The News And Views

What It Means: Pres. Truman's Request For Tax Exemptions

BY CHARLES MOLONY (For Jacksonville Beach)

WASHINGTON (AP) President Truman has tackled an increasingly great revenue loss problem in proposing to congress that tax exemptions on certain operations of schools and charities be narrowed.

The President was specific--although not detailed--about only two cases where he wants to remove the tax exemptions such organizations usually enjoy:

1. Where business and industrial operations "entirely unrelated to educational activities" have been operated under a school's tax-exempt wing and thus given "competitive advantage" over fully taxable enterprises in the same line of business.

2. "Where the exemption accorded charitable trust funds has been used as a cloak for speculative business ventures, and funds needed for charitable purposes, but increased by tax exemption, have been used to acquire or retain control over a wide variety of industrial enterprises."

The Treasury has shown concern over the revenue lost through these channels and now has two cases in court in which it is attempting to subject college-owned businesses to regular corporate taxes. One deals with an important spaghetti-macaroni firm, C. F. Mueller Co of New York, which is owned by a trust of which the beneficiary is New York University The other case involves a plant of the Century Electric Co of St. Louis and William Jewell College of Missouri.

While these cases remain unsettled, there have been other instances of colleges acquiring business interests by investment of their endowment funds as well as under the wills of alumni who die.

The Treasury established through a questionnaire published recently that $175,932,000 in receipts from "business" operations were taken in during 1946 by tax exempt organizations which answered the questionnaire. And, the Treasury said only a minority of the tax exempt organizations sent it data

Rep. Mason R-Ill., a member of the House Ways and Means (taxation) Committee, estimated that the total volume of these receipts approximates $50,000,000,000 annually and that the government loses about $10,000,000,000 a year in taxes as a result of exemptions.