SUMMARY Statement of George S. Koch October 2, 1969 Such 1. If the Congress should repeal the investment credit, compensatory adjustment should be made in the tax burden on corporations through adequate rate reduction or by liberalized depreciation allowances. action is necessary to maintain capital investment levels needed for economic growth. 2. All reasonable and legitimate costs incurred by employees in moving to a new job assignment should be recognized in the tax provisions relating to moving expenses. 3. Present rules relating to restricted stock plans should be continued but with a provision that would prohibit issuance to employees of stock other than stock of the employer corporation or of its subsidiaries. 4. The complex provisions in the bill relating to other deferred compensation should be deleted pending completion of a current Treasury study of all deferred compensation arrangements. 5. Revisions in existing provisions relating to the foreign tax credit should be deleted and the subject should be considered in relation to the overall subject of foreign source income taxation on which the Treasury plans to submit recommendations to Congress at a later date. 6. Percentage depletion allowances have served the nation well, both as to defense and consumer costs, and have not resulted in unwarranted aftertax profits to extractive industries. Present allowances should be retained. 7. The objective of reform provisions in the bill relating to depreciation of buildings can be accomplished through the recapture provisions which would eliminate capital gain treatment with respect to all depreciation claimed in excess of straight line depreciation. Accelerated depreciation should not be denied to any facilities which are used in the trade or business. 8. Certification of pollution control facilities for rapid amortization should be limited to appropriate State authorities rather than both State and Federal. Election by the taxpayer to write off the cost in any period shorter than five years would be desirable. 9. Elimination of the 25% alternative capital gains tax and extension of the holding period to 12 months would inhibit transfers of capital and new investments and should not be enacted. The 25% capital gains rate for corporations should not be increased. 10. Both the limit on tax preferences and the allocation of deductions are moves toward taxation of individual gross income and should not be enacted. The allocation is especially onerous because it discriminates between taxpayers with the same amount of income. 11. Steep progression and existing high rates for taxation of individual incomes are the real cause of many of the problems this bill seeks to meet through a maze of complicated provisions. The new individual rate schedules and the maximum rate of 50% on earned income are commendable, but this maximum should apply to all income without distinction. 12. The taxation of interest on state and local bonds through the tax preference and allocation of deductions provisions in the bill should be eliminated. Such taxation can only add to bond interest rates and increased state and local taxes. 13. Retroactive application of several provisions in the bill is inequitable and should be modified. STATEMENT OF GEORGE S. KOCH On Behalf Of MEMBER STATE CHAMBERS OF THE SENATE FINANCE COMMITTEE My name is George S. Koch. I am an attorney-at-law in New York and am Chairman of the Federal Finance Committee of the Council of State Chambers of Commerce. Council, is with me today. Mr. Eugene F. Rinta, the Executive Director of the We are submitting a statement of our views on H.R. 13270 and ask that it become a part of the record of these hearings. Our specific views on particular provisions of the House Bill are expressed in the statement and, because of the number of subjects on which we submit our views, I shall limit my oral presentation to a general summarization. The Council of State Chambers of Commerce is an organization which studies and formulates views on national issues for the use of its 31 member State chambers of commerce throughout the nation. As you will note at the end of the statement, 24 of such chambers have endorsed the statement which represents a virtually unanimous consensus of our Committee. The fact that some of the member State Chambers have not endorsed the statement is primarily due to lack of time for its consideration by their policy making bodies, not disagreement with the views it expresses. The Federal Finance Committee of the Council is composed of financial and tax oriented people from numerous business enterprises and the chambers of commerce. These men are all capable of understanding the problems of Federal finance as well as the tax law since much of their time is devoted to these subjects. From these men come expressions of deep concern regarding H.R. 13270. |