Evening star. [volume], June 09, 1937, Page A-4, Image 4

About Evening star. [volume] (Washington, D.C.) 1854-1972

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EXEMPT TAX DRIVE j
URGED IN STATES
Reciprocal Program Would
Net Millions for Treas
ury.
BACKGROUND—
March returns from taxes, par
ticularly income levies, were dis
appointingly low.
President first asked that econ
omy be practiced in departmental
expenditures. Later he blamed rev
enue shortages on wilful evasions
by wealthy few, asked inquiry by
Treasury Department and legisla
tion by Congress to plug loopholes.
Es the Associated Press.
Treasury officials said today States
Would have to join the Federal Gov
ernment in a reciprocal tax program
If millions in revenue now lost through
exemptions are to be channeled into
public treasuries
President Roosevelt told his press
conference he always had favored re
moving income tax exemptions which
are granted Federal and State em
ployes He said he believed income
from securities now exempt should be
taxed.
Two other developments helped
make taxation a major topic of Cap
ital discussion:
1. The House approved a resolution
for an inquiry into tax dodging, but
voted to restrict publicity. The Sen
ate must agree to the limitations or
seek a compromise.
2. United States Chamber of Com
merce officials predicted business
spokesmen would seek modification of
the new undistributed profits tax.
White House officials said the House
proposal to restrict tax-dodging pub
licity would be acceptable to Presi
dent Roosevelt.
It was said that while the President
would take no sides in the Senate
House controversy over publicity, the
resolution would meet no objection
from him.
The President, discussing the re- i
moval of exemptions, said a constitu- ]
tional amendment probably would be !
necessary. The States might ratify 1
It and they might not, he added.
Co-operation Held Necessary.
Treasury officials reported the Gov
ernment could make its future security
Issues taxable simply by enactment of
a law. They added, however, that
unless all States and political sub
divisions took similar action interest
rates on Federal obligations would rise
to exorbitant levels.
Commerce Department figures
Fhowed about $58,000,000,000 of exempt
or partially exempt securities are out
standing. If these yielded an average
of 4 per cent, removal of all present
exemptions would subject about $2,
320.000.000 to income taxation.
Less revenue would be realized,
Treasury officials said, from removal ]
of tax exemptions on State and Fed
eral employes because most of them '
are in the lower brackets, where low
tax rates prevail. One authority gftt
mated receipts from that source at
less than $100,000,000.
'Federal employes now pay only
Federal income taxes and State em
ployes pay only State taxes.)
If any action is taken on removing
these exemptions, informed persons
said, it probably will not develop until
the tax-dodging Inquiry is completed.
Publicity O. K. Necessary.
The House resolution, passed with
out, a record vote, would require the
special committee of six Senators and
six Representatives to give approval be
fore confidential information on tax
tetums could he made public.
Almost unrestricted authority to
publish income tax returns was voted
by the Senate last week atfer President
Roosevelt condemned tax evasion and
avoidance. The two versions must be
reconciled before the inquiry can start. !
Th* House debate yesterday included
frequent reference to J. P. Morgan's
statement that taxation was a legal
and not a moral question.
Representative Boileau, Progressive,
of Wisconsin, said he agreed, although
he added it was unusual for him to be
supporting the financier.
Representative Harlan. Democrat, of
Ohio asked: “How can you avoid a
feeling of loathing, a feeling of resent
ment and detestation when you read
his 'Morgan’s) statement?”
“Here it is*.” he (Harlan) said:
“ ‘You do only what you are com
pelled to do by law.’ ”
“This is the greatest financier in
the United States talking. * * *
"That sentiment. Mr. Speaker, is
rugged individualism in the raw. It
Is the directing sentiment of the con
fidence man, the cheat, the exploiter.
He owes nothing to society, or human
decency. He takes generously of the
blessings of civilization, but only con
tributes what Is taken from him by
law.
“It is just as true now as of old,
“the defense of sin is the law.’ ”
“Legal” View Supported.
