Evening Star Newspaper, August 6, 1935, Page 4

PAIR CONTESTS T0 FEATURE PLAY Man Against Man, Woman Against Woman in Bridge Competition. By the Associated Press. 'ASBURY PARK, N. J., August 6.— It was man against man and woman against woman in the American Bridge League’s annual Summer tournament The feature events were the men's and women's pair events. In the for- mer 53 pairs were entered, while 28 pairs of women, including present and former title holders, competed in the women's event. At the end of the first session, early today, Mrs. Anne Rosenfeld and Mrs. A. C. Hoffmyer of Cleveland were leading with 22712 match points. Closely following them were Mrs. Olive Peterson of Philadelphia and Mrs. Doris Fuller of New York with 217%; points. Baltimorean in Lead. In the men’s event, Dr. Llewelyn Lord of Baltimore, paired with Mil- lard P. Kaiser of St. Louis, was lead- ing the field. C. J. Solomon and E. G. Ellenbogren of Philadelphia held second place. Kaiser and Lord had a lead of 9 match points with 210, and the second-place | pair had 201. Philip Abramson and S. Waterman of New York were third with 190!, match points. Today also brought the final session of the mixed team of four, in which two of the defending champions, Mr. | and Mrs. Lester Bachner of New York, ‘were paired with Mr. and Mrs. Millard | Kaiser of St. Louis. This team was leading the field of 21 teams entered by a margin of 11, match points. Strike Hard Luck, The California champions, Hal W. Pemberton and R. A. Puffer of Los Angeles, ran into a streak of tough luck when on the first board their op- ponents made six no-trump on the hand below: South dealer. nerable. North and South vul- A A-K-J-7-6-3 West. Pass. Pi North. 2 spades. 3 spades. 4 diamonds. 6 no trumps. East Pass. Pase Pass 6 diamonds. Pass. Pass. Pass. West's opening lead, enough, was the club 10, the leader, of course, being unaware that the de- clarer did not hold a spade. In con- sequence the declarer was able by fine play to fulfill his ambitious contract. ——— Ford (Continued From First Page.) per cent of the outstanding stock of the Ford Motor Co. Henry Ford, therefore, does not own more than 59 per cent of the stock of the Ford Motor Co., and the inheritance tax could apply only to what he retains. “Edsel Ford has already received an interest in the Ford Motor Co. now worth on the balance sheet $246,000,- 000. This is not touched by inherit- ance or estate taxes. This illustrates concretely what I have stated to be the general rule, that estates do not pass from rich men to poor men, but usually to heirs already amply pro- vided for. “An estate of $354,000,000, the bal- | ance sheet value of the remaining 59 | per cent of the stock which we will | assume Mr. Henry Ford still owns, is | abnormal by any test we know. The | House bill, intended to cover most nor- | mal estates, stops graduation entirely | at $10,000,000 and the Ford estate, on these figures, would be 35 times the point at which graduation of rates ceases. The largest estate, so far returned to the Bureau of Internal Revenue was $140,000,000. It is ob- vious that the hypothetical applica- tion of this law to the Ford fortune would be a distortion of its usual ap- plication. Surplus Not Distributed. “Morcover, while the Ford Motor Co. has been accumulating its surplus at an average rate of $20,000,000 a vear, this amount has not been dis- tributed to stockholders where it ‘would be subject to surtaxes. The in- crease in value of the holdings of Henry Ford, if realized upon by a sale in his lifetime, would pay heavy indi- vidual taxes. If it now passes by n- heritance, it will have escaped all surtaxes. Thus, if the heirs of Henry Ford shall now find themselves in high inheritance tax brackets, it is in part offset by the advantages of ac- cumulating wealth without paying surtaxes thereon. “It is impossible, on the bases of Tublished figures, to arrive at a re- Jiable estimate of the tax that might be imposed upon the estate of Henry Ford. We do not know how much ot his holdings will remain in his indi- vidual possession and subject to tax or how much of them will pass to organ- izations that are exempt from tax, nor what part of them will pass to his son end what part to others. “The inheritance tax, whatever its amount, would not be a tax on the Ford Motor Co., nor a claim against it. According to public statements, the Ford Motor Co. began business in 1903 | with $28,000 in cash actually paid in, and its net worth of $600,000,000 in 1934 represents the accumulations after the payment of dividends.” Over this period the Ford Motor Co. has added to the book value of its stock through accumulation of surplus an