the salt lake conference

National Tax Association

THE SALT LAKE CONFERENCESource: The Bulletin of the National Tax Association, Vol. 6, No. 1 (October, 1920), pp. 1-5Published by: National Tax AssociationStable URL: http://www.jstor.org/stable/41785137 .

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THE BULLETIN OF THE

National Tax

OF THE

AssdciltfÓň20

Edited by A. E. Holcomb

Volume VI. No. 1. October, 1920 Published each month except July, August, and September by the National Tax Association.

Yearly Subscription, $2.00 (To members included in annual dues) Single copy, 25 cents

CONTENTS The Salt Lake Conference: Organization

Details, Resolutions, Business Meet- ing, Election of Officers, Attendance. 1

More about the Classified Tax L»w in Ken- tucky . . . . 6

William B. Belknmp Excess Profits and Corporation Taxes in

Great Britain 7 Alzada Cometock

Taxation and the Budget System 9 Philip Broês

Recent Propesala concerning State Taxa- tion in Mexico 12

Henry A . E. Chandler Decisions and Rulings 17 Recent Publications 31

Publication Office, Lancaster, Pa. Editorial Office, 195 Broadway, New York City. A. E. Holcomb, Treasurer and Subscription Manager,

195 Broadway, New York City. Entered as second class mail matter in the post office at Lancaster, Pa.

THE SALT LAKE CONFERENCE The thirteenth conference has passed

into history as a pleasing incident in the lives of the members who attended. It can hardly be adequately described so as to convey its meaning and personal stimulus, but some account of it is due those who, while they did not attend, have by their steady, consistent support and encourage- ment made this conference and previous ones possible. With the kind help of Mr. Glover of New York, a close observer of the events, we are able to present some of the outstanding features.

The transportation plans turned out sur- prisingly satisfactory. The delegates were praxtically all 011 hand for the opening session, thus providing for ̂ prompt and effective organization. About seventy com- posed the special party which concentrated at Chicago and the journey was thus made thoroughly enjoyable.

Organization of the Conference President Haugen called the delegates to

order on Monday evening, September 6th, and after thé usual provision for the nominating committee of the National Tax Association, turned the meeting over for organization. He was promptly selected as permanent chairman and Mr. Holcomb was made secretary.

Governor Davis of Idaho was then called to the chair and Governor Bam- berger of Utah extended a welcome, saying among other generous things, that he real- ized that he was " talking to the men who were the brains of the forty-eight states of the Union and of the territories." This naturally brought forth approving ap- plause.

Responses, in light and serious vein, were made by Attorney General Roberson of Mississippi; J. T. White, Solicitor of the Treasury of Ontario; José E. Bene- dicto, Treasurer of Porto Rico; D. E. Metzger, Treasurer of Hawaii, and Vice- President Bliss.

The committee on resolutions was authorized by the selection of C. J. Tobin of New York as chairman, the committee to be completed as usual by designations by the various states.

Tuesday The first formal session of the confer-

ence was held at Saltair Beach, a miniature Coney Island, located on the shore of Great Salt Lake.



2 BULLETIN OF THE NATIONAL TAX ASSOCIATION [Vol. VI

Governor Davis of Utah gave a very interesting and instructive talk on the bene- fits derived in Idaho from the coordination and consolidation of the duties of the various state officers. He was followed by Mr. Bailey, Secretary of the Utah state board of equalization, who described the work accomplished by that board under its recently enlarged powers Even though working under the old general property tax system, much good work has been accomplished through proper education of the local assessors and close cooperation between them. One big problem in Utah and the surrounding states is the assess- ment of cattle on the ranges, which, dur- ing the grazing season, are moved back and forth across the state lines. This problem has been met in many cases by " gentlemen's agreements " between the taxing authorities of the adjoining states, but some criticism was expressed of the failure of the taxing authorities of Ari- zona to meet the situation. In the absence of Wyoming's representatives who had wired their inability to attend, Mr. Orr, Tax Attorney for the Sinclair Oil Com- pany, was called upon and discussed the taxation of oil properties. His talk aroused considerable amusement through his vivid picture of the trials and tribulations of a corporate taxpayer.

Although the season at Saltair Beach had closed the night before, a few of the attractions were thrown open for our especial benefit. A large number availed themselves of the opportunity to take a dip in the far-famed waters of the lake. This experience was a novel one to many, due to the fact that the water is some five to six times as " salty " as average ocean water and the body floats without any phys- ical exertion. To those accustomed to fresh water or surf bathing this experience was unique, it being extremely difficult to swim, since the buoyancy tends to throw the feet out in the air where they have no effect in propulsion. Perhaps the strangest part of the bath was the fact that after- wards the body was entirely covered with a crust of salt which was extremely difficult to remove. MucE merriment was occasioned the spectators in watching the unusual antics of our usually staid and sedate members.

