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Barring any delays, 8K will have to be filed either today, tomorrow, or Thursday...I see no delays happening..GLTA
WTF are these sells below the biddddddd
Correct...
375 Stephanie St suite 1411 is INCORP, client Services...a registered Agent for incorporating a business in the state of NV..Heather handles the account Skybridge Tech
As I said, Intentions, so it is advisable, IMO, to take it one step at a time and wait for the Certified Financials [hopefully certified] and 8K. Maybe then actual physical corporate info, something I can smell, taste and touch will be available without going to China
January 8 2010 Pink Sheet Filing (Edited)
This will serve to set forth our intentions regarding the merger or acquisition of XXXX
Stainless Steel Co., Ltd. into a publicly trading company and subsequent financing.
Company Going
Public
XXXXX XXXXXXX Co., Ltd.
Public Vehicle
I disagree,IMO everybody is looking forward to certified financials and the 8K first. Who knows how far ahead the Steel Merger will be if at all...that's reality..Remember everything as stated was/is intent, it becomes reality when finalized and signed. Yes the sanhe merger took place as intended, but I still dont know what I received for my money. Call me a doubting Thomas, but I'm taking this one step at a time in keeping an eye on my investment. I look forward to my visiting their location
As one who never likes to tip his hat, I'm heading down to Stephanie Street today with a few of my east coast associates...havent been there since the area was being developed and I guess now is as good a time as any..lol
Bitter sweet
that has me a little cautious too but i held strong against selling temptation @ .009...25,000,000 value company Sangh settled for 600,000,000 shares [.04 share based on their opinion of 25,000,000 value until certified]If value is true value and no or low debt then I made the right decision
Buys vs sells are just about even with the edge going to the buys..oh bring back, oh bring back, bring back my .oo9 to me , to me, sing along everybody, oh bring back, oh bring back, bring back my .oo9 to me , to me
That's why I use the word CERTIFIED as I agree with your post. But it should also be noted that there are plenty of stocks with higher A/S and Lower Value that have outrageous higher PPS...I want my MAPO and I want it now
This is the classic 1 step forward 2 steps back MM play with quite a few people falling victim today at the ask. No matter how undervalued it gets, my gamble is to hold [no sell no buy]... eventually true value shall rear its pretty hand...although, true value will be best served by current certified financial facts
by some I mean SEX, but the bottom line is the price today, down from the open, reflects not only the MM but Daytrader sell on the news...the gap was a gift for them and as you can see a shock for the longs at this point....we're all guilty...in pennyland everyone is prohibited from A/H by the rules but that doesnt mean they dont set up their play together, although that is collusion
Value of a Company Stock = whether a MM got some last night
Who's going to Toronto April 9th, just out of curiosity?
Within the next 5 to 7 business days the company plans to issue a CEOs message, video and still images of the Sanhe factory and infrastructure in China. [I hope 8K is out sooner]
Copies of patents will be filed with Pink Sheets along with other relevant documents relating to Sanhe shortly.
Give me the chinese version, I'll translate it myself..LOL What province do you live in?LOL
They had huge exposure in mainstream consumer market, National Commercials, Strategic Billboard Placement at Major League Stadiums for all sports, and plenty of PR's mentioning Sales Contracts both nationally and Internationally... throw in plenty of pumping and exxageration from the penny stock industry and fudged financials...look where it got them...By the way I sold at .24
I guess I win the RAZZIE short term..I thought this was a 60 day contest..LOL
Life is like a box of chocolates, you never know what you're gonna get...and who is gonna do it to ya
Nothing
as long as its three steps forward and none backward for whatever reason. I prefer moving upward and outward
This is the juicy part
Future Plans Substantially all of the assets of merged company will be sold into an OTCBB vehicle for stock in the OTCBB vehicle, to form a super conglomerate.
A Super 8-K or Form 10 will be filed with the U.S. Securities
and Exchange Commission for the move to OTC BB. Stock
in the OTC BB vehicle received for assets will be distributed
to shareholders.
Correct me if I'm wrong but this part sounds like the SKGO merger could be bought by the unknown steel company? Just a guess if I'm reading it correctly? Their Stated Intentions PR has laid out several different Scenarios of either a merger for shares,a buy, or acquired in which case as stated "Stock
in the OTC BB vehicle received for assets will be distributed
to shareholders." which could actually mean a share swap for us???
.05 > $1.00 LOL, but then I could be wrong
interesting new video and rules governing the market http://www.sec.gov/index.htm if interested? click on both videos
I would think the one year is voluntary on their part and part of the business arrangement or thats how long before it takes effect as stated in the rules, either way they have to wait at least six months unless certain conditions are met..in regards to one breaking the rules, if one wanted to break the rules then why care about the rules, you think...My question is, this acquisition was conducted by the exchange of shares. What will the next acquisition take and if shares how many, how many left and when...But whatever it is I'm waiting for the whole Enchilada.... interesting new video and rules governing the market http://www.sec.gov/index.htm click on both videos
Posted is the reason to the point backing up their statements
Rule 144: Selling Restricted and Control Securities
When you acquire restricted securities or hold control securities, you must find an exemption from the SEC's registration requirements to sell them in the marketplace. Rule 144 allows public resale of restricted and control securities if a number of conditions are met. This overview tells you what you need to know about selling your restricted or control securities. It also describes how to have a restrictive legend removed.
What Are Restricted and Control Securities?
Restricted securities are securities acquired in unregistered, private sales from the issuer or from an affiliate of the issuer. Investors typically receive restricted securities through private placement offerings, Regulation D offerings, employee stock benefit plans, as compensation for professional services, or in exchange for providing "seed money" or start-up capital to the company. Rule 144(a)(3) identifies what sales produce restricted securities.
Control securities are those held by an affiliate of the issuing company. An affiliate is a person, such as a director or large shareholder, in a relationship of control with the issuer. Control means the power to direct the management and policies of the company in question, whether through the ownership of voting securities, by contract, or otherwise. If you buy securities from a controlling person or "affiliate," you take restricted securities, even if they were not restricted in the affiliate's hands.
If you acquire restricted securities, you almost always will receive a certificate stamped with a "restricted" legend. The legend indicates that the securities may not be resold in the marketplace unless they are registered with the SEC or are exempt from the registration requirements. The certificates of control securities are usually not stamped with a legend.
What Are the Conditions of Rule 144?
If you want to sell your restricted or control securities to the public, you can follow the applicable conditions set forth in Rule 144. The rule is not the exclusive means for selling restricted or control securities, but provides a "safe harbor" exemption to sellers. The rule's five conditions are summarized below:
Holding Period.
Before you may sell any restricted securities in the marketplace, you must hold them for a certain period of time. If the company that issued the securities is subject to the reporting requirements of the Securities Exchange Act of 1934, then you must hold the securities for at least six months. If the issuer of the securities is not subject to the reporting requirements, then you must hold the securities for at least one year. The relevant holding period begins when the securities were bought and fully paid for. The holding period only applies to restricted securities. Because securities acquired in the public market are not restricted, there is no holding period for an affiliate who purchases securities of the issuer in the marketplace. But the resale of an affiliate's shares is subject to the other conditions of the rule.
Additional securities purchased from the issuer do not affect the holding period of previously purchased securities of the same class. If you purchased restricted securities from another non-affiliate, you can tack on that non-affiliate's holding period to your holding period. For gifts made by an affiliate, the holding period begins when the affiliate acquired the securities and not on the date of the gift. In the case of a stock option, such as one an employee receives, the holding period begins as of the date the option is exercised and not the date it is granted.
Adequate Current Information.
There must be adequate current information about the issuer of the securities before the sale can be made. This generally means that the issuer has complied with the periodic reporting requirements of the Exchange Act.
Trading Volume Formula.
If you are an affiliate, the number of equity securities you may sell during any three-month period cannot exceed the greater of 1% of the outstanding shares of the same class being sold, or if the class is listed on a stock exchange or quoted on Nasdaq, the greater of 1% or the average reported weekly trading volume during the four weeks preceding the filing a notice of sale on Form 144. Over-the-counter stocks, including those quoted on the OTC Bulletin Board and the Pink Sheets, can only be sold using the 1% measurement.
