Classic Mode

Music Trade Review

Issue: 1932 Vol. 91 N. 7

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
The Revenue Act of 1932
and Its
Bearing on the Music Trade
By R. W. MacNAUGHTON, C. P. A.
of Hill, Bieth & Company
Accountants and Auditors, New York, N. Y.
R. W. MacNAUGHTON
S the members of the music trade
as a whole have in all probability
familiarized themselves with the
contents of the new Revenue Act,
especially the provisions that directly affect
them, I will merely review some of the more
drastic provisions, as an argument in favor
of a general Sales Tax.
As a prelude let me state that in my
opinion the Revenue Act of 1932 is the
most unsatisfactory one we've ever had in
this country because it probably won't pro-
duce the necessary income to the Govern-
ment, which is the reason for its existence,
and because it contains so many excise taxes
which because of their nature are difficult to
administer and a nuisance to the taxpayer.
Under the Excise Tax provisions of the
present law only a few industries are taxed
and these at a much higher rate than the
defeated Sales Tax would have inflicted.
Consequently, an attempt has been made by
Congress to make collection agencies out of
the few industries taxed to the benefit of
those not taxed. Then again, the industries
taxed have been discriminated against eco-
nomically as their recovery from the financial
crisis which has had us in its throes for
the past three years has certainly been re-
tarded through decreased sales and profits.
The music industry is one of those dis-
criminated against. For example, under the
defeated Sales Tax, radios, radio parts and
accessories, phonograph records, etc., would
have been taxed at the rate of 2J4 P er
cent on the manufacturers' sales price,
whereas under the present Revenue Act they
are taxed 5 per cent.
As a practical proposition, if the buying
public knew that every time it bought an
article it was paying a low rate of tax on
that article, the tax would soon be forgotten
and would merge itself into the cost of the
article. It isn't the general things that dis-
turb the people, it is the exceptions.
A
The average wage earner, who was to be
the sufferer under the Sales Tax, according
to its opponents, has the following change
in income tax rates to face:
The increase of normal tax rates from
11/2 per cent on the first $4,000 in excess
of credits, 3 per cent on the next $4,000
and 5 per cent on the balance, with
surtax starting at $10,000, to 4 per cent
on the first $4,000 in excess of credits
and 8 per cent on the balance with sur-
tax starting at $6,000. In addition, the
surtax rate graduates to 55 per cent
under the new act, whereas 20 per cent
was the maximum under the Revenue
Act of 1928.
Credits for personal exemption have
been changed from $1,500 for a single
person and $3,500 for a married person
or head of a family, to $1,000 and
$2,500, respectively.
The corporation rate is 13% per cent
under the Revenue Act of 1932, instead of
the former 12 per cent, with a rate of 14V 2
per cent for consolidated returns. Under the
present act there is no exemption for cor-
porations whose income is $25,000 or less.
Under the Revenue Act of 1928 there was
a $3,000 exemption for such corporations.
A provision of the new act which affects
both individuals and corporations is the
limitation of losses from sales of securities
held for two years or less as deductions to
the extent of gains only, with the proviso
that losses disallowed in one year may be
carried over as offsets against profits from
such sales in the next succeeding year, sub-
ject to certain limitations, one of which is
that the taxpayer must have an income in
the year of the disallowed loss at least equal
to the amount thereof. Any excess of
disallowed loss over taxable income cannot
be carried over. For example, let us as-
sume that the A Piano Co. has a net income
from operations for 1932 of $5,000, excluding
security transactions. It has gains from sales
of securities of $1,000 and losses of $8,000.
It could carry over to 1933 as a deduction
against gains from the sales of securities
in that year only $5,000. The first year
affected by this new provision is 1932 and
the first year in which a carry-over can
be used is 1933.
A further interesting change is the limita-
tion in the carry-over of business net losses
to one year instead of two. For instance,
if a taxpayer had a net loss for 1930 and
1931 and a net income for 1932, he could
carry over as a deduction from the 1932
income only the 1931 loss, whereas under the
Revenue Act of 1928 the losses for the two
prior years were deductible.
It is impossible to enumerate all the
changes in the law in this space and it prob-
ably wouldn't be of interest or service to
the members of the music trade to do so.
However, the provisions set forth above
should prove of some interest to the trade
as a whole for it is undoubtedly affected by
them and they give some idea of the ex-
tent to which Congress had to go in its
attempt to raise the income necessary to
balance the Budget.
Now for the Excise Tax provisions of
the new Revenue Act. There is a 5 per cent
tax on telegraph messages, 10 cents on cable
and radio messages and a sliding scale on
telephone calls starting with 10 cents on
50-cent to $1 calls, 15 cents on $1 to $2
calls and 20 cents on calls in excess of $2.
If you rent a safe deposit box you are taxed
10 per cent on the rental fee; on all checks
drawn you pay 2 cents each.
In connection with the last tax let me
point out that the Treasury Department has
ruled that the bank must be under obliga-
tion to the drawer, either directly or im-
pliedly, to pay for the instrument, and must
have authority to charge the account of
the drawer before the tax is effective, and
that therefore moneys can be withdrawn from
either a checking or savings account without
incurring the tax, provided only a receipt
is personally tendered by the depositor. Also,
it is possible to arrange with the bank to
draw drafts on one's self which could be
covered by the individual, the bank not being
(Please turn to page 17)
Have your Federal Tax Problems answered by Mr. MacNaughton through THE REVIEW—con-
fidentially and without charge. With the many business readjustments, timely information in tax
matters is most important just now. Send us your questions.
THE
MUSIC
TRADE
REVIEW,
August-September,
1932
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
MUSIC
TRADE
REVIEW,
August-September,
1932
NEW AEOLIAN-AMERICAN CORP. FORMED