Boileau asserted he thought “there
Is a good deal that can be said in
behalf of the position that the amount
of taxes due to be paid Is a legal
question rather than a moral ques
tion.”
“If we permit loopholes to exist in
our laws,” he said, “we cannot absolve
ourselves from blame by trying to place
the blame upon some one else for mak
ing use of them.”
Also referring to the moral question,
Representative Treadway, Republican,
of Massachusetts, asked: “If it is 1m
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R L POLLIO. Manager
Center of Mail Dispute
Refusal of Harry M. Dixon (left), Warren, Ohio, postmaster,
and Harry A. Marceau (right), acting postmaster at Niles, Ohio,
to accept packages of food for mailing to strike-bound steel
plants had a widespread effect today, with the Senate hearing
demands for an investigation and Republic Steel Corp. appeal
ing to Postmaster General Farley and threatening to sue. The
postmasters said they had instructions to refuse any “irregular”
mail for the plants. —Copyright, A. P. Wirephotos.
moral to incorporate a yacht, why Is it
immoral to invest in tax-exempt se
curities?"
leading off the discussion on the
resolution, Chairman O'Connor of the
Rules Committee referred to Morgan,
but not by name.
"In a statement to the press on yes
terday," he remarked, "a great finan
cier defended the use of such (tax
evasion) loopholes and passed the
blame to Congress for being so 'stupid' ,
as to leave the holes open.
"That, of course, is no answer in
morals. Some taxpayers, in crawling
through these loopholes, so stretch the
holes that the world no longer recog
nizes them as holes.”
United States Chamber of Com
merce officials said the inquiry may ;
permit business representatives to
make suggestions for revision of the
tax laws.
Fred H. Clausen, chairman of the
Chamber's Federal Finance Commit
tee, said in a statement that the
profits tax "discriminates against cor
porations in financial difficulty to the
advantage of their well-financed com
petitors."
"It is doubtful." he added, "if the
Federal Government ever has adopted
a piece of major legislation which is
more inequitable and more discrimi
natory, or with greater disregard of
the harmful effects upon fhe national
business structure."
The undistributed profits levy was a
part of the 1936 revenue act. It was
designed as a two-way instrument for
increasing Federal Income.
On corporations which retain profits,
it imposed taxes ranging from 7 to
27 per cent. Corporations which dis
tribute profits to avoid the tax in
crease incomes of their stockholders,
who thus were subject to higher in
dividual income taxes.
Steel
(■Continued From First Page i
include in his proposed inquiry "the
moral conduct of both parties to the
strike” and alleged illegal transporta
tion and use of firearms and strike
breakers by the steel companies.
The 38-year-old Senator, one of
two "freshman” Republican^ In the
chamber, replied in a telegram:
"While I feel that the committee
will confine its investigation to specific
violations of postal laws and regula
tions, my personal feeling Is that any
repeated violation of Federal laws
might well be subject to senatorial
investigation.”
Chairman McKellar of the Fast
Office Committee indicated, meanwhile,
that a session Friday would constitute
a preliminary investigation of Bridges'
charges. At his request, postal officials
were compiling a report about alleged
refusal to accept parcels of food for
mailing into the strike-beset plants.
"The committee has no ax to grind,”
said McKellar. "Certainly no private
individual has the right to censor mall.
If evidence is produced to substantiate
charges that this has been happening,
we shall want all the facts made
public.”
Postmaster General Farley and As
sistant Postmaster General Howes ex
pected to confer on the situation before
the committee meets. One of them
may appear, perhaps in a public ses
sion.
A resolution somewhat similar to
Bridges’ was introduced in the House
by Representative White. Republican,
of Ohio, who said Chairman Mead of
the House Post Office Committee had
promised to submit it promptly to
Farley's department.
White said he was not "trying to
judge the merits” of how mail to
strike-bound plants was being han
dled, but that he wants all the facts.