Ordinary Brokerage Transactions.
If you are an affiliate, the sales must be handled in all respects as routine trading transactions, and brokers may not receive more than a normal commission. Neither the seller nor the broker can solicit orders to buy the securities.
Filing a Notice of Proposed Sale With the SEC.
If you are an affiliate, you must file a notice with the SEC on Form 144 if the sale involves more than 5,000 shares or the aggregate dollar amount is greater than $50,000 in any three-month period. The sale must take place within three months of filing the Form and, if the securities have not been sold, you must file an amended notice.
If I Am Not an Affiliate of the Issuer, What Conditions of Rule 144 Must I Comply With?
If you are not (and have not been for at least three months) an affiliate of the company issuing the securities and have held the restricted securities for at least one year, you can sell the securities without regard to the above conditions. If the issuer of the securities is subject to the Exchange Act reporting requirements and you have held the securities for at least six months but less than one year, you may sell the securities as long as you satisfy the current public information condition.
Can the Securities Be Sold Publicly If the Conditions of Rule 144 Have Been Met?
Even if you have met the conditions of Rule 144, you can't sell your restricted securities to the public until you've gotten the legend removed from the certificate. Only a transfer agent can remove a restrictive legend. But the transfer agent won't remove the legend unless you've obtained the consent of the issuer—usually in the form of an opinion letter from the issuer's counsel—that the restricted legend can be removed. Unless this happens, the transfer agent doesn't have the authority to remove the legend and execute the trade in the marketplace.
To begin the process, an investor should contact the company that issued the securities, or the transfer agent of the company's securities, to ask about the procedures for removing a legend. Since removing the legend can be a complicated process, if you're considering buying or selling a restricted security, it would be wise for you to consult an attorney who specializes in securities law.
What If a Dispute Arises Over Whether I Can Remove the Legend?
If a dispute arises about whether a restricted legend can be removed, the SEC will not intervene. The removal of a legend is a matter solely in the discretion of the issuer of the securities. State law, not federal law, covers disputes about the removal of legends. Thus, the SEC will not take action in any decision or dispute about removing a restrictive legend.
The newly operational company will file a Form 8K with the SEC to document these events, and then proceeds to issue all standard SEC reports from that point onward. The initial Form 8K should be a lengthy one, itemizing the acquisition agreement and should follow up with many of the same disclosures found in a Form 10K, but now describing the operations of the buying company, rather than those of the shell. Also, the Form 8K must include the separate audited and combined pro forma financial statements for both the shell and the buying company for the past two years, which requires some coordination between the auditors of both entities. The effort required to complete this initial Form 8K is so significant that the buying company should begin its preparation of the Form 8K at least one month before the scheduled acquisition date, since the form must be filed within four business days following the acquisition event.
At this point, the only stock that can be traded is the stock of the shell company that was tradable prior to the acquisition transaction. If the new management team wants to have other shares trade, then it can either advise shareholders to wait for Rule 144 to take effect in either six or twelve months, or it can engage in the sometimes lengthy and always expensive stock registration process.
1901-1932:
The Income Tax Arrives
The first 30 years of the twentieth century witnessed the rise of the modern income tax. More energized than demoralized by the Supreme Court’s invalidation of the 1894 income tax, fiscal reformers mounted a powerful campaign to resuscitate the levy. By 1913, they had engineered ratification of a new constitutional amendment, clearly establishing the federal government’s authority to levy an income tax.
In its first two years, the tax was modest, providing only a small part of the government’s total revenue. But World War I transformed it, moving income taxes to the center of federal finance. Democrats and progressive Republicans remained the strongest advocates of income taxation, but even mainstream Republicans came to accept the levy. By the early 1920s, it was firmly established as a centerpiece of the federal tax system.
1901 President William McKinley was assassinated in September, and Theodore Roosevelt assumed the presidency. The change was unsettling for GOP stalwarts,
Theodore Roosevelt. Photo courtesy of the National Archives. (larger image)
who had tried to derail Roosevelt’s soaring political career by installing him as vice president. In 1897, he had been named Assistant Secretary of the Navy by President McKinley. He soon resigned, however, to lead his famous Rough Riders in the Spanish-American War. Upon his return to the United States, he won election as governor of New York. Widely considered a reformer within his own party, Roosevelt worried the GOP establishment. Republican power brokers, including McKinley confidant Mark Hanna, believed Roosevelt would pose less of a threat once occupied with the exalted but largely ceremonial duties of the vice presidency.
After McKinley's assassination, those same leaders confronted the unsettling results of their handiwork. Roosevelt, however, moved quickly to reassure party leaders and the nation that he would continue the careful, conservative policies of his predecessor.
Roosevelt was slow to move on tax issues, at least early in his presidency. Congress, however, had other plans. In March, lawmakers passed the War Revenue Reduction Act, repealing or reducing most of the taxes enacted to pay for Spanish-American War. Several levies, however, remained largely intact, including the inheritance tax and numerous excises. Democrats criticized the law for failing to reduce consumption taxes adequately, especially in light of the Republican preference for steep tariffs. Democrats also argued for a new income tax on individuals and corporations, but GOP leaders easily defeated such ideas.
Sereno Payne (R-N.Y.) served as chairman of the House Ways and Means Committee from 1899-1911. Illustration courtesy of the House Ways and Means Committee.
1902 House Ways and Means Committee Chairman Sereno Payne (R-N.Y.) introduced a bill to repeal all remaining taxes levied for the Spanish-American war. Reassured by predictions of a large surplus in the federal Treasury, lawmakers agreed. While most Democrats urged retention of the federal inheritance tax and various corporation taxes, they ultimately acquiesced in the GOP plan. Both the House and Senate passed the tax cut overwhelmingly.
1904 Theodore Roosevelt won an easy re-election campaign, despite the misgivings of conservative Republicans.
The Supreme Court found the oleomargarine tax to be constitutional. Originally enacted in 1886 at the behest of dairy interests, the tax was designed to prevent margarine — which was relatively cheap to manufacture — from competing with butter in the marketplace. The tax was almost purely regulatory, although it did raise significant revenue as margarine became increasingly popular.
1906 In a speech on April 14, 1906, President Theodore Roosevelt endorsed a progressive estate tax:
It is important to this people to grapple with the problems connected with the amassing of enormous fortunes, and the use of those fortunes, both corporate and individual, in business. We should discriminate in the sharpest way between fortunes well-won and fortunes ill-won; between those gained as an incident to performing great services to the community as a whole, and those gained in evil fashion by keeping just within the limits of mere law-honesty.
Of course no amount of charity in spending such fortunes in any way compensates for misconduct in making them. As a matter of personal conviction, and without pretending to discuss the details or formulate the system, I feel that we shall ultimately have to consider the adoption of some such scheme as that of a progressive tax on all fortunes, beyond a certain amount either given in life or devised or bequeathed upon death to any individual — a tax so framed as to put it out of the power of the owner of one of these enormous fortunes to hand on more than a certain amount to any one individual; the tax, of course, to be imposed by the National and not the State Government.
Such taxation should, of course, be aimed merely at the inheritance or transmission in their entirety of those fortunes swollen beyond all healthy limits.
1907 Roosevelt stepped up his campaign for several progressive additions to the nation’s tax system. In his December 7 message to Congress, he urged lawmakers to consider an income tax.
When our tax laws are revised the question of an income tax and an inheritance tax should receive the careful attention of our legislators. In my judgment both of these taxes should be part of our system of Federal taxation. I speak diffidently about the income tax because one scheme for an income tax was declared unconstitutional by the Supreme Court; while in addition it is a difficult tax to administer in its practical working, and great care would have to be exercised to see that it was not evaded by the very men whom it was most desirable to have taxed, for if so evaded it would, of course, be worse than no tax at all; as the least desirable of all taxes is the tax which bears heavily upon the honest as compared with the dishonest man. Nevertheless, a graduated income tax of the proper type would be a desirable feature of Federal taxation, and it is to be hoped that one may be devised which the Supreme Court will declare constitutional.