The giant roller-coaster was also operated for our benefit and many hastened to

experience the hair-raising thrills of its- dips and curves. It was noticed that Mr. Whitney, genial Tax Attorney of the West- ern Union Telegraph Company, seemed to thoroughly enjoy this flirtation with death. The Entertainment Committee provided a substantial luncheon which was served in the pavilion and which was thoroughly appreciated, the salt air having produced large-sized appetites.

In the afternoon a review of tax legis- lation for the years 1919 and 1920 was presented by Mr. O. C. Lockhart of the National Bank of Commerce of New York. This was followed by a paper on inheritance taxes written by Professor Charles W. Gerstenberg of New York University and read by W. M. McCrea of Salt Lake City. The suggestion of Professor Ger- stenberg for exclusive federal administration, the yield to be apportioned to the states, seemed to create little enthusiasm.

Mr. Belknap summarized the work of the Inheritance Tax Committee, of which he is chairman and on behalf of which he has devoted a most unusual amount of time and energy. It is hoped that the results may serve in some measure to recom- pense him for his sacrifices in our behalf.

In the evening the conference was for- tunate in being permitted to listen to an address by Senator Reed Smoot, who kindly consented to welcome the delegates. He impressed one as being thoroughly aroused over the iniquities of the present federal tax laws and as earnestly desirous of bring- ing about some relief.

Wednesday The morning session was devoted to a

discussion of federal taxation problems. Mr. Hugh Satterlee, formerly with the Treasury Department and the author of " Regulations 45 ", was the central figure in this session. He addressed himself to two main factors. First, a lightening of the administrative load now imposed upon the Internal Revenue Bureau, to be accomplished by a transfer from that Bureau of the administration of regulatory taxes and by the abolition of certain other taxes. Second, the question of some method of raising the revenue which would be neces- sary to replace that lost through abolition of the taxes as proposed. A full discussion of his suggestions will, of course, be found in the printed proceedings.



No. i] OCTOBER, 1920 &

Mr. R. C. Allen, formerly of the Ad- visory Tax Board of the Treasury De- partment, graciously assumed to step into the breach and discuss the activities of the Tax Committee of the Industrial Confer- ence Board of which he is a member, Mr. Andrews having found himself unable to be present.

The tentative suggestions of the committee were to abolish the excess profits tax, increase the tax on corporation in- comes and add some items to the excise taxes. It expressed objection to the adop- tion of a general sales or turnover tax in any form.

The general turnover tax found a vali- ant champion in Mr. M. D. Rothschild of New York, who defended this tax in an elaborate paper, filled with statistical data designed to meet the objections which have been urged against it. Mr. Roths- child was naturally subjected to a rigid examination but evinced no hesitation in answering the objections which were fired at him. It seemed to be the opinion of many that the sales tax cannot be sum- marily dismissed as without merit and that Mr. Rothschild's proposals are entitled to careful consideration. It is to be noted that Mr. Satterlee also announced his ap- proval of this tax.

Particular appreciation is felt at the action of the Commissioner of Internal Revenue in assigning for our help Mr. John E. Walker, who has had large experience in federal tax matters as Clerk of the Ways and Means Committee and later as an administrative official. He is now assisting the Commissioner through work in the Solicitor's office and was especially helpful because of his close association with Dr. Adams who, at the last moment found it impossible to attend.

The afternoon was devoted to a trip to the Bingham mine of the Utah Copper Company. This mine is operated on what is known as the " open cut" system. The ore lies comparatively close to the surface and as it does not average more than one and one-half per cent in copper content, enormous quantities of ore must be handled in order to produce paying quantities of copper. The ore is loosened by blasting and loaded by enormous steam shovels upon cars, for transportation to the grind- ing mills and smelters* The mine officials brought the special train into a position

which enabled us to overlook the entire scene of operations, presenting a most im- pressive spectacle and one which was quite sensational to most of the spectators. All sorts of questions were fired at the guide, ranging from those which concerned the size of the mine pit, developed property and undeveloped property, to those which concerned the probable market value of the company's stock. This mine is the- first, and is probably the largest in the- world, to employ the open-cut system oí. operation.

