Evening star. [volume] (Washington, D.C.) 1854-1972, 1917-04-22
COMMITTEE SITS
VIEWS ON TAXATION
Proposal for Levies on Food
Products Has Met With
Strong DisapprovaI.
AVOID INDUSTRY BURDEN

Wlthout actual expression as yet by
medium of vote, sentiment on proposed
new taxes is found to be crystallizing in
the House ways and means committee
along we'll defined lines, and especially
with reference to some things that will
probably not be taxed, .st.
For example, 1t is found that there is
strong disapprova1 of the proposition to
place a consumption tax on food products,
which was part Of Secretary McAdoo's
He suggested cents
a pound on coffee, Is cents a pound on
tea and ! cent pound on sugar. The
committeeman are disposed to reject these
proposals. EiA4i4i
Suggested Customs Duties.
Neither is a majority of the committee
some of the articles included in the Sec
retarys letter to the committee. The re-
publicans do not want the tariff increased
on imports without a corresponding need
of protection to American industries, and
the democrats will not assent to the pro-
tective feature.
There seems to be practical unanimity
upon the proposition to decrease the ex-
emption on incomes from $4,000 to $500
for unmarried men. AS to the super taxes
on large incomes, there is expected to be
much discussion and wide divergence of
opinion, so that it is impossible at this
t me to forecast the outcome.
One of the most delicate problems the
committeeman find themselves facing is
the question of tax on excess profits. The
point has been raised that to increase this
tax may work hardship upon corpora
tions of small and genuine capitalization,
while permitting corporations with wa
tered" stock to escape much of the burden
of taxation. The claim is made that
the overcapitalizated corporations reduce
through their watered stock their divi-
dends and SO do not come under the excess
profits tax. while the corporations that
are working on an actual capitalization
will be the natural prey Of the tax col
lector
An alternative suggestion to relieve
this alleged threatened evil is that a
fiat tax be imposed upon gross earn
ings, less operating expenses, and by
this means reach some of the great
which will otherwise es-
cape carrying their share of the load.
Not to Burden Industries.
Another consideration urged is that
care must be taken not to burden in
dustrial enterprises with such an ac-
of taxation that share
holders and bondholders will find ii
necessary to dispose of their holdings
and invest in the seven -billion-dol
loan at 3l2 per cent, which is exempt,
from taxation.
In this connection the financial col
umns of the New York newspapers yes
terday reported that the sale of bonds
on the New York Stock Exchange Fri
day was of character clearly indicat-
kind and for this purpose has already
set in. That is to say, there were
claimed to be direct evidences that
many of the sales were avowedly for
the purpose of realizing on present
holdings in advance of the expected
increase In income tax and increase in
excess profits tax. with the object of
keeping resources liquid to invest in
the government bond issue
Banking Interests Speak.
Committeeman have been warned, it
IS said, by great banking interests of
the danger threatening the govern
ment's efforts to raise income by
OVERRIDING" the taxation and cutting
off at the very source the desired reve-
nue..
The Senate committee on finance is
llso taking cognizance of these fea-
lures of the taxation and bond situa-
ton. Senator Penrose. ranking re-
publican member Of the finance COM
nittee, is especially outspoken in his
upon this subject.
He said yesterday to inquirers that
i is highly important that Congress
determine as early as possible what
of taxes necessary to meet
the war expenses is to be raised by
lirect taxes. This question. he said
will have direct bearing upon the alb
by the public and the big
interests of the government
bonds and may be a factor in fixing
their market value. Secretary McAdoo
has estimated that it will require ST.
SOC, ,000, 900 to meet war expenses in the
next fiscal year. and it should be de-
cided at once, he said. what propor-
tion of this sum shall be raised by
direct and indirect taxes.