The inheritance tax was even more desirable, Roosevelt continued. Not only did it serve the cause of social justice, but it also enjoyed the Supreme Court's constitutional impramatur:
The inheritance tax, however, is both a far better method of taxation, and far more important for the purpose of having the fortunes of the country bear in proportion to their increase in size a corresponding increase and burden of taxation. The Government has the absolute right to decide as to the terms upon which a man shall receive a bequest or devise from another, and this point in the devolution of property is especially appropriate for the imposition of a tax. Laws imposing such taxes have repeatedly been placed upon the National statute books and as repeatedly declared constitutional by the courts; and these laws contained the progressive principle, that is, after a certain amount is reached the bequest or gift, in life or death, is increasingly burdened and the rate of taxation is increased in proportion to the remoteness of blood of the man receiving the bequest.
Roosevelt rejected arguments that an estate tax would penalize thrift.
A heavy progressive tax upon a very large fortune is in no way such a tax upon thrift or industry as a like would be on a small fortune. No advantage comes either to the country as a whole or to the individuals inheriting the money by permitting the transmission in their entirety of the enormous fortunes which would be affected by such a tax; and as an incident to its function of revenue raising, such a tax would help to preserve a measurable equality of opportunity for the people of the generations growing to manhood. We have not the slightest sympathy with that socialistic idea which would try to put laziness, thriftlessness and inefficiency on a par with industry, thrift and efficiency; which would strive to break up not merely private property, but what is far more important, the home, the chief prop upon which our whole civilization stands. Such a theory, if ever adopted, would mean the ruin of the entire country--a ruin which would bear heaviest upon the weakest, upon those least able to shift for themselves. But proposals for legislation such as this herein advocated are directly opposed to this class of socialistic theories. Our aim is to recognize what Lincoln pointed out: The fact that there are some respects in which men are obviously not equal; but also to insist that there should be an equality of self-respect and of mutual respect, an equality of rights before the law, and at least an approximate equality in the conditions under which each man obtains the chance to show the stuff that is in him when compared to hisfellows.
1908 William Howard Taft won the presidential election to succeed Roosevelt. Handpicked by his predecessor, Taft was considered fairly liberal within his party, but he presented a less threatening image to party regulars. While supporting certain reformist ideas, including the possibility of limited taxes on income and estates, he moved cautiously in advancing such ideas.
1909 An uneasy coalition of Democrats and western Republicans joined to support passage of an individual income tax. The specter of a hostile Supreme Court haunted the debate. Some observers believed the justices would invalidate an income tax, just as they had in 1895. Others, however, thought the Court had changed to reflect growing bipartisan -- and popular -- support for the levy. A few income tax supporters wanted to press the issue regardless of the Court's likely response, eager to make the case for progressive taxation. In any case, the income tax coalition developed a moderate proposal and sought to attach it to tariff legislation in the Senate.
GOP leaders were alarmed by rebellion in their own ranks, with numerous Republican progressives indicating their support for a new income tax. Senate Finance Committee Chairman Nelson Aldrich (R-R.I.) tried to fend off the income tax proposal, but pro-tax forces enjoyed considerable momentum. Worried that Aldrich would lose the battle, President Taft convinced the senator that a modest tax on corporate income would siphon off support for general income taxation. In doing so, it would deny victory to the congressional income tax coalition, preserving GOP unity.
Sen. Nelson Aldrich. Illustration courtesy of the United States Senate.
Taft — who had earlier indicated some openness to income taxation anyway — orchestrated passage of a 1 percent tax on net corporate income. Framed as an excise tax on the privilege of doing business as a corporation, the levy was carefully designed to sidestep constitutional issues surrounding the income tax.
As Taft had predicted, the corporation tax successfully deflated the larer income tax movement -- at least for the time being.
The corporation tax included a publicity requirement that all returns be open to public inspection. As with publicity provisions during the Civil War, this requirement proved unpopular, especially among small business owners unaccustomed to releasing information. Taft argued, however, that publicity would enhance federal oversight of corporations, aiding lawmakers, administration officials, and investors. In fact, the publicity feature was key to Progressive support for the law, helping convince many lawmakers to accept the corporate excise tax in lieu of a broader income tax that included individuals.
1910 In response to taxpayer conplaints, the Appropriations Act of 1910 tightened disclosure regulations for Taft's corporation excise tax. Henceforth, tax returns would be open to inspection "only upon the order of the President." It was a blow to progressives in both parties, who had hoped the tax would serve as a means to regulate private corporations by fostering the availability of accurate financial information..
1913 As part of his 1909 tax compromise, Taft had agreed to support a constitutional amendment authorizing federal income taxes. Not only would an amendment settle constitutional questions once and for all, it would also delay substantive action on the income tax, at least until ratification was complete. And since ratification was far from certain anyway, the amendment might defuse the income tax issue indefinitely, allowing it to simply fade away in the state legislatures.
In making his case for the amendment to wary Republican legislators, Taft stressed the importance of avoiding a confrontation with the Supreme Court. Such a fight , he warned, would diminish public confidence in the Court and threaten one of the pillars of American government. Congress agreed, and lawmakers soon approved the amendment and sent it to the states.
While opponents couldn’t stop the 16th amendment, they argued long and hard against it. Richard E. Byrd, speaker of the Virginia House of Delegates made a particularly impassioned plea to reject the amendment, offering a potent rhetorical blend of state rights, limited government, and anti-tax convictions. Ratification, he warned, would open a new and dangerous chapter in American government:
A hand from Washington will be stretched out and placed upon every man’s business; the eye of the Federal inspector will be in every man’s counting house . . . The law will of necessity have inquisitorial features, it will provide penalties, it will create complicated machinery. Under it men will be hailed into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of Federal inspectors, spies and detectives will descend upon the state . . . Who of us who have had knowledge of the doings of the Federal officials in the Internal Revenue service can be blind to what will follow? I do not hesitate to say that the adoption of this amendment will be such a surrender to imperialism that has not been since the Northern states in their blindness forced the fourteenth and fifteenth amendments upon the entire sisterhood of the Commonwealth.
Opposition from Byrd and like-minded conservatives couldn't stop the amendment. To the suprise of many, the states ratified the amendment in relatively short order, and in February 1913 it became the Sixteenth Amendment to the Constitution.
Meanwhile, newly elected President Woodrow Wilson included a call for tariff reform in his inaugural address. On April 8, he reiterated the need for revenue reform, with a particular emphasis on lower import duties. Four days later, House
House Ways and Means Chairman Oscar Underwood, D-Va. Photo courtesy of the Library of Congress.
Ways and Means Chairman Oscar W. Underwood (D-Va.) introduced a bill to lower tariff rates from and average of 40 percent to roughly 29 percent. To compensate for lost revenue, the bill also included an income tax. The House passed the legislation on May 8, and the Senate followed suit four months later. When Wilson signed the bill in October, it included an income tax of 1 percent on individual income over $3,000 ($4,000 for married couples). It also featured a progressive surtax ranging from 1 percent to 6 percent, depending on income.
Returns for the new tax were to be kept secret, reflecting the unhappy fate of corporate publicity features in the 1909 revenue law. The new income tax also provided for collection at source, meaning that some kinds of income would be taxed before it reached the taxpayer, as with the modern system of tax withholding.
The Bureau of Internal Revenue established a Personal Income Tax Division to collect the new tax. It included a Correspondence Unit of 30 employees dedicated solely to answering questions about the new levy.
1914-1915 In 1914, the BIR unveiled its form for the new income tax. Four pages long, it was
dubbed Form 1040 as part of the agency’s normal sequential numbering process. No money was collected during the first year. Instead, taxpayers returned just a completed form, which was then checked by field agents for accuracy.
The 1913 version of the Form 1040. (larger image)
In 1915, several congressmen complained that income tax forms are too complicated. The House Sergeant at Arms offered lawmakers assistance in preparing their own returns. As one congressman explained the complexity: "I write a law. You drill a hole in it. I plug the whole. You drill a hole in my plug."
