The Washington times., 1912-03-02
SENATE MAY DOOM
FREE SUGAR AND
INCOME TAX BILLS
Three Obstacles in Way of
Measures Adopted by
!. Democratic Caucus.
BY THEODORE TILLER.

on incomes of more than So 00O' formally
approved at a party caucus last night.
The plan adopted for the revision of
the sugar schedule is something new
over on Capitol Hill. Facing a loss of
$540OO0O0 in revenue through free su-
gar, the Ways and Means Committee
suddenly thrust upon the surprised
Democrats of the House last night a
proposition to equalize this revenue by
extending the present excise tax to
firms, co-partnerships and individuals.
1t applies now only to corporations.
Both free sugar and the thinly-dis
guised income tax went through with
"a whoop after members from louisiana
and Colorado had Indignantly voiced
their protests at the assault upon the
leading industry of their States.
Rucker Enters Protest.
Congressman Rucker of Colorado, it
is learned, bid Democratic House a sor-
rowful farewell. Because of the action
of the caucus, Mr.. Rucker declared,
Colorado would be swept into the Re-
publican column and it would send two
Republican Senators and Republican rep
resentatives to Congress. He predicted
that the State might go to the G. o.
=. by $1,000 majority because of the
Democratic free sugar bill.
Three possible obstacles are in the
way of the twin bills approved by the
Democrats. A canvass of the Senate
is said to have shown that 1t will be
impossible to muster sufficient progress
sives to combine with the Democrats
and pass either the free sugar bill or
10 believed, would veto the bills, were
they to pass. A third difficulty is the
question Of constitutionality certain TO
be raised against the proposed extern
sion of the excise law.
Chairman Underwood of the Way and
MeMans Committee, believes, however,
that the excise tax bill as framed will
meet all objections as to constitution
alty.
I'VE simply took the corporation tax
law and rewrote it to include indl-
viduals and partnerships" he said to-
day. THE Supreme Court of the United
Cision holding that an income tax was
unconstitutional, has maintained the
cOnstitutionalty of an excise tax levied
on all corporations doing business in
the United States"
Question in Caucus.
The question of the constitutionality
of the extension of the excise law was
raised in the caucus. 1t was also sug-
gested that the adoption of the pend
ing bill might jeopardize the chances
of the income tax law proper now
awaiting ratification by the States. The
maerity of the Democrats, however,
saw no objection to the unique plan
brought in by the Ways and Means
Committee to put sugar on the free
list and make the fellow who gets more
than 5000 year supply the loss in
revenue.
Taking himself as an exhibit, Mr.. Un-
derwood said:
"A member of Congress gets $500 per
year. Paying an income of 1 per cent
on all above 5000. he must pay $25 an
nually as an excise tax"
Congressman Broussard denounced the
free sugar plan as "contiscatory" of the
vast sugar interests Of Louisiana.
Congressman Ransdell, of the same
State, pleaded for a more equitable rate
that would affect hundred millions of
property in Louisiana alone.
When Congressman Rucker told the
Democrats that free sugar" meant a
Republican Colorado" one of the
members from the rear of the hall said
Let 'er go Republican. Might as we'll
have Republicans here now, for you fell
lows have kicked over on wool, on lead,
and now on sugar. What Democratic
doctrine does Colorado favor, anyway"
Taylor Most Indignant.
Congressman Taylor of Colorado was
perhaps the most indignant of all the
members from the sugar producing
States. A caucus rule abcolves any
member from abiding by the caucus ac-
tion II that member will state that ne
has made pledges to constituents" -"
Mr. Taylor refused to say that he had
made pledges to his constituents, but
he announced that he would not vote
for the free sugar bill because it was
contrary to Democratic doctrine and
antasonistic TO the Denver platform.
The effect of the proposed excise tax
extension, 'or the thinly-VeIled income
tax law, is thus explained by Chairman
Underwood, OF the Ways and Means
THE bill does not in any way alter,
amend or repeal the corporation tax
law as 1t now stands on the statute
books, but provides that every person,
firm, or Co-partnership shall be subject
TO- pay annually special excise tax
with respect to carrying on or doing
business by such person, equivalent to
per centum upon the entire net income
over and above 5000 received by such
person from all sources during each
putting the income of any person there
shall not be included the amount re-
Ceived from any corporation, joint stock
company, or association, or insurance
company as dividends upon the stock In
such corporation, joint stock company
or association, or insurance company il
the special excise tax of ] per Centun
now imposed by law has been paid by
such corporation. joint stock company
or association, or insurance company.
I'm other words. the income derived
from dividends of a corporation on
which the tax is now levied will not
be subject to a further or additional
tax. but incomes derived from oth"r
sources of business than those named
in the corporation tax act will be SUB
ject to tax of one per Ccntum pei
RnnUm where the net income exceeds
5000 annually. Under the present laN
persons who have their money invest
ed in corporations that are employing
labor and developing the country arc
taxed one per centum on the net earn
ings of the corporations.
Question of Equity.
''Why is i: not as equitable and Just to
impose a sirnilur tax on individuals
whose money is Invested in lines OF
business not organized as corporations?
Under the present law the stoCl;holder
in a corporation Is compelled to pay a
tax; the bcndhOldcr, who, as rule
take little or no risk in the business is
not taxed. II the bill becomes a law
the bondholdCr can be taxed on the
fame basis as the stOckhO!der. The levy
OF this tax is not excessive: " man haY-
ing an income of $1,000 would nav ma