The Republic Steel Corp., contend
ing the law allowed no discrimina
tion, asked Farley yesterday to in
struct postmasters in the strike cities
to transmit to the affected plants all
properly addressed mail. Otherwise,
it said, legal steps would be taken.
Immediate unionization of Great
Lakes seamen was sought by John
L. Lewis, whose aides in the Com
mittee for Industrial Organization
said they hoped to keep supplies from
upper Great Lakes mines from reach
ing the steel mills.
President Roosevelt declined com
ment yesterday on the strike situation.
Florsheim cut out the holes to cut
down, the heat and give your feet
a chance to breathe. Try a pair
today; you’ll find there’s nothing
finer when it’s 80° in the shade.
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LUDKE WILL ME
Circuit Court Upholds School
Board in Expulsion of
Six Children.
B> a Staff Correspondent ol The Star.
UPPER MARLBORO, Md„ June 9 —
Appeal from a Circuit Court order
upholding the expulsion of the six
Ludke children from Prince Georges
County schools was planned today by
attorneys for the youngsters who re
fused to salute the American flag.
August A. Ludke of Silver Hill, an
employe In the Washington Post Office
and father* of the children, said the
case would be “carried to whatever
lengths possible,”
The youngsters were refused ad
mission to the Oxon Hill Consolidated
School last Fall, after they declined
to take the Oath of Allegiance to the
flag at daily patriotic exercises. They
said their action was based on tenets
of the Jehovah's Witnesses, religious
sect.
Reaffirm Their Stand.
Ranging in age from 7 to 14 years,
the children failed to join in the
patriotic exercises more than a year
ago. They were permitted to finish
the school semester, but the senior
Ludke was warned by the Prince
Georges County Board of Education
that they would be barred from at
tendance the next Fall if their refusal
persisted. When the youngsters re
affirmed their stands, on the basis
that the salute "put the flag before
God, and therefore violated the Ten
Commandments,” they were not per
mitted to enter school last September,
Seeking reinstatement of his chil
dren. Ludke, through Attorneys Ed
mund Campbell of Washington and
J. Frank Lillard of Hyattsville, filed a
petition last November for a court writ
of mandamus to compel their admis
sion into county schoois.
Court Issues Order.
The Circuit Court issued its order,
dismissing the petition, yesterday. No
opinion was given, but Chief Judge
Walter Mitchell, now- 111 in a Balti
more hospital, is understood to be pre
paring one.
Similar action was recently taken in
nearly parallel cases by courts in Mas
sachusetts and New Jersey. The Ludke
case, according to current plans, will
now' be carried, to the Maryland Court
of Appeals.
Since their expulsion the children—
Ruth, 14; Frances, 13; Frederick, 12;
Anna Louise, 10; Walter, 8, and Es
ther, 7—have been receiving private
instruction at home. Ludke said today
that the domestic classes had recessed
for the Summer.
---:
Jails
(Continued From First Page.)
vances in every other respect, our jail
system is still in the dark ages.”
The commission, headed by State
Senator Vivian Page of Norfolk, ap
proved the following methods of
carrying out the five recommenda
tions:
Abandonment of jails as places of
sentence serving—consolidation of the
119 jails into a smaller group to be
used only to house persons awaiting
trial.
Pointing to the recent trio of fires
in small Virginia lockups, in which
three prisoners were cremated, the
report said that most of the present
jails are insecure and are operated
by men who are untrained in jail
work.
Establishment of regional farms—
at least three regional farms should
| be established in the State, accord
I ing to population areas. The report
estimated the farms could be estab
lished for $100,000 each.
Other Suggestions.
Replacement of officers’ fees with
salaries—present methods of compen
sating officers on the the fee basis
should be abandoned and these of
ficials paid fair and equitable sal
j aries.
Tlie report stated that no one knows
] what these officers are receiving at
present, "least of all themselves.”
Indeterminate sentences: Upon the
adoption of the indeterminate sen
tence as a fixed policy hinges the ef
fectiveness of almost all the other
reforms, the report said.
