYSTEM OUTSIDE? all the way in less than a day! Connecfions <t ANCHORAGE, NOME, BETHEL, and All Alaska Points INFQRMATION . RESERVATIONS . TICKETS PAN AMERICAN ALRWALS Senator Coffey--Do other _State) income tax laws have this provis-| ion? Prof. Harsch—] believe no Smtes] require estimated tax returns, atj| the present time. 1 Then, the Committee arose, on motion by Senator Lyng. Once again out of Committee of the Whole, the Senate adjourned until 1 o'clack this afternoon; fol- lowing the announcement of a meet- ing of the Finance Committee, set for 10 o'clock this morning. It had previously been expressed| by President Coffey, that no| business would be permitted to be! concluded in the Senate during the| absence to Sitka of the four mem- | bers of the Institutions Committee. - | QUIET REIGNS OVER SENATE HALL TODAY Bill Setting Up Alaska De- velopment Authority | Is Offered 1 Alaska’s legislative halls were comparative deep silence today far as the Senate was concerned, all discussion and consideration in as as | of i measures was suspended until the | return from Sitka of the Pxoneers'i i Home investigating committee. The Senate got together at 1 o'clock this afternoon, but remained in session for only about 30 minutes 11 o'clock tomorrow forenoon. The remainder of today was to be devoted to com- mittee work and other phases of | that large portion of law-making that takes place off the floor of the chamber. One committee meeting was an-' nounced, with the Finance Com- mittee being called together follow- ing adjournment. Senate Bill No. 19, entitled: “An Act to create an Alaska Develop- | ment Authority, defining its powers" and duties, fixing its compensation, | providing for the appointment of an Advisory Council and General Man- | ager, reports to the Legislature, making an appropriation therefor | and declaring an emergency,” was | introduced jointly by Senators How- | ard Lyng and N. R. Walker. It was referred to the Committee on Labor and Commerce, with the instruction | that it be passed along to the Fl~;» —— | nance Committee. | Other matters before the body in- cluded the approval of the Journal of the previous day; the reading of | a communication from the Governor to the effect that he had read House Joint Memorial No. 1 and had sent it to the Secretary of Al- aska for permanent filing. Also, an invitation was read from Delta Chapter of Beta Sigma Phi, asking the legislators to attend the art show and tea to be given by the sorority. Married Jan. 26l Miss Isabel Parsons ,daughter of Mr .and Mrs. Ernest Parsons of Ju- neau, and Capt. Joseph McLean, son of Mrs. Elsie McLean of Juneau, were united in marriage in San Francisco on Tuesday January 23, in | the presence of a few friends. Mrs. | Donald Raleigh, a girlhood friend, | was her only attendant. | Immediately after the ceremony they left on an extended honeymoon through the Southern States. Capt. McLean is to be in Seattle or San Francisco by February 26 to rejoin his company and Mrs. McLean will ccime to Junéau to make her home with her ‘pafents until her husband returns from the wars. AU, ALASKA GAME CHIEFS GATHER HERE Commissioner from the Second Di- ed that vision; Darl Bright, flcet engineer for the Sixth Wildlife Region, and |sed, but Captain Royal Cole, port captain for | nouncement ’l\w wildlife fleet | mission has had Coming from Kelchikan on the|sider them the slate for holds several matters to be disc that there can be no an- until the meeting after the com- | opportunity to con- ASSOCIATION OF NURSES AGAINST MEMBER DRAFT FIVE ficial Party Last Night Game and Fish officials told the mark here today, ready to launch into the annual meeting of the Al- aska Game Commission, which had been scheduled to open today. A majority of the officials arrived in Juneau last night aboard the Flo ship Brant, of the Wildlife S¢ fleet, Capt. Leo James Collins Passengers aboard the Brant were: From Seattle—W. E. Crouch, chief of the division of game manage- vice | Brant, was Dan Ralston, former | SN LR | i | police chief in Juneau and now | | , Wildlife at Ketchikan. James | NEw (RUISER | R. Leek! biologist in charge of [ * | the experimental fur farm operated | .’UNEAU “ow jointly by the Wildlife Service and | R the University of Alaska, came in Bram B”ngs m I_arge Of_ aboard ihe vessel from Petersburg BEING BU".I’ Already gathered in Juneau were Earl Ohmer, Game Commissioner | for the First Divigion and S. Gor- Harry I. Lucas, mayor of Juneau don Springbett, Commissioner from when the original Cruiser Juneau Fourth Division. Time was be- was built in 1942, has been in- ing marked today, awaiting the ar-|formed that a new light Cruiser rival of the Game Commissioner for Juneau is being built for the Navy the Third Division, Andrew A. Sim-|at a shipyard on the East (‘nimj mcns, who is due to arrive by to replace the original Juneau plan sunk in the Battle of Guadalcanal November 13, 1942 Wildlife Agents Dale Fleek and| The Empire expects pictures and Hosea Sarber arrived yesterday |other informatfon on the new sifip | from Petersburg, aboard the Wild-|as soon as clearance is obtained | life vessel Black Bear. Mrs. Sarber | from the Navy Department. accompanied her husband. X i o Also included on the passenger - |list of the Brant were: Mrs. Hynes,| Mrs. Cuibertson, the two Culbertson children, John Steele, Jr, and Sarah| & Will Give Consent Only If All Women Come Under Act WASHINGTON, Feb. 9.—Officers of the American Nurses' Association said today the association would ac- cept a nurses’ draft “only as the first step in a Selective Service Act for all women.” A The association recommended in- stead that a federally-financed re- cruiting program, to be at least compaarble in scope to those ems ployed in enlisting WACS and WAVES, be used. A P 4 ment, attached to the-Chicago office of the Wildlife Service; Frank W.|Ann Mrs. Ohmer and Mrs, Ral- L K Hynes, Regional Director of the|ston are also in Junecau, arriving by| | wear AYSER Fish and Wildlife Service of the | steamer and plane respectively. 1 Department of the Interior and| Jack O'Connor, Game Manage- . Executive Director of the Alaska| ment Supervisor has been in Ju-| & fl!lflly. o ;/MI owe Game Commission; J, Steele Cul- neau in charge of the Wildlife of- bertson, Fisheries Management Su-fic here pervisor; Frank P. Williams, Game Director Hynes this morning stat- There’s only one better buy in Bonds...WAR BONDS/} , i ? | o your au fience!” PHONE 433 BUILDING CONTRACTORS REPAIRING and REMODELING ALL TYPES OF GLASS WORK Panes Replaced-New Frames Made 149 So. Main Street ———a Glenmore Distilleries Co., Incorporated, Louisville, Kentucky SPECIAL | SHERWIN - WILLIAMS | SANITARY ... DECORATIVE J DECOTINT Hot or Cold Water | WALL FINISH | Broken Lines and Disconlin;led | Colors of DECOTINT at 45¢-- 5 Ib. pkgs. Each package will cover 250 sq. fi. 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