1916 Once again, war brought a steep decline in international trade. In 1914, President Woodrow Wilson had asked Congress for emergency revenue legislation, and lawmakers responded with the War Revenue Act of 1914. Featuring a slew of new excise taxes, the law tried to compensate for slumping customs revenue — a byproduct of the damper that war put on international trade. While lucrative, these consumption taxes proved unable to close the fiscal gap. Wilson soon joined
Democrats in Congress to support a steeper, more productive income tax.
Rep. Claude Kitchin, D-NC, led a group of congressional insurgents pushing for steeper income taxes. While barely two years old, the income tax had already proven itself a viable source of new revenue. Kitchin and his allies — all comfortably to Wilson’s left — wanted to make better use of the tax, redistributing tax burdens up the income scale.
President Woodrow Wilson. Photo courtesy of the Library of Congress. (larger image)
Congress approved a new income tax as part of the Revenue Act of 1916. The law set out to raise $205 million in new revenue, with more than half coming from the income tax. Lawmakers boosted the "normal" income tax rate from 1 percent to 2 percent on net incomes over $3, 000 ($4,000 for married couples). They also raised surtax rates, moving them from a maximum of 6 percent on incomes over half a million dollars to a maximum of 13 percent on incomes over $2 million. The changes made the income tax steeper, but left it's base quite narrow; the levy still applied only to the nation’s richest taxpayers.
The 1916 law also raised the corporation income tax from 1 percent to 2 percent, and introduced a new federal estate tax with an exemption of $50,000 and rates ranging from 1 percent to 10 percent. The law included a novel munitions tax designed to appease opponents of American involvement in the war; levied on manufacturers of military equipment, it was designed to prevent war profiteering. Finally, the law featured a host of excise taxes, as well as a capital stock tax on corporations.
Rep. Claude Kitchin, D-N.C. Picture courtesy of the House Ways and Means Committee. (larger image)
In response to administrative concerns, the 1916 revenue law repealed the "collection at source" provisions of the 1913 tax. Instead, the law now required simply that income souyrces provide information to the government on the amount of income paid out to receipients.
1917 In March 1917, Congress introduced a major innovation to the federal tax system: a corporate excess profits tax. This levy taxed any profits above a "reasonable" rate of return. Initially, this rate was set at 8 percent; if owners made more than that, then they paid taxes according to a steep rate schedule.
Supporters defended the new tax on equity grounds, but it also turned out to be the biggest money maker among new wartime taxes. It attracted bitter opposition from business groups, who considered the tax a threat to managerial prerogatives. They were certainly justified in their suspicion, since both Wilson and his allies in Congress considered the levy a legitimate means of business regulation. Many supporters hoped to retain it after the war ended.
The excess profits tax applied to individual as well as businesses, taxing the former at 8 percent on incomes over $6,000. This last innovation prompted critics to label it a “tax on brains,” since it generally only applied to professionals and other highly educated workers.
In addition to the new excess profits tax, 1917 brought hikes in the regular income tax as well. The War Revenue Act of 1917 imposed a 2 percent tax on incomes over $1,000 ($2,000 for married couples). It featured graduated surtaxes reaching as high as 63 percent. It also added an additional tax of 4 percent to the existing corporate income tax.
The Bureau of Internal Revenue struggled to cope with the massive tax changes. Federal revenues grew dramatically. The average collection for each year in the twelve years preceding 1915 was $281 million. For the twelve years between 1915 and 1926, the average was $2.78 billion. As one congressional report later summarized the change: “[A]n organization which had collected slightly over a quarter of a billion dollars yearly suddenly was required to collect annually nearly ten times that amount.”
The estate, munitions, and capital stock taxes all required new administrative machinery. The agency added staff in all these areas to interpret and administer the taxes. The real work, however, came from the expansion of the individual and corporate income taxes, as well as the introduction of the corporate excess profits tax. To cope, the bureau expanded dramatically. In 1917, as the agency began to gear up for war taxation, it employed 524 headquarters staff and 4,529 field staff. By 1918, total staff had grown to 9,600, and it rose further to roughly 14,000, 18,000, 20,000, and 21,000 in each of the subsequent years.
The task almost proved too much for the agency. The expanded income tax deluged the agency in paper. When returns for 1918 began to arrive, those from 1916 had not been audited, let alone ones from 1917. The number of returns filed in 1918 was five times greater than the number from 1917. Subsequent increases only added to the burden. All told, the number of returns increased more than 1,000 percent between 1916 and 1921, giving the BIR an impossible problem. “The enormous increase in the revenue,” one BIR commissioner complained, “the overwhelming increase in the number of returns filed and increase in the work to be performed as a consequence thereof went by leaps and bounds. No one did or could foresee it, or prepare for it.”
1918-1919 The Revenue Act of 1918, actually passed in early 1919, made relatively few major changes in the tax structure, but it did raise rates on individual and corporate income, corporate excess profits, and estates. The law provided for normal and surtax rates that rose the dizzying level of 77 percent on the biggest incomes. Corporations were given an exemption of $2,000, but rates were raised to 12 percent on net taxable income. The law also rectified numerous mistakes in earlier revenue laws, most of which had been enacted in great haste.
The income tax now occupied a central place in the federal revenue system. In 1916, income taxes had been providing 16 percent of federal revenue. From 1917 to 1920, that percentage ranged as high as 58 percent. The tax was now a pillar of federal finance. Still, however, it remained a narrow levy. In 1920, only 5.5. million returns showed any tax due.
May 27: Wilson makes his famous "politics is adjourned" speech to urge higher taxes, including levies on income, estates, and excess profits.
Meanwhile, the BIR began a massive recruitment campaign to help redress its chronic personnel shortage. More than 1,000 auditors were hired in the first six months of 1919. The agency still struggled to keep up, however; delays in the printing of tax forms and instructions prompted an extension of the filing deadline from March 1 to April 1.
William G. McAdoo, Wilson's Secretary of the Treasury. Photo courtesy of National Archives. (larger image)
Audio clip: McAdoo on the need for tax reduction, probably 1919. [External link to Library of Congress]
October 27: Volstead Act, providing for enforcement of the new Prohibition Amendment, passed over Wilson's veto. BIR commissioner was charged with enforcing the act. A new Prohibition Unit was created on December 22, allowed a budget of 2 million under the Volstead Act.
1920 A broad consensus held that steep wartime tax rates were unsustainable. Two of Woodrow Wilson’s Treasury secretaries, Carter Glass and David Houston, suggested cuts. Even Wilson himself -- the architect of the progressive wartime tax system -- seemed to agree. In his 1919 State of the Union Address, he had suggested the possibility of reducing taxes.
Still, many Democrats and progressive Republicans were unwilling to roll back wartime tax reforms. Pleased with the newly progressive cast of federal revenue policy, they sought to retain some of its more progressive elements, including the excess profits tax.
Left to right: Sec. of the Interior John Barton Payne, Moreven(?) Thompson of Washington, D.C., Sec. of the Treasury David F. Houston, ex-Senator Willard Saulsbury, photographed at the Chevy Chase Club. Photo from Library of Congress (LC-USZ62-101983)
Supporters believed that the profits tax — which imposed a graduated levy on business profits above a pre-determined “normal” rate of return on capital — to be a blow for egalitarian ideals. Rep. Claude Kitchin led the campaign to retain the tax. As chairman of the House Ways and Means Committee in the years leading up to World War I, he had helped craft the highly progressive wartime tax system. Now in the minority, he insisted that the tax should be made permanent, arguing that it would shift the fiscal burden to the individuals and corporations whose wealth posed a threat to American society.
Kitchin and his allies were not destined to succeed. Republican lawmakers joined with a series of GOP presidents to engineer tax cuts in 1921, 1924, 1926, and 1928. Andrew Mellon — who moved into his Treasury office in 1921 and stayed their until 1932 — was the principal architect of these reforms. As one wag remarked, “three presidents served under Mellon,” and when it came to taxes, he was certainly correct.
Audio clip: George White, on Republican tax promises (from the Library of Congress)
1921 The series of Mellon tax cuts began in 1921, as legislators from both parties set about revising the wartime tax system. On April 30, Mellon asked Congress for a variety of tax changes, including elimination of the excess profits tax, a modest increase in the corporate income tax, a reduction in personal income tax rates, and the retention of most wartime excise levies.