State control of the entire system:
The remedy suggested calls for the
i creation of a Bureau of Correction
i which would absorb the present duties
Iii Peril
DOCTOR IN IGNORANCE OF
EXPOSURE TO DISEASE.
Police between Rochester,
N. Y., and Los Angeles have
been asked to locate Dr. Har
old A. Cohn, Rochester ra
diologist, who is traveling to
the West Coast, and warn him
that he has been exposed to
dread spinal meningitis. A
few hours after he left Ro
chester, a friend tvhom he had
visited, was taken ill with the
disease and died.
—Copyright, A. P. Wirephoto.
and operations carried on as a by
product of the Department of Public
Welfare.
As methods of keeping Virginians
out of jail the commission urged a
more extended use of bail; release of
minor offenders on their own recogni
tion while awaiting trial; a system of
probation; installment paying of fines;
making prisoners with money pay
their own jail keep, shortening the
period of waiting for trial.
-■-•--.
Fatality Rate in Mines.
A new low fatality rate was set by
coal mines in 1936—2.568 deaths per
million tons of coal mined, as com- ,
pared with 2.926 in the preceding year. '
1
Vast Control Appropriations
Due After Economy
Wave, He Says.
E> the Associated Press.
Maj. Gen. Edward M. Markham,
chief of Army Engineers, believes
there will be a substantial increase in
congressional flood control appropria
tions “after the economy wave."
He testified before the House Flood
Control Committee yesterday on a
proposed $800,000,000 reservoir and
levee program for the Mississippi and '
Ohio Rivers and their tributaries.
“If flood control is good business
for the Federal Government, to re
duce the terrific damage caused by
floods,’’ Markham said, “appropria
tions will doubtless be very vastly
speeded up after the economy wave.”
He said that while the Federal
Government’s share of the proposed
program would cost about $500,000,
000, appropriations totaling only $52.
000,000 had been recommended thus
far.
Markham disclosed that the lives
of at least 125 persons had been
ieopardized by the dynamiting of a
floodway at New Madrid, Mo., during
last Winter’s floods.
Asserting the blasting had been
delayed “as long as we dared" while
fruitless efforts were made to evacuate
all persons, Markham said:
"We actually blew that fioodway
when, to the best of our knowledge, ,
125 people still were in there.”
He said the landowners had re- i
fused to vacate their property even
after a warning by National Guards
men.
“None of us up here liked that.’’
Markham said, “but we felt it was the
only thing we could do in the emer
gency.” He said the dynamiting was
necessary to save Cairo, 111.
Markham cited the incident as the
major factor which had impelled him
to recommend that in construction of
future floodways the Government ac
quire fee-simple title to the lands to
be flooded.
WEATHER DELAYS
MIA EARHART
Moted Flyer Studies Maps
of Africa as She Awaits
Favorable Reports.
By the Associated Press.
DAKAR, French Senegal, June 9.—
Amelia Earhart bent her tousled blond
head over maps of Africa's wild ex
panses today while awaiting the fa
vorable weather report that would
send her on the next stage of her
flight around the world.
Assisted by flying officials and Air
France headquarters, the American
airwoman set the course she and her
navigator, Capt. Fred Noonan, will
take across Africa.
Miss Earhart hopes to take off in
her silvery, twin-motored monoplane
some time today, but that depended
on the weather. She left Miami, Fla,
June 1 on the "just for fun” journey,
in which she is following the Equator
as much as practical.
Bound for Khartoum, in the Anglo
Egyptian Sudan. Miss Earhart chart
ed a route to Niamey, principal city
in the French Niger colony, approx
imately 1,350 miles straight east from
Dakar. From Naimey she and Noonan
planned to continue 850 miles east and
slightly southward to Fort Lamy, in
Chad territory, French Equatorial
Africa.
Then they will boar slightly north
ward on another 1.200 miles to Khar
toum. They planned to skirt the hot,
sandy reaches of the Sahara.
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