average of, roughly, $20,000.00_ a year. It is obvious that a corporation with this record is not to be abandoned or closed because of any tax on the right to inherit its stock. “The utmost to be anticipated would be that some part of the equity now represented by the common stock ‘would be sold to other interests or to the public. This equity might be disposed of in part through a bond issue, or through preferred stock, or by a sale of a portion of the com- mon stock. The effect of this would be to convert what is now a family industry into a widely owned one, and to permit the public to share in the future earnings of an enter- prise to the building of which public patronage has made a substantial contribution.” Auto Financiers Busy. The autmobile financing business is high up in the realm of big figures naturally | | taxes and our entire structure of cus- incomes | make the relative weight of these con- ROBERT H. HE prepared statement of Rob- | | enue Bureau counsel, before | today follows, in part: “As the figures of tax collections have become available it has become apparent that the present adminis- ture which, in terms of making that burden proportional to ability to pay, | had become out of balance even by | standards adopted during the preced- ing administration. “Income, gift, estate, capital stock and excess profits taxes. which are | the taxes that bear most heavily on | accumulated wealth, do not constitute the entire Federal tax burden. Poor Bear Brunt. “Miscellaneous internal | revenue toms taxes and now processing uxes! have an incidence that has little rela- tion to ability to contribute to the cost of Government. It is a commonplace that such taxes are proportional to consumption. hit poorer classes hardest and rest with greater weight upon large families with small incomes than they do upon small families with large in- | comes. “It may be assumed that collections in the year 1930, governed largely by the revenue act of 1928, reprmnmd‘ a ratio of burden between these two | types of taxes, fairly deliberately ar- rived at, without intent to unduly penalize the more affiuent. In that year we find that those taxes bearing most heavily on the well-to-do con- tributed $2,475,000,000 to the National ‘Treasury, or 68.2 per cent of its total internal revenue and customs receipts, while miscellaneous taxes and customs receipts, bearing most heavily upon | the consumer, contributed only $1.- 152,000,000, or 31.8 per cent of such receipts. By 1933, however, this ratio had so changed that only $781,000,000 was raised from the taxes based on ability to pay and that sum consti- tuted only 417 per cent of the Fed- eral internal rcvenue and customs re- ceipts, while taxes based on consump- tion produced $1.090,000.000, or 58.3 per cent of such Federal receipts. Trend Continues, “Since 1933 the trend has been in the same direction but the percentage change relatively small. In 1935 the taxes based on ability to pay contrib- uted 38.7 per cent of the internal rev- enue and customs receipts, or a de- cline since 1933 of only about 3 per cent, and, during the same period there has been an increase in the pro- portion of revenues contributed by taxes based on consumption from 58.3 to 61.3, an increase of only about $ per cent. “While the shift in the tax burden from those more able to those less able to pay has been small from 1933 to 1935, this shift, however small, is tnsound. The trend should be re- versed. “In weighing this shifting burden of taxation, allowance must also be made for declining incomes which sumer taxes greater than mere yield would signify. These taxes are paid largely out of consumers’ purchasing power,.and are borne to a great extent by those whose incomes are barely adequate for maintenance and who lack other resources to fall back upon. The burden ‘of taxation should be so readjusted as to meet the cost of gov- ernment by a recovery tax program that will eliminate the present in- equities and that will not impair the purchasing power of the mass of con- sumers. More Equitable Basis Desired. “The cost of the emergency meas- ures to combat the depression has of necessity been met largely by bor- rowing. As we emerge from the de- pression, it is time to make such ad- justments in the tax structure as will meet the postponed costs of protecting the social order with a tax structure in which the balance between taxes levied on the basis of ability to pay and taxes based on consumption is more equitable. “Added revenue to go toward bal- ancing the budget and toward meeting the cost of overcoming a depression which threatened rights of property should be contributed by the propertied class in