Repeal of the excess profits tax was almost a foregone conclusion, enjoying broad, bipartisan support. In 1919, President Wilson had told Congress in 1919 that the levy “should be made the basis of a permanent tax system which will reach undue profits without discouraging the enterprise and activity of our business men.” But fiscal experts had since begun to question the tax.
Thomas S. Adams was arguably the most important tax policy expert of his day, a trusted adviser to both Democratic and Republican administrations. He was also one of the original champions of excess profits taxation. In 1920, however, he dealt the levy a heavy blow, calling for its repeal. Having once defended the tax as a means to “allay hostility to big business,” Adams now derided it as burdensome, complicated, and inequitable. Business leaders, he warned, understandably resented its “intricacy and capricious inequalities.” Government officials, moreover, had found the levy hard to administer.
Columbia University economist Edwin Seligman was another vocal critic. More conservative than Adams, Seligman was a leading light of the economics profession and a pioneer in the study of taxation. With strong support from the business community, he argued that the excess profits tax posed a threat to corporate autonomy and economic efficiency. While supporting progressive taxation generally, Seligman argued that the excess profits tax was unwise. Instead, he favored broader use of the federal income tax.
Economist Edwin Seligman. Photo courtesy the History of Economic Thought Website.
Not every economist, however, was a critic of the excess profits tax. Robert M. Haig, a Seligman protégé and colleague at Columbia, offered a compelling case for retention. The excess profits tax, he insisted, was both just and practical — or at least it might be, if Congress would enact several key reforms to simplify its administration. Compared with its alternatives, including higher income taxes or a national sales tax, the profits tax was far superior. Policymakers should “continue the policy of skimming the richer crocks of milk,” he counseled, rather than opting for less progressive alternatives.
Expert debate notwithstanding, the forces arrayed against the excess profits tax proved irresistible. Even Democrats joined the campaign for repeal. Wilson’s Treasury Secretary Carter Glass insisted that the tax “encourages wasteful expenditure, puts a premium on overcapitalization and a penalty on brains, energy, and enterprise, discourages new ventures, and confirms old ventures and their monopolies.” Business leaders, meanwhile, agitated aggressively against the levy.
Sen. Reed Smoot. Photo courtesy of the Library of Congress. (larger image)
When Congress began consideration of the 1921 revenue bill, the sales tax proved to be a sticking point. Mellon’s proposals, including excess profits repeal, sailed through the House of Representatives, arriving in the Senate almost intact. In the upper house, however, the bill ran into trouble. Sen. Reed Smoot, R-Utah, proposed a national retail sales tax, and he had considerable support among Senate leaders. Sen. George Higgins Moses, R-N.H., offered a colorful, if intemperate, appeal, insisting that a sales tax would “strike down the vicious principle of graduated taxation which appears in the pending [House] tax bill, and which is but a modern legislative adaptation of the Communistic doctrine of Karl Marx.”
Moses failed to persuade his colleagues, especially after Mellon sided with opponents of the sales tax. Meanwhile, a strong coalition of Democrats and progressive Republicans challenged the bill on the Senate floor, opposing the sales tax and insisting on higher income tax rates. This “agricultural block” — derided as the “wild asses of the desert” by their enemies — also pushed for steeper estate tax rates, as well as higher corporate income taxes.
Nearing the end of the session, harried lawmakers agreed to a relatively moderate package of reforms. They eliminated the excess profits tax, but replaced some of the lost revenue with a hike in corporate income tax rates. They also lowered the top marginal income tax rate on individuals to 50 percent — a dramatic reduction from wartime highs but far less than Mellon had requested. Legislators increased the exemption for heads of families and for dependents, making the tax base somewhat narrower and lightening the burden for many middle income taxpayers. And they introduced preferential treatment for capital gains income.
As passed, the 1921 revenue act pleased almost no one. Critics complained that it was a pastiche of unrelated, politically driven compromises. Republicans were disappointed in its modest rate reductions; as Sen. Smoot observed, “When the bill becomes law it will be the present revenue baby merely dressed in pink instead of red.” But at least one contemporary observer thought the country had dodged a bullet. “The leaders of each of the contesting parties,” observed economist Roy Blakey, “as well as the nation at large had cause to be thankful that the law was no worse than it was.”
Andrew Mellon
Generally speaking, Mellon argued that tax burdens were too high. Steep rates, he insisted, served only to stifle incentive and foster tax evasion. “Any man of energy
President Calvin Coolidge, Secretary of the Treasury Andrew Mellon, and Secretary of Commerce Herbert Hoover. Photo courtesty of the Library of Congress. (larger image)
and initiative in this country can get what he wants out of life,” he wrote. “But when initiative is crippled by legislation or by a tax system which denies him the right to receive a reasonable share of his earnings, then he will no longer exert himself and the country will be deprived of the energy on which its continued greatness depends.”
Worse yet, Mellon argued, high rates didn’t even raise money. By encouraging both legal tax avoidance and illegal tax evasion, they eroded the tax base and reduced overall revenue. Lower rates, he said, would actually raise money by spurring economic growth and reducing the incentive for tax avoidance. “It seems difficult for some to understand,” he complained, “that high rates of taxation do not necessarily mean large revenue to the government, and that more revenue may actually be obtained by lower rates.” In particular, Mellon insisted that high rates distorted investment decisions, boosting the popularity of tax-free state and local government bonds. Indeed, Mellon made these tax-free bonds a regular target of his reform attempts, but Congress resisted his plans to eliminate them.
In general, Mellon offered a consistent and politically compelling case for tax reduction, impressing even his opponents with his passion for sweeping cuts. “There was a mystical righteousness about tax reduction,” observed Randolph Paul, a leading tax expert who would figure prominently in Roosevelt-era tax policymaking. That sense of righteousness even extended to specialized tax breaks for specific industries. Mellon and his supporters believed that tax reductions — almost any tax reduction — would help spur growth. A convenient side-effect of such narrow tax incentives, of course, was the power they conferred on policymakers, who used them to reward friends and political allies.
But for all his tax cutting zeal, Mellon was not quite singleminded in his pursuit of lower taxes. He split with some of his GOP colleagues to support the retention of both corporate and individual income taxes. When some Republicans tried in 1921 to advance a plan for a national sales tax, Mellon resisted the idea. And even while promoting repeal of the excess profits tax, he supported an increase in corporate income tax rates to compensate for the lost revenue. Perhaps most important, he advocated rate cuts for individuals but endorsed retention of the income tax. “The income tax,” he assured lawmakers, “is firmly embedded in our system of taxation and the objections made are not to the principle of the tax but only to the excessively high rates.” The comment reflected Mellon’s assessment of political and economic realities. The income tax, he had concluded, was here to stay.
Mellon had a few distinctly progressive ideas. Of particular note, he suggested taxing “earned” income from wages and salaries more lightly that “unearned” income from investments. As he argued:
The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs.
Surely we can afford to make a distinction between the people whose only capital is their mental and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.
It was a striking argument, especially coming from a friend of wealth and capital. But it was not out of character. Mellon believed that some degree of progressivity was necessary to forestall more radical attacks on capital. Such an argument did not sit well with many of his Republican colleagues, who longed to eliminate income taxes. Mellon remained committed, however, to taming the income tax, saving it from the excesses of its more ardent supporters, as well as its most bitter critics
1924 Mellon took another run at tax reduction in 1924. He urged lawmakers to further cut income tax rates, arguing — as he had in 1921 — that lower rates would actually raise revenue. Existing taxes were simply too high, he told the chairman of the House Ways and Means Committee. “Ways will always be found to avoid taxes so destructive in their nature, and the only way to save the situation is to put the taxes on a reasonable basis that will permit business to go on and industry to develop,” he wrote. “The alternative is a gradual breakdown in the system and a perversion of industry that stifles our progress as a nation.”
