The Rich Dodge the Tax Collector While the Rest of Us Pay
A labor paper seethes over a Supreme Court ruling that let corporations issue stock dividends tax-free — and demands the working class stop carrying the burden of government.
Avoiding the payment of taxes by stock dividends has become a nationwide scandal. Hundreds of millions of dollars in dividends have already been distributed in this way and the end is not yet in sight. This has been the greatest Christmas for melon cutting Wall Street ever saw. Still this same bunch wants to fasten onto the people the ship subsidy. They not only dodge the payment of taxes, but want to get out of the public treasury all that is possible to get.
The supreme court ruled that stock dividends are not income. That ruling will cost Uncle Sam many millions of dollars in taxes not collected — estimated at anywhere from five million to a billion dollars.
This perfectly evident and successful attempt to evade the payment of taxes on the part of the rich is no doubt responsible for a good deal of the dissatisfaction in the country. A reasonable, contented citizenship is essential to the welfare and progress of our nation. There has always been a widespread belief that those best able to bear the burden of government manage to escape their share of the burden and shift it onto the shoulders of the middle and laboring classes.
Stock dividends are all right and have been declared for many years past, but usually amounted to a very nominal sum. But since the late court ruling practically every corporation worth mentioning has used this method to avoid payment of taxes so sorely needed by the government at this time.
The average citizen was shocked when they read of the 200 per cent stock dividend by the Standard Oil or 600 by the Victor Talking Machine corporation, but we hope the citizens affected with heart trouble fail to read of the dividend declared by Brown & Sharpe Manufacturing company. This concern, engaged in the manufacture of tools, declared a dividend of 16,000 per cent.
This sudden stampede of huge profits is due to the well founded belief that the new congress when it meets will revise the tax laws. And before this takes place it is expected that the taxability of stock dividends will again be presented to the supreme court which decided by a five to four decision that they were not taxable as income.
“There has always been a widespread belief that those best able to bear the burden of government manage to escape their share of the burden and shift it onto the shoulders of the middle and laboring classes.”
A century later the same argument echoes: who actually pays for government, and how the wealthy find instruments — then stock dividends, now carried interest and offshore trusts — to slip the burden onto wage earners. The five-to-four margin is a reminder that tax law is never settled, only renegotiated by whoever can afford the lawyers.
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