proportion to their ability to pay “Even informed observers were startled at the tendency to concentra- tion and the rate of concentration indicated by the 1933 returns. The number of persons filling income tax returns decreased from 1932 by 3.8 per cent. Not all who file returns pay taxes because of exemptions, so that only 1,747,740 persons out of our en- tire population reported taxable in- comes, and the total amount of income reported fell by 5.5 per cent. Yet in the face of generally declining incomes, and in spite of the bank holi- day and other events of that year, the number who reported net taxable in- comes of $1,000,000 or over more than and does a large business for any industry regardless of the times. ] Tax Inequalities Pointed Out In Statement by Jackson Counsel for the Internal Revenue Bureau, is shown telling the Senate Finance Committee that the “propertied class” should contribute added revenue toward balancing the budget. THE EVENING STAR, WASHINGTON, PAY RAISE ENDS GREEK REVOLUTION Gen. Bakapoulos Conquers Rebel-Strikers, Then Ne- gotiates Increase. By the Assoclated Press. ATHENS, August 6.—Four thou- sand strikers, their revolt crushed, returned to work in Crete today with a 15 per cent wage increase nego- tiated by Gen. Bakapoulos. The general, after accepting the surrender of the rebels, was instru- mental in settling the strike issues, outstanding among which was the wage question. A check of casualties from the street fighting at Candia yesterday showed that 6 persons were killed and 51 wounded. Previously, reports were received that the strikers, supported by the populace, had created a menacing situation in an outlying village of the Candia district, and rumors were current that the strikers had over- thrown local authorities. Warships Called Back. The government, however, rescinded orders for warships and bombing planes to go from Athens to Candia. Gen. Bakapoulos, in command of the troubled zone, reported to Athens that the riotous strikers dispersed peacefully last night and were or- dered to surrender all stolen arms to- day under pain of drastic measures. Labor circles attributed the upris- ing to failure to meet the demands of the strikers, although some gov- ernment quarters placed the responsi- | bility on adherents of former Premier Eleutherios Venizelos, who led an un- | successful revolt five months ago. Professes Ignorance. (The exiled Venizelos, in seclusion at the isolated French village of 1‘ Tesse-La-Madeleine, said that he did not know what was behind the rebel- lion.) The question of restoration of the JACKSON, —A. P. Photo. . D. C, TUESDAY, AUGUST 6, 1935. o1d Mary Runs Up Circus Water Bill It takes a lot of water to give Old Mary, a favorite among the hundreds of animals with the Hagenbeck- ‘Wallace and Forepaugh-Sells Bros.' Combined Circus, & bath, as shown in the above picture. will be in Washington Thursday and Friday, August 15 and 16, at Fifth street and Florida avenue northeast, is said to have the largest animal menagerie in the world. TRIO ELECTROCUTED WHEN CAR HITS POLE Stage Couple and Daughter, 3, Killed as Power Line Falls on Auto. By the Associated Press. DURHAM, N. C.. August 6.—Death ended the stage career of a trouper, his wife and their 3-year-old daughter early yesterday when their car left the The circus, which Taxes (Continued From | Appeals to keep abreast of tax litiga- | tion has resulted in tremendous losses to the Government,” he said, and is a situation “of utmost gravity.” “No serious difficulties are seen in tance taxes” Jackson sald. To the question of difficulty of liquidation in the case of some large estates, he | said, “legislation must have regard | for the general condition rather than ert H. Jackson, Internal Rev- I double, having increased from 20 in 1932 to 50 such persons in 1933. “By general consent, our income tax laws, under all administrations, have provided exemptions, in amounts subsistence, so as to avoid depress- ing the standard of living within the | lower income groups. The ngnmcant‘ result is that when the groups that income for necessities, are left out, we have only a relatively small num- ber left. Applying the standard thus | set by Congress as necessary to a | reasonable way of life, we find the | largest number who ever rose above that .standard, as evidenced by the number of returns indicating taxable | incomes, to be 5,518,310. This was in 1920, when exemptions allowed were at their lowest. In 1933 the returns flled, which showed taxable | numbered 1,747,740. | “The conclusion indicated by Treas- ury statistics is that the base for | our income tax is now seriously nar- | row, and results in part from the fact | that the number of people having in- | comes above a generally nrcepted‘ subsistence level is seriously small. | “We have just studied the incomes | of 58 taxpayers who. in 1932, re-| | ported total taxable and non-taxable incomes exceeding $1,000,000. Of the 58 such taxpayers, 38, or over 70 per cent, are accounted for by member- ship in 14 families. This indicates | that statisctics may fail to reveal the | true extent of concentration of op-l portunity and control, and hence oX! the benefit of organized government and of both ability and duty to pay taxes. Fortunes Dissipated. “It is often asserted that large wealth is dissipated in three genera- | tions, and it has become a proverb | |that it is ‘three generations from | shirt sleeves to shirt sleeves” It was| doubtless once true that all a grand- | father saved from the fruits of his| labor could be spent by a grandson. | It is probably true today of very mod- erat2 fortunes. It is not true of large invested fortunes under present condi- tions. They not only perpetuate them- selves—they grow. “This is because they are now so large. A riotously living heir to one of our larger fortunes would exhaust himself before he could exhaust the income alone of the estate. Further- more, such estates are largely perpetu- ated in trusts, and every legal and economic obstacle to their dissipation is employed. They are invested in the enterprises of the country where the income and management are not dependent upon the judgment of in- dustry of the heir or are invested in tax-free Government securities. “Most of the large estates as at present managed, we find, not only perpetuate themselves, but are larger as they pass from generation to gen- eration. With large incomes from inherited property remaining intact or actuelly increasing, there results a diversion of a large proportion of the community's productive re- sources to the satisfaction of the wants of a few individuals, and a fastening of control in few hands. Determined by Collections. “The tax burden is not a mere mat- ter of rates written into the law Actual collections determine the bur- den carried, and administrative pro- visions and procedures have resulted in the income tax law in the higher brackets being considerably less ef- fective in application than income tax in the lower brackets. “The Treasury is deeply concerned over the problems of enforcement, some defects of which 1t calls to your attention, both for whatever consid- eration you feel it should have in shaping the policy of the law and rates of tax, and also because we find fair and equal enforcement to be it- self & problem which the Congress must soon deal with. “Congress lays a surtax rate of 4 per cent on an income between $4,000 and $6,000. In actual operation that means that the average taxpayer within that range of income really pays to the Federal Government a surtax of 4 per cent on that $2,000. On the other hand, Congress lays a surtax rate of 59 per cent on net in- comes in excess of $1,000,000, but that does not, by any means, indicate that each taxpayer in that range of in- come pays a surtax of 59 per cent on all such excess. The latter taxpayer has available many devices for reduc- ing his tax liability which are not available to the small taxpayer. An illustrative, but by no means all- inclusive, list of means oy which in actual experience the large tax rates are made less effective, follows: SLOY INTS e J8PA You'll be sure of a PERFECT job if you use Devoe & Reynolds Paints. A special paint for every purpose. NA. 8610 922 N. Y. Ave. N.W. | Twenty of them had net taxable in- monarchy also entered into the situa- | tion. Responsible sources said the | policies of Gen. George Kondylis. | the Senate Finance Committee | considered necessary to reasonable | minjster of war and now an active | monarchist, have aroused distrust in the Republican populace of Crete In urging an early plebiscite on the question of restoration, he has been | tration inherited in 1933 a tax struc- | are considered to need all of their | strongly opposed by Premier Panayoti Tsaldaris. ~Political sources said Tsal- | daris would like to avoid a plebiscite, but that Kondylis might even favor a coup d'etat if monarchist success at the polls appeared dubious. The Cretian revolt broke out yes- terday morning at the Candia pre- fecture. Card Party Tonight. CAPITOL HEIGHTS, Md. August 8 (Special).