The secretary proposed a top rate of 25 percent, insisting that lower rates would stem tax avoidance. He also proposed his special tax break for earned income, amounting to a 25 percent reduction for wage and salary income. Finally, he supported reductions in estate taxes, which Mellon considered a “levy upon capital,” since it allowed lawmakers to extract capital from accumulated fortunes and use it for current operating expenses.
An unusual photo series of John Nance Garner from his time as vice president. Photos by Theodor Horydczak, courtesy of the Library of Congress. (larger image)
Mellon met stiff resistance on Capitol Hill. With a smaller congressional majority than they had enjoyed in 1921, Republicans had less room to maneuver. Rep. John Nance Garner, D-Tex., seized the opportunity to launch a Democratic attack, contending that the Mellon plan cut rates too much. “This is the time to determine the policy of who is going to pay the taxes,” he told one observer. “The crux of the fight is the surtax. The Mellon 25 percent maximum is at least 10 or 15 per cent too low.”
Republican stalwarts attacked Garner's substitute bill as a mishmash of bad economics. “You have heard of great musicians sitting down at a piano and improvising a tune,” declared Rep. Ogden Mills, R-N.Y. “Mr. Garner sits down at a table in this chamber and improvises a tax bill.” But Garner was gaining ground, securing the votes of virtually all Democrats and even some progressive Republicans. Within three weeks, Republican leaders were ready to capitulate. Speaker Nicholas Longworth, R-Ohio, agreed to accept higher income tax rates, and even swallowed a hike in estate tax rates.
In the Senate, Republican leaders knew they had a weak hand, and they offered only limited resistance to the Democratic onslaught. President Calvin Coolidge reluctantly signed the 1924 act, complaining that Congress had ignored his recommendations. The law granted an immediate 25 percent rebate on taxes paid for 1923 income. It also reduced the top marginal income tax rate to 40 percent — a substantial cut but, again, much less than Mellon had sought. The secretary got his 25 percent earned income credit, but he also had to swallow a hike in estate tax rates from 25 percent to 40 percent.
1926 All in all, the 1924 tax act amounted to half a loaf — or less — for Mellon. By 1926, he was ready for another try. Energized by GOP victories in the presidential and congressional elections, he offered a new plan, including immediate elimination of the gift tax, gradual elimination of the estate tax, and a broad reduction in individual income tax rates, bringing the top marginal rate to just 20 percent.
A major lobbying effort sprung up in support of Mellon's proposals, featuring Capitol Hill appearances by a number of “tax clubs.” The clubs claimed to be grassroots organizations, giving prominent voice to popular opinion. Critics, however, considered them ill-informed, partisan mouthpieces for the rich.
As it happened, Congress needed little convincing; lawmakers of both parties rushed to sweeten the Mellon proposals. With the progressive wing of the Republican party in disarray, and many Democrats throwing in their lot with GOP tax cutters, the success of the Mellon proposals was never in much doubt.
Democrats managed to stave off elimination of the estate tax, but only after agreeing to a 50 percent rate cut, as well as a credit for state inheritance taxes. Rep. John Nance Garner successfully resurrected his plan to raise income tax exemptions. The law raised exemptions across the board, eliminating roughly a third of the nation's 7.3 million income taxpayers; higher exemptions moved many taxpayers off the rolls entirely.
President Calvin Coolidge signs the 1926 revenue act. Treasury Secretary Andrew Mellon is on the far left. Photo courtesy of the Library of Congress. (larger image)
The exemption hikes were not part of Mellon's plan. Indeed, he opposed the idea, insisting that the tax base was already too small. “To narrow it further,” he told one Republican senator, “would make the whole tax structure unstable and its continued usefulness as a source of revenue uncertain.” In Mellon's view, the higher exemptions also created a political hazard. “As a matter of policy,” he said, “it is advisable to have every citizen with a stake in his country. Nothing brings home to a man the feeling that he personally has an interest in seeing that government revenues are not squandered, but intelligently expended, as the fact that he contributes individually a direct tax, no matter how small, to his government.”
Progressives in both parties bridled at Mellon's suggestion that poor Americans had no fiscal stake in their government. “Surely the Secretary of the Treasury can not intend, with a stroke of his mighty pen, to expatriate 96 per cent of us,” noted the Omaha World-Herald:
We pay taxes on our coats, on our shoes and socks, on our hats, on our shorts and underwear, on the food on the breakfast-table, on the materials of which are homes are constructed, on the furniture in them, on the vehicles we ride in, on the amusements wherein we seek surcease—on practically everything, indeed, that we have and do. Do not these payments entitle us to feel equally with Mr. Mellon, that we have a stake in our country?”
Poor Americans did, indeed, pay a host of taxes, most of them on consumption. Many excise taxes enacted during World War I remained on the books, imposing their regressive burden on a host of consumer goods and services. But as a few lonely liberals pointed out, the consumption tax burden was really an argument against higher exemptions, not for them.
Nonetheless, 1926 was a year for tax cuts, and Garner's exemption hike became part of the package. Mellon accepted the higher exemptions as the price of his marginal rate cuts. In a few years, he would have cause to regret that decision, but for the time being, it seemed a reasonable expedient.
1928 The tax cut parade was not quite over. In 1928, Mellon took another run at reduction, again suggesting estate tax repeal, as well cuts in the corporate income tax. Lawmakers agreed with the latter but not the former. It was the last time for a long while that legislators would have a free hand in cutting taxes.
As Mellon surveyed his seven years in office, he must have been pleased. The income tax had grown more central to the federal revenue system; Prohibition had dried up alcohol excise revenue, making the income tax even more important than it had been at the end of World War I. But rates had declined dramatically since 1921. And while Mellon never succeeded in his quest to eliminate the estate tax, he did manage to keep its rates relatively modest. All in all, taxes were less burdensome for many Americans, particularly those in the upper strata of society. These were happy years for tax policymakers of both parties. They had the pleasant task of choosing among various tax cuts, their deliberations buoyed by a fat and happy Treasury. As Franklin Roosevelt later pointed out, “it was all very merry while it lasted.” But in 1929, the party came to a crashing end.
1929-1932 The Great Depression wreaked havoc on the federal budget; as one observer recalled, “The sun was sinking in a cloudy western sky.” By 1930, Andrew Mellon was warning Congress that declining revenues would produce a deficit of $200 million. His projection proved optimistic, and lawmakers watched fiscal gap soar to more $900 million that year. Despite the prospect of even larger deficits to come, Mellon and President Herbert Hoover continued to resist tax increases. But with national income falling from $87.8 billion to $42.5 billion between 1929 and 1932 — and tax revenues falling at an even faster rate, thanks to the progressive rate structure of the individual income tax — such intransigence could not last.
Treasury Secretary Andrew Mellon (left) and his deputy, Ogden Mills. Photo courtesy of the Library of Congress. (larger image)
Early in 1932, Mellon appeared before the House Ways and Means Committee to ask for a tax hike. It was a painful request for this inveterate tax cutter, but one dictated by fiscal orthodoxy. In a sign of things to come, Mellon asked Undersecretary of the Treasury Ogden Mills to read his statement; within a month, Mellon would be eased out of the Treasury building, dispatched to London as an ambassador. This towering figure of the 1920s was being put out to pasture.
Ogden Mills took the reins at Treasury, offering the Hoover Administration both his financial expertise and his political acumen. An upper-class New York Republican of generally orthodox fiscal inclinations, he had served on the Ways and Means Committee during the early 1920s. “Little Oggie,” as he was known in the liberal press, enjoyed a reputation as a tax expert.
In presenting the administration's proposals, Mills warned that the deficit was soaring above $2 billion. Excessive expenditures, coupled with falling tax revenues, had opened a huge hole in the budget. The decline in revenue was particularly dramatic. Corporate income taxes, which had yielded $1.1 billion in fiscal 1930, were likely to raise only $550 million in 1932. Individual income tax rates were plummeting even more dramatically, from just over $1 billion in 1930 to $370 million in 1932. The only relatively bright spot was excise revenue, which Mills expected to decline from $628 million to $544 million over the same period; the moderate decline, he pointed out, was due largely to the stable revenues of the federal tobacco tax.
