shipping commissioner or other person making such entries in accordance with the provisions of this section. Records so maintained shall not be open for general or public use or inspection. "(g) Any person, partnership, company, or corporation who shall require any seaman employed or applying for employment to possess, produce, or carry a continuous discharge book, if and when such seaman possesses or carries an identification certificate, or to carry an identification certificate, if and when such seaman possesses and carries a continuous discharge book, or who shall exchange or give to any other person, partnership, company, or corporation information to cause discrimination against a seaman for electing to carry either an identification certificate or a continuous discharge book, or to prevent a seaman from obtaining employment on that account, shall be deemed guilty of a misdemeanor; and, on conviction thereof, shall be punishable by a fine of not more than $1,000 or imprisonment for not more than one year, at the discretion of the court. "Seamen shall apply for certificates of identification or continuous discharge books hereunder; and if any application contains any statement known by the applicant to be false, he shall be deemed guilty of a misdemeanor and, on conviction thereof before any district court of the United States, shall be fined not more than $1,000 or imprisoned for not more than one year, in the discretion of the court. "(h) In case of the loss of a continuous discharge book, a certificate of identification, or of any certificate of discharge by shipwreck or other casualty, the seaman shall be supplied with a duplicate of such continuous discharge book, certificate of identification, or certificate of discharge in which shall be entered all data that may be available from the copies of records kept by the Bureau of Marine Inspection and Navigation. In other cases of loss the seaman may obtain a duplicate of such continuous discharge book, certificate of identification, or certificates of discharge, containing the same entries, upon a payment of a sum equivalent to the cost thereof to the Government to be determined from time to time by the Secretary of Commerce. "(i) The provisions of this section shall not apply to fishing or whaling vessels or yachts. (j) The Secretary of Commerce shall enforce this section as to all vessels of the United States subject to the provisions hereof through collectors of customs and other Government officers acting under the direction of the Bureau of Marine Inspection and Navigation, and shall make such rules and regulations as he may deem necessary to carry out the provisions of this section. "(k) Where vessels are required to sign on and discharge the crew before a shipping commissioner and no shipping commissioner is appointed or is available the functions and duties required by subsections (d) and (e) of this section to be performed by such shipping commissioner may be performed by a collector or deputy collector of customs; and where vessels are not required to sign on and discharge the crew before a shipping commissioner the duties and functions required by subsections (d) and (e) of this section to be performed by the shipping commissioner shall be performed by the master of such vessel. Any master who shall fail to perform such duties or functions shall be fined in the sum of $50 for each offense. "(1) The master of every vessel subject to the provisions of this section shall submit reports to the Bureau of Marine Inspection and Navigation with respect to the employment, discharge, or termination of services of every seaman not shipped or discharged before a shipping commissioner. The Secretary of Commerce shall, by regulation, prescribe the manner, form, content, and time of submitting such reports. Any master who shall violate any provision of this subsection or regulations estab pished hereunder shall be subject to a penalty of $500.” NOTE. For the further information of the House, section 3 of the Act of June 16, 1938 (Public, No. 647, 75th Cong.), further amended Revised Statutes 4551 by providing that the provisions of that section of the Revised Statutes "shall not apply to unrigged vessels except seagoing barges." 76TH CONGRESS HOUSE OF REPRESENTATIVES 3d Session CONSIDERATION OF H. R. 10413 { REPORT No. 2893 AUGUST 28, 1940.-Referred to the House Calendar and ordered to be printed Mr. SABATH, from the Committee on Rules, submitted the following REPORT [To accompany H. Res. 583] The Committee on Rules, having had under consideration House Resolution 583, report the same to the House with the recommendation that the resolution do pass. О THE SECOND REVENUE BILL OF 1940 AUGUST 28, 1940.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed Mr. DOUGHTON, from the Committee on Ways and Means, submitted the following REPORT [To accompany H. R. 10413] The Committee on Ways and Means, to whom was referred the bill (H. R. 10413) to provide revenue, and for other purposes, having had the same under consideration, report it back to the House without amendment and recommend that the bill do pass. The bill may be divided into three general parts: (a) the excessprofits tax, (b) the suspension of the application of the provisions of the Vinson-Trammell Act restricting profits upon the construction of naval vessels and aircraft, and (c) the provision of special amortization in respect of facilities necessary for national defense. NEED FOR THE LEGISLATION On May 16, 1940, the President, in his message to the Congress, outlined the immediate necessity for increasing the outlays for national defense. In response to this and to subsequent messages the Congress has made available in direct appropriations and contract authorizations $14,702,000,000 for national defense, of which the revised budget of August 5, 1940, estimates that $5,000,000,000 will be expended in the fiscal year 1941. In further response to the message of May 16, in order to finance the additional appropriations there requested, your