—A card party will be given tonight in the fire house under | auspices of the Capitol Heights Com- | munity Welfare Organization. Mrs. Isabel Stommel and Mrs. Irene A. Conner are in charge of the arrange- | ments, —— Treasurer Sworn In. LEONARDTOWN, Md., August 6 (Special) —Harrison Hobbs of Valley Lee, Republican, was sworn in as treasurer of St. Marys County yester- cay, succeeding Benjamin Drury, Democrat. Hobbs was elected last November but the treasurer's term does not expire here until August 5 of the following year. ties is an important tax shelter. The small taxpayer finds their yield small and the supplemental yield to him through tax savings insignificant. The large taxpayer finds the nominal yield supplemented by a very valuable tax exemption and the result is a con- iderable concentration of holdings of tax - exempt securities among those having the larger incomes. Apply Only to Part. “When Congress, therefore, writes rates such as apply to the wage earn- | ers, salaried men, the small business men or the professional men, it may be sure that most of them will pay the full legal rate upon their entire nei income. When considering the rates in the higher brackets, however, it must be remembered that they will apply to but a part of the taxpayer's actual income, for the taxpayers in the higher brackets, according to our studies, commonly have large tax- free incomes, often equal to, or in ex- cess of, taxabie. incomes. By reason of this fact rates apparently severe are in fact moderated and to some extent made ineffective. “We have analyzed the 1932 returns of the 58 taxpayers whose gross in- comes for that year exceed $1,000.400. comes exceeding $1,000,000. “The information is incomplete. While the regulations require that tax exeémpts shall be reported, al- though not taxed, & substantial num- ber of taxpayers, including some of the largest, failed to return any informa- tion. The figures that we use, there- fore, understate the extent of avoid- ance through tax-exempt securities. Tax-Exempt Securities. “The 58 taxpayers reported the ownership of $461,000,000 tax-exempt securities and a tax-free income there- from in that year of $21,000,487, as against a taxable income of the group amounting to $57,015,000. The exemp- tion on this group cost the Govern- ment in 1932, $11,866,000 in taxes. This study indicates that our tax laws wholy fail to reach about 37 per cent of the income actually enjoyed from all sources by those whose incomes are over a million dollars a year. “The study also reveals gross in- equalities of taxation between the well-to-do taxpayers of really similar position and income. We have nre- pared a study of the effect of tax- exempt securities upon the 58 gross incomes exceeding $1,000,000 in 1932, with the taxpayers identified only by letter; and we shall be glad to submit | People’s Revue,” Oxford Highway near here and| for the exceptional.” creashed into & power line pole, send- | ing 6.900 volts through the over- | tance taxes “fundamentally fair” and turned vehicle. | giving opportunity “of raising very Harvey Gatchett, 36, of the “Crazy | substantial revenue.” 8 New York com-| jackson was asked to return before pany, was killed by a shock when,|ihe committee tomorrow to discuss after escaping from the highly corporation taxes. This unexpected charged vehicle, he sought to extricate | prolonging of the hearing schedule his wife and their two small children, | mgde it unlikely that the committee Barbara, 3, and Bobble, 10. They lived | will conclude its hearings before at Portland, Oreg. | Thursday or Friday. Bobbie managed to escape from the now do not expect to have the meas- | car shortly before the gasoline tank | ure taken up on the floor before exploded, and the car burst into| Monday. flames. The bodies of Mrs. Gatchett, | 35, and Barbara were badly burned.| yij Two other members of the trcupe, Neva Chafin and Lou Archer, who also managed to extricate themselves from the car, stood by helpless to save the others. hear arguments tomorrow in | favor of increasing the already high rates was indicated today by the In closing, Jackson termed inheri-| Senate leaders | | The likelihood that the committee | | presence of Representative McFarlane, | Democrat, of Texas on the list of | | Wednesday's witness before the Senate | one-half per cent of the visitors were the rates during consideration of the | measure on the floor of that body. In addition, and perhaps of even | more significance, is the fact the| Texan also attempted to persuade the House to insert a provision for inter- | company dividends, a proposal which was made by President RoosevzIt in his message to Congress of June 19. | This was not carried out by the House, which declined to support Mr. Roose- | the way of administration of inheri-| Vélt nd McFarlane on this issue. | Prof. F. B. Fairchild of Yale Uni- versity and several business men also are scheduled to appear tomorrow. As passed by the House yesterday. | 282 to 96, the bill contained only one committee amendment, to allow cor-| porations exemption for gifts to char- | ity. In support of the measure 18 Republicans joined 254 Democrats, 7 Progressives and 3 Farmer-Laborites, while 18 Democrats jumped in the other direction to aid 78 Republicans in opposing it. SIS, AR e PARK VISITORS INCREASE 85,563 in Smoky Mountain Area in July. GATLINBURG, Tenn., August 6 (#.