Altogether, the revenue shortfalls were nothing short of cataclysmic. The problem, Mills declared, was inherent in the revenue structure. “The truth of the matter is that our revenue system rests on a comparatively narrow base,” he explained, “and that our tax receipts are susceptible to the widest variations in accordance with variations in business conditions. This is particularly true of current individual income-tax collections.” The progressive nature of the income tax made the problem worse, he said. Large incomes were the first to rise in good times and the first to fall in bad times. The graduated rate structure ensured that revenues would rise faster than overall income when the economy was doing well. But it also guaranteed that when depression struck, revenues would fall faster than incomes.
Given this reality, Mills counseled against steep increases in the rate structure, predicting that they would not raise adequate revenue. While acknowledging that rates must necessarily rise, especially on the richest Americans, he emphasized the need for an increase in the number of people paying income taxes in the first place. Congress must recognize, he said, that “the weakness in our revenue system is, as I have already stated, the narrowness of the base on which it rests.” Broadening that base was crucial to securing adequate, and dependable, revenue. It was also, he said, manifestly fair. “Many not now taxed are very definitely in a position to make some contribution to the support of Government,” he declared. “The should be asked to do so, taking into consideration ability to pay.”
To close the budget gap, Mills suggested a package of tax hikes that would together raise about $920 million. First and foremost, he asked legislators to restore income tax rates to their 1924 levels. Surtax rates, he said, should increase across the board, topping out at 40 percent — twice their existing level. Even more important, Congress should reduce exemptions to $1,000 for individuals and $2,500 for married couples. These reductions would broaden the tax base, bringing 1.7 million new taxpayers into the system. The tax, Mills emphasized, would still be confined to a narrow slice of American society. “There would be only some 3,600,000 Federal taxpayers in a Nation of 120,000,000 people, and of this number less than 300,000 would contribute 90 percent of the tax.” Indeed, Mill's plan would still have left the tax much narrower than it had been before the 1926 exemption hike.
Ultimately, leaders of the new democratic Congress refused to adopt the lower exemptions that Mills suggested. Instead, they chose to embrace a new federal sales tax. This was a striking departure, given the party's traditiolnal opposition to sales taxes.
A rebellion among rank and file Democrats forced party leaders to backtrack. Abandoning the sales tax, they resorted to a slew of narrow excise taxes, as well as higher rates on incomes and estates.
As ultimately passed by Congress, the Revenue Act of 1932 was predicted to raise $1.1 billion in new revenue. A substantial chunk of this revenue — some $178 million—was expected to come from a combination of steeper rates and lower exemptions in the personal income tax. But fully $457 million was expected from new or increased excise taxes. The list of consumption levies was long, including taxes on lubricating oil, malt syrup, brewer's wort, tires, toilet articles, furs, jewelry, automobiles, trucks, radio and phonograph equipment, refrigerators, sporting goods, cameras, firearms, matches, candy, chewing gum, soft drinks, and electricity.
Taxed goods were disparate, their selection dependent on a variety of factors, including the political influence — or lack thereof — associated with an industry. Most important, however, was a preference for articles of wide consumption, with a secondary concern for their relative necessity. Lawmakers preferred to tax items that people had some choice about consuming, rather than, say, table salt or flour. Some levies, however, were selected because they clearly seemed to indicate a capacity to pay — hence the luxury tax on jewelry, for instance. But others, like the car tax, were selected at least as much for the revenue they promised. Long the target of progressive tax reformers, the car tax survived the legislative battle because it promised to raise money.
Indeed, revenue was the name of the game in 1932. All other concerns were secondary. The pitched battle over the sales reflected not so much an argument about whether to increase taxes — that was never in doubt — but exactly how. The rank and file Democrats who shaped the debate made clear their preference for isolated excise taxes, strongly preferring them to more general sales levies. In large part, this preference reflected a conviction that people could choose whether to consume taxed goods. Under a general sales tax, no such choice was possible.
Of course, the excise taxes were highly regressive. But regressivity was only one measure of fairness, and in the face of a gaping deficit, it was not the most important one. Democrats made consumer choice a central aspect in their definition of fair taxation.
Just five months after the 1932 revenue act was signed into law, Franklin Roosevelt won his campaign for the presidency. When he took the oath of office in 1933, he inherited a tax system largely defined by this last revenue bill of the Hoover Administration. It was, in almost every respect, consistent with the revenue policy advanced by the GOP Treasury of Andrew Mellon and later Ogden Mills. It represented a triumph for fiscal orthodoxy, even at the expense of tax fairness. The Republican era of tax policymaking would have long-lasting effects, if not quite the ones that Mellon had originally hoped to define. The low taxes of the 1920s were a distant memory, as was any hope of eliminating such progressive taxes as the estate and gift levies. But the tax system of 1933 was certainly nothing like the progressive revenue structure emerging from World War I. Republicans had managed to limit the scope of progressive taxation, keeping the income tax reasonably limited and placing much of the tax burden on consumption. While sales tax proponents had reason to be disappointed, the federal revenue system was increasingly dependent on narrow sales taxes of one sort or another. That structure, moreover, was not imposed by Republicans on their unwilling Democratic colleagues. Indeed, Roosevelt‘s party had crafted this system in close cooperation with the Hoover Administration. Regressive taxation was a bipartisan achievement.
Thanks for the tip, will do. I will pass the letter along
I hope so but up to this point they have shown no fear and still infer they want the 4 billion back if/when JMW awards the 4 billion back to WMI. Only a select few in high places were in the loup knowing exactly the events of the take down..This being the age of denial, no one will admit any guilt and justice will have to be determined Judicially even if a settlement satisfying all parties, and I mean all parties including commons, occurs IMO
Compensate WaMu Victims, Send this letter to UR Senators
Bernanke is not, but Ms. Sheila Bair is the culprit of world financial crisis
If Fed Chairman Bernanke ever made any mistake, before or during the financial crisis, he did not intend to. But FDIC’s Ms. Sheila Bair was the culprit who caused world financial crisis by illegally seizing WaMu because of her personal interest..
Founded in 1889, WaMu was the largest savings bank in the U.S. until Bair intentionally killed it in September 2008. JP Morgan’s CEO Jamie Dimon wanted to steal WaMu for a long time. In order to help her friend Dimon to get WaMu, Bair played all kinds of games to kill WaMu as soon as possible to give it to Dimon virtually for free.
The first game Bair played was to downgrade WaMu. After an in depth review, WaMu’s regulator, the OTS stated on September 8th, 2008 that WaMu had enough capital and liquidity to operate as a well capitalized institution. On Sep 9, 2008 S&P downgraded WaMu and stated it would downgrade again over the next two years. Two days later, Moody’s also downgraded WaMu. WaMu responded immediately with a statement that the downgrade was baseless, inaccurate and biased because WaMu had enough capital and liquidity, significantly above the requirements for a well- capitalized bank. Having been scrutinized by regulators everyday inside the bank, WaMu dared not and did not lie.
However, Bair did not want to wait for two years. Orchestrated by her, within one week, WaMu was downgraded again by S&P, Moody’s and the OTS to "junk" status. There was never in history of the U.S. that a well funded bank was downgraded over and over again within one week. American people now all believe it was Bair who orchestrated all these downgrades to collapse WaMu. All communications between Moody’s, S&P, and the OTS/FDIC should be investigated by Congress.
It was these downgrades that scared the American people and induced what the FDIC claimed a “bank run” in deposits between Sept. 15 and 24, 2008. The FDIC then had an excuse to claim that WaMu did not have enough capital and liquidity and should be seized immediately. As a matter of fact WaMu did have enough capital and liquidity with $5 billions in cash on deposit. According to official reports withdraws of only $16.7 billion out of total deposits of over $200 billion which means that 90% of WaMu's deposits were still left intact during the period. However, the FDIC seized WaMu anyway and gave it to JP Morgan for next-to-nothing.