committee reported and the Congress enacted the revenue bill of 1940. This measure, approved June 25, 1940, provided for a $4,000,000,000 increase in the national debt and additional tax revenues of $1,000,000,000 annually for a 5-year period-an amount sufficient to retire the additional borrowings at maturity. In its report on the revenue bill of 1940, your committee expressed the desire that the rearmament program should furnish no opportunity for the creation of new war millionaires or the further substan tial enrichment of already wealthy persons. Your committee is still of this opinion but, at the same time, deems it advisable to stimulate the cooperation of private enterprise in the defense program by suspending the profit limitations of the Vinson-Trammell Act, appli cable to the construction of naval vessels and Army and Navy aircraft. In addition, it is considered desirable to provide special amortization with respect to the facilities necessary in the national defense, in order further to encourage the participation of private enterprise in the rearmament program. While these benefits are being accorded to business engaged directly in the defense program, your committee feels that they should be accompanied by a general excess-profits tax rather than one limited to contractors for Army and Navy aircraft and naval vessels or even to munitions manufacturers generally. Accordingly, the tax provided in the bill will apply to corporate profits from all sources. This is felt desirable since the segregation of profits directly attributable to the expenditures of the Government for the defense program presents insuperable difficulties. For these reasons your committee recommends the incorporation in the same bill of these three interrelated features, each of great importance to the financial aspects of the defense program: the suspension of the profit limitations under the Vinson-Trammell Act, the provision of special amortization for defense facilities, and an excess-profits tax. In the opinion of your committee, this integrated plan presents the best method of effectuating the recommendation of the President as expressed in the following message: To the Congress of the United States: We are engaged in a great national effort to build up our national defenses to meet any and every potential attack. We are asking even our humblest citizens to contribute their mite. It is our duty to see that the burden is equitably distributed according to ability to pay so that a few do not gain from the sacrifices of the many. I, therefore, recommend to the Congress the enactment of a steeply graduated excess-profits tax, to be applied to all individuals and all corporate organizations without discrimination. THE WHITE HOUSE, July 1, 1940. FRANKLIN D. ROOSEVELT. Upon thorough examination, it appeared that the excess-profits tax should apply only to corporations, as individual and partnership incomes are subject to heavy surtaxes upon net income, whether or not left in the business, while, in general, neither corporations nor their stockholders pay surtaxes upon earnings which are not distributed. Moreover, since all of the assets of an individual, whether he be a sole proprietor or a member of a partnership, are at the risk of the business, it is extremely difficult, if not impossible, to determine the capital actually invested. The matters included in the bill were referred by your committee to its Subcommittee on Internal Revenue Taxation on August 1, 1940. On August 8 the subcommittee, in a printed report, submitted its recommendations, which formed the basis for full public hearings, held jointly by your committee and the Committee on Finance of the Senate. The recommendations of the subcommittee, modified as to rates and further modified with a view to the relief of certain types of cases disclosed in the hearings, are embodied in the bill. ESTIMATES OF REVENUE It is estimated that the excess-profits tax will yield $305,000,000 gross revenue for the calendar year 1940 and over $700,000,000 for a calendar year in which the defense program becomes fully operative. SUMMARY OF PRINCIPAL FEATURES I. EXCESS-PROFITS TAX 1. TAXABLE YEARS The tax imposed by the bill is applicable with respect to all taxable years beginning after December 31, 1939. 2. CORPORATIONS TAXABLE The bill provides that all corporations except the following shall be subject to the excess-profits tax: (a) Corporations exempt from income tax. (b) Personal holding companies. (c) Foreign personal holding companies. (e) Diversified investment companies registered with the Securities and Exchange Commission. (Foreign corporations not engaged in trade or business within the United States and not having an office or place of business therein. Corporations with excess-profits net incomes of not more than the specific exemption are not subjected to tax and need not file excessprofits-tax returns. Since the specific exemption for a taxable year of 12 months is $5,000, and since only about 70,000 of the almost 500,000 active corporations in the United States have net incomes for general income-tax purposes in excess of $5,000, it is apparent that a large number of small corporations will be relieved from the excess-profits tax. A personal-service corporation, as defined in the bill, may be relieved from the excess-profits tax for any year by electing to have its income for such year taxed in the hands of the shareholders, whether or not actually distributed to them. 3. BASE PERIOD For the purpose of ascertaining the previous earning experience to be used as a comparative measure of earnings for the taxable years under the bill, the years 1936 to 1939, inclusive, are selected to constitute a base period. 4. MEASURE OF EXCESS PROFITS (a) Corporations in existence during entire base period.-In determining the portion of the earnings to be considered as excess profits, the taxpayer, if in existence actually or constructively during the entire base period, may choose either of two standards of measure ment. |