—A total of 85563 persons visited the Great Smoky Mountains National Park in July, compared with 70,035 in July, 1934, J. R. Eakin, superintendent, announced today. Twenty-seven and Gatchett was a comedian in the | group. McFarlane made several futile | frem States other than North Carolina team of Archer and Gatchett. |:twmpu to have the House increase | and Tennessee, site of the park. TREASURY BANS STATETAXTOKENS Morgenthau Holds Them lllegal—Sub-Penny Coin Drive Reopened. By the Associated Press. Secretary Morgenthau will notify four States that their sales tax tokens are illegal. Legal experts in his department have concluded that use of tokens manufactured by States for payment of suppenny sales taxes is illegal, and Illinois, Colorado, Missouri and Wash- ington will be notified immediately of the decision, Morgenthau said. The tokens represent fractions of a penny. ‘The Treasury's move was interpreted in some monetary circles as reopen- ing of a drive for congressional ap- proval of Federal coinage of half-cent pieces and mills (one-tenth of a cent). Morgenthau asked the House Coins, Weights and Measures Committee a month ago to legalize “fractional coin- age,” but his bill was pigeon-holed on grounds it was drawn up “too broadly.” ‘The midget pieces are sought by the Treasury to meet demands from sales taxes areas. At present, per- sons making small purchases often are required to pay a cent even though | the tax may be smaller. The Treasury's ban against State- coined tokens does not apply to trolley tokens, Morgenthau said. They are regarded as a commodity for exchange purposes, while tax tokens are given as change in a monetary transaction. “The mints are prepared to supply the need for fractional coins quickly 1f the necessary legislation is enacted,” he said, adding he hoped Congress would not embarrass States by refus- ing to pass the legislation, Decision Ignored. DENVER, August 6 (#).—Colorado expects to proceed with plans to use metal tokens in payment of sales taxes. despite a Treasury decision that use of the tokens is illegal. Charles M. Armstrong, Secretary of State, said tokens will be issued to merchants as soon as the 5,000,000 pieces ordered are available and that their use will start September 1. Now Showing ACT 11 in the Half-Yearly GROSNER Clearance MEN’S FURNISHINGS & $1.65 SHIRTS......... White broadcloth, neckband and collar attached. Sizes 1315 to 17%. (6 for $7) $250 WHITE BROAD-: CLOTH SHIRTS Collars attached; all sizes. (3 for $4.15) $1 NECKTIES.. All handmade with resilient construc- tion; wool lined; also bows. (6 for $3.15) Special group rayon, lisle and Jac- quards. $1.19 (6 for $1.50) 55¢c MEN'S HOSE. .. Including lisle, silk and rayon; clocks, stripes and checks. (6 for $2.25) $1.65 and $1.95 PAJAMAS. . Fancy or plain broadcloth in middy and coat styles with contrasting trim. (3 for $4) $1.65, $2 and $250 SPORT Polo shirts, pull-over and coat styles; plain shades; meshes, heather mixtures and broken stripes; Terry cloth and some celanese. $395 and $5 BATHING SUITS .... Zipper and one-piece styles. $1.35 95 $0,95 this study.” $].50 Round Trip Including Admission to CHARLES TOWN RACES August 7 to 10, Inclusive Special Train Leaves Washington 12:30 P. M. Leaves Rockville 12:55 P. M. Returning after last race B&O $2, $3 and $4 STRAW HATS Any one in the house. $3.50 GROSLITE FELT Light-weight felts in light and medium gray, tan and brown. $1.45 §7.65 Every year, gets going, we s HATS—added! just as the Clothing Sale tage “Act II,” THE FURNISHINGS CLEARANCE .. . this spreads the savings through every department in the store. LINEN SUITS.. Any linen suit in the house THE HE HOUSE regardless of former price; single and double breasted drape and single and double breasted regular models. SEERSUCKERS & Single and double breasted and cream. Were $12.75. GABARDINE SUITS...... Any Gabardine suit in the house. Shirred back with drape bello swings; in brown, gray, tel shades. Were $35. SUMMER SPORT TROU- CORDED 58 $24.75 " front or blue, pas- 95 Regardless of former price; Bedford cords, flannels, worsteds; in grey effects, tan effects and black stripes as white. IT'S AIR COOLED TO 75° AT GROSNER of 1325 F S ASK ABOUT OUR TEN-PAY CHARGE PLAN well as plain