The second game Bair played was to scare all the potential buyers of WaMu. The OTS advised WaMu to look for buyers without a deadline, indicating that WaMu was well capitalized by then. WaMu was then discussing terms with 6 potential suitors including J.P. Morgan through investment bank Goldman Sachs. However, the FDIC went behind WaMu to forge a dirty deal with JP Morgan, knowing that JP Morgan was negotiating with WaMu in the front. Unbeknownst to WaMu, the FDIC threatened all the potential buyers that the FDIC was going to seize WaMu soon, so that nobody would dare to make an offer.
The third game Bair played was to seize WaMu and give it to Dimon without an open bid. Looking back on it, all the games Bair played was to benefit Dimon for her own personal interest. That was why JP Morgan was able to submit over hundreds of pages to get WaMu within a few hours.. According to WSJ, the FDIC had already informed a planned seizure of WaMu to JP Morgan 3 weeks before WaMu’s seizure. http://blogs.wsj.com/deals/2008/09/29/how-jp-morgan-raised-115-billion-in-24-hours/
The possible inappropriate relationship between the FDIC chairwoman Sheila Bair and JP Morgan CEO Jamie Dimon should be investigated by Congress.
One week before FDIC seized WaMu, then Secretary of Treasury Henry Paulson asked Dimon whether he is interested in Morgan Stanley for one dollar per share. Dimon did not have time to do the homework because his focus was to get WaMu with the help of Bair as soon as possible.
On 9/25/2008, Bair seized WaMu. Moments later, Dimon acquired the deposits,
assets of WaMu for $1.9 billion which was pocketed by Bair.
Because Bair’s wrongdoing was not condemned by Congress, this most powerful woman in the US proudly did it again to Wachovia bank within a few days. It was Bair’s misconduct to wipe out the two large U.S. banks all of a sudden in a few days which triggered world financial crisis. Dimon who stole WaMu’s 307 billion asset and 2239 profitable branches for free and later stole American taxpayers another $29 billion by claiming tax credit on behalf of WaMu now becomes a “hero” of world financial crisis.
Jamie Dimon is not a hero. A hero is someone who sacrifices himself to save others. At most he was just lucky and exposed less in mortgage crisis because of his greedy policy and few people were willing to do business with them. He was the only winner in this crisis because he is a thief who knows how to bribe the government officials to help him to steal from millions of American middle class who invested at WaMu. If we have more people like Dimon, our nation will become a corruptor zoo. "For what if he shall gain the whole world and lose his soul?" Mark 8:36
Below is Dimon’s confession.
http://files.shareholder.com/downloads/ONE/220162815x0x283417/92060ed3-3393-43a5-a3c1-178390c6eac5/2008_AR_Letter_to_shareholders.pdf
Dimon confessed in his annual report to shareholders that he was the only bank prepared to act immediately (within a couple of hours because Bair only informed him 3 weeks in advance. He pretended to be a buyer of WaMu in public, while getting information from Bair everyday behind the curtain).
Dimon confessed that he acquired WaMu’s 2,200 branches, 5,000 ATMs and 12.6 million checking accounts, as well as savings, mortgage and credit card accounts for merely $1.9 billion. Importantly, Bair did not give Dimon the liabilities or debts of WaMu. Dimon confessed for $1.9 billion, he got $240 billion of mortgage and assets, $160 billion in deposits and $38 billion in equity. The deal was immediately accretive to earnings $2 billion and later claimed $29 billion tax credit from U..S. government and American taxpayers. Dimon confessed that even if home prices go down another 20%, he thinks the transaction will remain a great deal, at a great price for his shareholders. (a penny on the dollar).
With Bair heading the FDIC, it now becomes a corruptive profit institution. They took over WaMu, sold off and pocketed the money while it was still healthy, like putting and burying a healthy person into a coffin while he is still able to jog and run. JP Morgan got the assets and deposits at a bargain at the expense of WaMu shareholders. What the FDIC did to WaMu was exactly the same as what the Japanese did to the Americans during World War II. On Saturday, Japanese Foreign Minister signed the peace treaty with the USA in Washington D.C. Next morning, Japanese bombed Pearl Harbor and seized all the assets of American banks in Hong Kong. President Franklin Roosevelt was totally in the dark. Like FDIC seizing WaMu and giving it to JP Morgan, only planners Sheila Bair and Jamie Dimon knew when to pull the trigger, because it was totally a conspiracy.
It is believed that the misconduct of Ms. Bair of FDIC helped JP Morgan steal WaMu from investors. JP Morgan had been making phantom negotiation with WaMu in the front, while getting inside information from Ms. Bair behind the curtain.. It is a theft and a criminal act on the part of JP Morgan to exploit the chairwoman of the FDIC and benefiting to take WaMu’s assets plus thousands of very profitable branches at an exorbitant discount. Dimon, who has a salary of 15.5 millions plus option 40 millions per year can proudly take credit for corrupting huge WaMu assets for free through a collusion with Bair.
Unfortunately, the person to blame for this debacle is still in charge and threatening future American prosperity. Forbes stated that the FDIC’s Sheila Bair is the second most powerful woman in the world next to the German Chancellor. She can make any big bank disappear and wipe out its shareholders at any time she wants. When AIG collapsed and Lehman Brothers bankrupted, the stock market was still stable. It wasn’t until WaMu was unlawfully seized by the FDIC that the stock market started to collapse. It was Bair who destroyed the American people’s confidence by this unlawful seizure of well-funded WaMu and wiping out all shareholders. The American people were totally astonished and panicked. Who would be the next victim? They worried that their lifetime savings and retirement investment could be plundered by Bair without any justification and given away for free. It was Bair’s illegal abuse of power by plundering WaMu from the shareholders while it was still healthy that scared American people and caused the cascade of worldwide financial crisis.
The American people believe that the FDIC acted in a premeditated fashion to kill WaMu from the very beginning, no matter how hard WaMu was working in order to stay alive. All the games that Bair played were designed to benefit JP Morgan. American people have a lot of questions that deserve answers.
*How could the FDIC inform JP Morgan the planned seizure while WaMu was still a well capitalized bank?
*How could JP Morgan pretend to negotiate with WaMu in the front while they had inside information behind the curtain from the FDIC?
* How could JP Morgan present hundreds of pages of acceptance of purchase of WaMu to FDIC within a few hours, if this wasn’t a premeditated game?
*How did Dimon of JP Morgan bribe Bair of FDIC in exchange for her help to get WaMu dirt cheap and become the biggest bank in the nation and biggest winner in this worldwide financial disaster? What position/compensation/benefit did Dimon promise her once she is out of government office? and/or what did Dimon offer her family members or relatives, that prompt her so anxious to push the OTS to kill WaMu and give it to Dimon for free?
*How did Bair orchestrate downgrades by Moody’s, and S&P?
* What made Bair decide that WaMu’s $310 billion asset and 2,239 profitable branches is only worth of $1.9 billion without open competition? Why didn’t Bair have an open bid? How could she pocket that $1.9 billion and wipe out WaMu shareholders?
It is a big insult to this great nation that this grand theft is tolerated and all our beloved elected Senators and Congressmen have to keep silent because Bair is the second most powerful woman in the world.
Bernanke has good intentions for our country. Bair, a culprit of world financial crisis by illegal seizure of WaMu for her personal interest, should be indicted and investigated by the Congress for her fraud, wrongdoing and misconduct. WaMu victims should be compensated by the grand thief JP Morgan.
We respectfully request Congress investigate Bair of FDIC and Dimon of JP Morgan’s conspiracy and collusion to wipe out WaMu and order JP Morgan to compensate WaMu shareholders.
Thank you and may God Bless America.
Respectfully Yours
"Issuing subpoenas against dozens of other parties just goes too far," she said.
A separate agenda item about the return of a deposit was postponed to Feb. 5.
Mr. Twitter.com/Was_Mutual I dont know, everybody could be anybody here
Hey our twitter friend got a mention in the Grind commentary...
"I think we are now a step closer to a positive outcome," said shareholder Ho Pham, one of many to attend the ruling, in a text message.
YAHOO regarding rule 2004...Is that too soon?
Sheeee's Baaaaaccccckkkkk! Just a warning shot across the bow of the SS Rosen and SS JPMORGAN et al
Remember the BISMARCK
Short Break then remainder of Agenda...keeps getting better
Yeah Again