TO HANDLE THE MANUFACTURING END
A
S the result of a series of meetings
between directors and representatives
of the stockholders of the Aeolian
Co. and the American Piano Corp., there was
organized late in July, becoming effective on
August 1, a new joint subsidiary manufac-
turing corporation, representing the combined
production resources of both companies and
to be known as the Aeolian-American Corp.
Both the Aeolian Co. and the American
Piano Corp. will retain their separate iden-
tities as retailers of pianos and reproducing
pianos with the new corporation taking over
all wholesale selling and the manufacturing
activities. It is stated that manufacturing
operations will be confined for the present to
the big and modern plants in Neponset,
Mass., and East Rochester, N. Y., which
will mean the elimination of other plants
and will effect economies.
The officers of the Aeolian-American Corp.
are: President, W. H. Alfring, president of
the Aeolian Co.; executive vice-president,
Gardner C. Kavanagh, who holds a similar
office with the American Piano Corp.; treas-
urer, W. Lee White, also treasurer of the
American Piano Corp.; secretary, Clarence
E. Bahn, and assistant treasurers, R. W.
Staff and E. C. Thompson.
Among the pianos of wide reputation, the
manufacture of which will be controlled by
the new corporation, are included the Mason
& Hamlin, Knabe, Chickering, Weber,
George Steck, Fischer, Marshall & Wendell
and Haines Brothers, while the reproducing
pianos comprise the Duo-Art and the Ampico.
In announcing the new organization Wil-
liam H. Alfring, the president, said: "The
new Aeolian-American Corp. commences
operations with a substantial net worth and
working capital and no obligations, and owns
free and clear the most modern and fully
equipped piano building plants in America.
"Moreover, the new corporation will be
fully self-contained in that it will control
all its own facilities for the manufacture of
plates, actions, cases and other elements en-
tering into the building of finished instru-
PHILIP WYMAN NOW
BALDWIN CO. DIRECTOR
Philip Wyman, vice-president of the Bald-
win Piano Co., Cincinnati, O., was recently
elected a director of the company to fill the
vacancy caused by the recent death of George
W. Armstrong, Jr. Mr. Wyman has been
an active factor in the Baldwin company
for a number of years and is a very popular
member of the trade.
H. E. CAPEHART HEADS NEW
PACKARD-CAPEHART, INC.
H. E. Capehart, founder of the Capehart
Corp., Fort Wayne, Ind., who recently re-
signed from that organization, is president
of the newly organized Packard-Capehart,
Inc., in Fort Wayne. The new company
has already begun the manufacture of
popular-priced automatic phonograph-radio
combinations and record-changing units in
the well-equipped plant formerly occupied
One particular merit of the book is frank-
ness and the authors have not hesitated in
presenting those objections and criticism that
have been heard frequently from individuals
opposed to the plan for some reason mostly
selfish. Certainly logical answers are offered
for the twoscore outstanding criticisms and
the booklet should prove of much direct
benefit, both to those who are working to
spread the operation of piano class instruc-
tion and also to those fair-minded objectors,
themselves, who are willing to read and
listen.
REPORTS ORGAN SALES
KEEPING UP WELL
WM. H. ALFRING
ments of a recognized high quality.
"The character and identity of the instru-
ments, which, under their respective names,
have earned such a splendid reputation with
the musical public, will be preserved and
probably will, in some cases, be still further
enhanced, due to the opportunity now cre-
ated for the best talent and craftsmanship
of all participating companies."
The combining of the manufacturing fa-
cilities of the two big companies is regarded
generally as a most logical move and one
making for increased production efficiency
while still observing quality standards. It
places the new company in a most favorable
position to meet the existing business situa-
tion on a sound basis and to profit immeas-
urably from any general upturn in business
which appears certain in the near future. It
is significant that a great majority of the
dealers representing both companies have ex-
pressed their enthusiasm over the arrange-
ment as one calculated to increase their
opportunities.
by the Packard Piano Co., in that city. The
new products will be known under the name
of Packard.
Associated with Mr. Capehart in the new
venture are J. E. Voyles, formerly secretary
and general manager of the Capehart Corp.,
who is secretary of the new company, and
R. G. Norman of Fort Wayne, also formerly
with the Capehart Corp.
BOOK ANSWERS CRITICISMS
ON GROUP PIANO STUDY
The National Bureau for the Advancement
of Music recently made an important addi-
tion to its list of publications in the form
of a booklet of answers to criticisms of
piano class instruction. The little volume
has been written by Ella H. Mason, head
of the Piano Class Department of the bureau,
and Raymond Burrows, lecturer in music
education at Teachers' College. Both authors
have had wide direct experience in pro-
moting class instruction on the piano.
In spite of generally slack business, the
Wangerin Organ Co., Milwaukee, has been
booking enough orders to keep its organiza-
tion intact, according to A. A. Wangerin,
president of the concern. Among recent
orders has been that for the organ in the
Boys' Technical High School in Milwaukee,
which is now being built at the factory at
2330 South Burrell street. Specifications for
the instrument and the plans for the cham-
ber in which the organ will be installed
were drawn up by the firm and then pre-
sented to the school board for approval.
Preliminary installations will be started
shortly. This is the second pipe organ to
be installed in Milwaukee public schools,
one having been installed in the Wash-
ington High School some time ago to be
used in connection with the music course
and for concerts and entertainments.
OCCUPIES NEW QUARTERS
IN LEXINGTON, KY.
The J. P. Simmons Music Co. recently oc-
cupied new quarters at 222 East Main street,
Lexington, Ky., carrying a full line of
pianos, radios, musical merchandise and sheet
music, with the Baldwin piano line featured.
The company recently bought out the
Meadors Music Co. J. P. Simmons, head
of the company, has been in the piano busi-
ness for forty-nine years.
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