In the Evening the delegates were, in* large measure, recompensed for the inability of Governor McKelvie of Nebraska to- fill his assignment, by the appearance of one of the association's best and most accomplished friends, Professor T. W. Page, now Chairman of the United States Tariff Commission. Dr. Page described the recent work of the Commission and aroused much interest among those who had not before been made aware of the important things the Commission is doings entirely aside from dealing with the thread- bare subject of customs duties. The com- prehensive examination which is being made of the commercial treaties is in itself a most important work and one which seems to offer valuable results.

The emphatic denunciation of exemptions contained in the report of Professor Plehn's committee was refreshing, as was Dr. Haig's stinging criticism of the insid- ious proposal to exempt mortgage interest from income tax.

Some little friction was noticed in the discussion of the constitutional changes proposed in Illinois.

Thursday > The morning session was devoted ta

state income taxation and Mr. Henry H. Bond, formerly Income Tax Deputy of Massachusetts, presented a draft of a- model state personal income tax law. Ta those non-residents of New York State who- are subject to taxation under that stated income tax law, it will be interesting ta know that his model provides for the pos- sibility of taxing non-residents on income derived within the state. This provision, however, need not cause any consternation if all the states can be induced to pass an income tax law similar to that presented, since there is a provision for crediting



4 BULLETIN OF THE NATIONAL TAX ASSOCIATION [Vol. VI

against the tax of one state the amount paid to the resident's own state.

At noon every one repaired to the Mor- mon Tabernacle where, by special arrange- ment, they were treated to a recital on the famous pipe-organ in that building. Pro- fessor McClellan is a master and it is needless to say' that for the following forty-five minutes all ordinary every-day cares betook themselves to the background and one's thoughts 'floated on the magic volume of sound which flowed through the immense auditorium.

After the recital those so inclined followed one of the guides through the temple and tabernacle grounds and were given a demonstration of the marvelous acoustic properties of the tabernacle, wherein it is possible to hear a whisper or the sound of a dropped pin from a distance of some two hundred feet. Incidentally, they were treated to Mormon propaganda, of a nature tending to eradicate the prejudice often held against the Mormon religion.

After luncheon some of the officials were taken to the Capitol in the famous Yellow- stone stage-coach " Beehive ", drawn by four horses as in its palmy days.

By special invitation from Governor Bamberger of Utah the afternoon session was held in the House of Representatives at the state capítol. This building is comparatively new and represents the latest and best in construction and furnishings. The session was followed by the annual group picture taken on the steps of the Capitol. Mr. Glover observes that it was noticeable that the officers of the association and the more prominent speakers were especially careful to place themselves right down in front where they would not be overlooked.

The evening session was devoted to the problems of the local assessors from Utah and the adjoining states. Much interest was displayed and no little criticism that the time was insufficient to permit satisfactory discussion. We imagine that such a session could be continued indefinitely.

Friday The important subject of mine taxation

came up in the forenoon, and after the papers by Professor Peterson and by Paul Armitage, the latter read by Mr. Paul Bre- reton of Colorado, the report of the. Com- mittee was read by Mr. R. C. Allen,

Chairman. This report marks a definite step forward. It reflects the unanimous view of representatives of the mining in- terests and of taxing officials and should have a definite influence on the future de- velopment of mine taxation.

Resolutions of the Conference The resolutions committee, through

Chairman C. J. Tobin of New York, made its report containing the following resolutions, all of which were adopted by a prac- tically unanimous vote : |

"Resolved, That this conference is of the opinion that serious consideration should be given to devising some substitute for the present federal excess profits tax and securing the great- est practicable simplicity in matters of administration of federal taxes. "Resolved, That the model tax system com-

mittee of the National Tax Association be re- quested to review the reports of the various special committees appointed by the tax association since 1918, the model income tax law presented to this conference, and the papers and discussions concerning such law, with the view to providing for the assistance of its members, state officials, legislators and others interested, at the earliest possible date, its conclusions, whether tentative or final, concerning the subjects covered by such reports, papers and discussions.

"Resolved, That this conference request the National Tax Association to appoint a committee or committees to investigate and report upon the best method of apportioning among the several states the property or income of corporations doing an interstate business, and such other subjects involving comity as it may be practicable to consider. " Resolved, That this conference is of the opinion that exemptions of private property or income from taxation should be confined within the narrowest possible limits. "Resolved, That this conference is unalterably opposed to the exemption of interest from mort-

gages from income taxation under either federal or state laws, and that this conference is of the opinion that salaries of all public officials and the interest on future issues of federal, state or municipal obligations should be subject to income taxation.

