New-York tribune., 1909-06-20
LIKES STAMP TAX BEST
DIR. DEPEW'S OPINION.
Does Not BeIieUe 4ny Special Tar
alton VII Be Necessary.
From The Tribune Bureau. !

The tariff BILL he said has 2 bout seven hun
dred main schedules and. in the division of the
schedules, two thousand items. These have all
been acted upon except in the iron and steel ched
ule pig and scrap iron. steel rails wire nails and
cotton ties part Of the lumber schedule tobacco
coal, hides and leather, hats, bagging for cotton
bales, carpets. silk. lnoleurs and pineapples Ex-
cept Tor the debate which is aroused by hides and
leather. COAL lumber and steel, the tariff could be
finished in a few hours. The debates on these
items. however will probably consume from three
to four days. The administrative features have
not been acted upon They involve reciprocity or
counterva1ing duties, and may require day
The uncertain equation is the income tax and
the substitute proposed by the President of tax
OF per cent the net earnings of corporations
There is earthly doubt that the moment this
tariff becomes law the country will enter on an
unprecedented period of prosperity. This will lead
to plenty OF money. large expenditures and cor
responding increase in nportations. There will
follow revenues than sufficient for the support
OF the government. A six months trial viii Demon
strate that there are no expenditures in sight or
liable to be incurred which will equal the revenues
from customs and internal revenue taxation
THE income tax and the alternative OF per
cent on the net earnings OF corporations raise so
many questions that the man in the street can
not understand why stamp taxes not adopted
1t has been demonstrated that they work well that
they have produced high s40.O00.0Co a year.
that they popular. and that they affect only
those who amply able to pay Only persons who
have to have bank accounts and have the ability TO
buy and sell property would be called to
stamps. The revenue from this source would begin
the day the bill passed do not think It is
needed, and believe that any tax In addition to
the tariff and the internal revenue law In exist
ence will produce unnecessary and dangerous
surplus. The trouble with the situation is that it
is wholly political and economic The Demo
cratic free traders want income tax. their
leader. Senator Bailey, frankly declares very fire.
quently. in order to compel reduction Of the
protective tariff to a revenue basis to avoid
unnecessary and dangerous surplus Others believe
that there is sentimental demand for income
tax to penalize the rich regardless OF its effect
upon the revenues. 1t is largely in order TO meet
this sentiment that the tax on the net earnings
of the corporations IS proposed.
The income tax advocates fierce and
tmportunate to have the measure enacted
because they know that by the next session OF
Congress the surplus in the Treasury will make
additional taxes of any kind absurd. They think
their only chance is now. while they claim
there is doubt as to whether the revenues inter
nal and from the CUSTOMS. will be sufficient
WEAK POINTS OF INCOME TAX.
The weak port the income proposition is
that It enacts lawsuit, and It will years
before the Supreme Court can have opportunity
to It's old opinion In which It declared the
bill OF 1894. Of which the present propositions are
exact copies. unconstitutional
The second proposal. to submit to the states
constitutional amendment TO empower Congress to
pass income which shall be levied on indi-
viduals and not apportioned among the states, as
prescribed by the present Constitution win meet
when II comes TO be acted by the states two OBJ
Jections. The first and most important is that all
the larger states rapidly increasing -ner
penditures for state purposes. Many OF them. like
New York. longer tax real estate for state pur-
poses. because OF the tremendous burdens real
estate from town. village. county and city assess
ments In New York-and in that we do not differ
from many Of the larger states-our expenditures
have outrun our income from indirect sources. and
we have exhausted every kind OF indirect taxation
other than direct tax on land, except an income
think that when the matter is fairly put before
the people they VIII reject a constitutional amend
granting 10 the federal government this
OF revenue. because It will take it away from the
states. II would be calamity TO go back TO taxes
on land for state purposes, in addition TO the
already resting on # for local purposes. because
that would add so much TO rentals affecting every
family. The other point which will be raised is
whether the taxes to support the government should
be paid by the citizens OF a few states about if
teen). leaving the others practically exempt. As it
only requires the OF twelve states to defeat
constitutional amendment this would seem to place
such an amendment in a good deal Of peril
OBJECTIONS TO CORPORATION TAX.
Now. as to the proposal TO tax the net incomes
Of corpora tions-that will lead to very exhaus-
tive discussion. The points made against 1t al
ready are that the great majority Of storekeepers
and business men. matter how small their CAPT
tai. have incorporated on account OF the limit OF
property the death of one of the partners. They
claim that to put per cent tax on the small
earnings of the country store and the small manu-
facturer would be nequitable burden. Another
point made against 1t is that it will not reach
bondholders and Mr.. Carnegie is cited as an emf
nent example, he having received $500. 900 900 in the
underlying bonds of the United States Steel Cor
poraton on the sale of his steel COAL coke and iron
properties to that company 1t is proposed TO meet
this by treating interest bonds net income
That would not reach Mr. Carnegie, because II
would have to be paid by the corporation. and
would have TO come out OF the stockholders 1t
can be seen that in corporations where there is
very large bonded Indebtedness, II the tax the
interest on the bonds has to be paid by that cor
poration there would not be much left for the
stock Another point made is that where a cor
poration has a large number OF subsidiary COM
panies there would be per cent tax the net
earnings Of each of these companies, and then,
when the net earnings paid in. is always
the case TO the treasury of the parent company,
there would be another tax of per cent because
these earnings OF the subsidiary company would
be recorded as part OF the earnings OF the parent
company. This opens wide field Of speculation
as to results
Properly framed. and that Is now being done
bv the Finance Committee, with the advice of the
Attorney General the bill is. however, far prefer
abba to the income tax. It is not the kind Of tax
which the states would be likely to for the
purpose of the state governments 1t is
else tax wholly within the power of the federal
government While not think that. in addition
TO the revenue measures which will be in force
when we adjourn. this is necessary yet If an ex-
periment must be made, and II the income tax
people will not permit stamp tax. then II seems
to me that the the net earnings of cor
poratlons as suggested by President Taft. is the
only feasible way of solving the problem
Now as to the time The Senate bill should be
in the hands of the conference committee within
a day or two after July ana IN the hdnos OF tne
b,y he