Word: textron
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...Textron, Trusts & Taxes...
...Royal Little had set up six such trusts. Part of their tax-free income, which had totaled nearly $10 million, had been used to finance Textron's expansion. The trusts had paid out very little to their beneficiaries. Example: the Rhode Island Charities Trust had taken in $4,500,000, paid out $85,000 to its beneficiary (the Providence Community Chest). But it had paid out $140,000 to its trustees and banker...
...trusts had milked other cor porations, by buying up control and paying out huge dividends. Example: in July 1948, Textron's "Sixty Trust" bought up the stock of the Cleveland Pneumatic Tool Co. for $6,825,000, then paid itself $4,500,000 in dividends...
...various trusts permitted Textron to take out assets, replace them with others of less value. Example: Rayon Foundation Trust let Textron take $200,000 worth of stock, paying 10% dividends, replace it with stock paying 5% or less. The trustees also sold stock to friends and associates, at less than the trust had paid for them...
Concluded Tobey: "The maze of negotiations, investments, loans and leases between these trusts and Textron presents a fantastic picture of fiscal manipulation," which gave Textron an unfair advantage over taxpaying corporations. Tobey's remedy: Congress should pass a law forcing all such trusts to pay out 85% of their annual gross income to beneficiaries, to get tax exemption...