"Resolved, That this conference endorses the present policy of the federal government, of in- terchanging information with the several states concerning corporation income returns, and re- quests the executive committee of the National Tax Association to take such steps as may be expedient, looking towards further cooperation and interchange of information between state and federal officials charged with the administration of substantially similar taxes, under due safeguards against general publicity. " Resolved, That this conference desires to send to Allen Ripley Foote, the founder and first president of the National Tax Association, cordial and affectionate greeting, expressing regret at his inability to be present in Salt Lake City,



No. i] OCTOBER, 1920 5

acknowledging gratefully his message of con- gratulations and earnestly hoping for his par- ticipation in future gatherings of this kind. " Resolved , It is the sense of this conference that under a model system or any revised plan of inheritance taxes for the separate states, the revenues from such inheritance taxes be collected and used wholly by the respective states. " Resolved , That this conference commends the bulletin published by the National Tax Associa- tion and express its appreciation of the services rendered by Alfred E. Holcomb, secretary and editor. " Recognizing with gratitude the obligations of this conference to many individuals and asso- ciations who have contributed to the success of this conference and to the pleasure and comfort of the members, we desire to express our thanks by formal resolutions; therefore, be it Resolved , That we extend our sincere thanks to the following organizations and persons, namely : To Simon Bamberger, governor of the state of Utah, for his hearty cooperation and helpful interest in the work of the conference; also for the reception extended by him to the members of the conference; to Reed Smoot, United States senator; to the members of the entertainment committee ; to the chairman, William Bailey, member and secretary of the state board of equalization, and especially to William N. Beatty, secretary of the general committee, for constant and effective services in behalf of this conference; to the state board of equalization of Utah and its efficient assistants; to Mayor C. Clarence Neslen of Salt Lake City; to the ladies' reception committee; to Bishop David Á. Smith and Professor John J. McClellan; to John M. Hayes of the Utah Copper Company; to the citizens of Salt Lake and of the state of Utah generally; to the man- agement of the Hotel Utah for very cordial efforts for the comfort and needs of the conference and for extending special facilities for the meetings and the accommodation of the officers ; to the press of Salt Lake for their interest and cooperation." Business Meeting of Natfonal Tax Association

As usual, the business meeting was hur- ried, as the tired delegates were by that time anxious to get started homewards.

The recommendations of the nominating committee were unanimously and enthu- siastically adopted with the following result :

President : Zenas W. Bliss of Rhode Island.

Vice-President : Samuel Lord of Minne- sota.

Secretary and Treasurer: Alfred E. Holcomb of New York.

Executive Committee Carl C. Plehn of the University of Cali-

fornia succeeding J. ̂V. Brislawn of Wash- ington.

Frank Roberson, Attorney General of

Mississippi, succeeding T. W. Sims of Alabama.

Carl S. Lamb, Ass't Gen'l Counsel, Pittsburgh Plate Glass Company, succeeding G. G. Tunell.

As Canadian members : W. L. Donley, Chairman Manitoba Tax Commission and J. T. White, Solicitor of the Treasury of Ontario, were chosen to succeed T. W. McGarry and Adam Shortt.

Adjournment came and this conference, which was by unanimous verdict, voted the "best -yet", passed into history.

Only inadequate recognition may be given to the good friends who made the conference the success which it was. Brother Bailey, ably aided by Mr. Beatty and by the efficient local committee on arrangements under the leadership of the genial and effective chairman, A. G. Mack- enzie, certainly " made good " in every sense and we have nothing but feelings of sincere satisfaction as the result of this year's conference.

Great thanks are also due to the Enter- tainment Committee for the time and labor spent in arranging proper entertainment for the visitors. Many remarks were heard from those who had attended previous con- ferences indicating that, in their opinion, the committee had done much better than most of its predecessors. It may also be remarked in passing, that those who had made advance hotel reservations found their accommodations ready for them when "

they arrived, which was in marked con- trast to the situation which has prevailed at times in the past.

All left Salt Lake City much impressed by its sense of spaciousness, due largely to the broad, clean streets, and all were much delighted with their trip and the efforts that had been made to instruct and enter- tain them.

Attendance The attendance was unusually represen-

tative, forty- two states, the District of Co- lumbia, Porto Rico, Hawaii and the Prov- ince of Ontario being represented. The total registration was 371, including 77 ladies.

An analysis of the registration made by Senator Vaughan shows that of the total, 60% represented taxing officials, 34% representatives of taxpayers and the bal- ance economists, technical men, etc.



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