New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-06
The War Tax Bill


the suggestion that the normal income tax
rate be increased to 6 per cent The rate
is now . per cent, and has been raised by
the House of Representatives to per
cent. The Finance Committee leaves it at
4. Inasmuch as the exemption has been
lowered to 1000, a normal rate of per
cent would have put an unduly severe bur
den on the very large class of persons
with incomes ranging from $1,000 to
$4,000. Such a rate would not have been
justifable in first war tax bill-a bill,
moreover, which lays only moderate tax
on excess war profits.
The committee raised the normal income
tax rate for corporations to per cent
and stopped at that. This increase is ex-
pected to produce S162,000,O00. The tax
on incomes of $4,000 and more was raised
slightly, producing about 100000. The
remainder of the S32s,OOO,0O needed was
obtained chiefly by added taxes on dis
titled and fermented liquors.
The committee decided to add only
100000 to the excess profits tax. 1t is
plain that excess war profits will become
eventually one Of the greatest sources of
war revenue. The House of Representa-
tives did not foresee this. We judge from
Chairman Kitchins shallow criticism Of
the Senate committees work that he is
still incapable Of an enlightened judgment
on this point. The House bill raised only
$500, 900 from excess war profits. The
Senate committees measure aims at rails
ing 1852 ,O00,00 Inasmuch as this judi
cious shift OF the tax balance is sure to
encounter the opposition of the parochial
and benghted Mr.. Kitchin and of many Of
his House associates, the Senate leaders
may think it prudent not to try just now
TO recover war profits on the scale on
which they ought to be recovered. 1t IS
certain, however, that as the pressure for
new taxation increases this source of rev.
enue will be drawn on more and more
freely. Taxation Of excess profits is the
most equitable form of war taxation. 1t
represents an automatic readjustment; so
far as it goes it makes the profits which
war conditions create pay for the war.
Mr. Kitchin has put forward the aston
ishing argument that an excess profits tax
discriminates against the persons and cor
porations which were relatively less pros
porous before the war and are relatively
more prosperous now, and in favor Of those
!. who were prosperous before the war and
IRE still prosperous only in about the same
" degree. But that discrimination is the
very essence of an excess profits tax. II
there were no excess profits, due TO war
conditions, there could be no excess profits
tax. Stable and ordinary average profits
can be reached in other ways, through
ether forms of taxation.
1t would have been surprising if Mr..
Kitchin had not attacked the Finance
Committees bill. He is the natural enemy
Of any rational and constructive scheme of
taxation. His point of view is always mar
rowly sectional. Whether the incidence OF
taxation is fair or not doesn't bother him,
so long as his own people can dodge said
incidence.
The most superficial comparison Of the
bill which passed the House on May % and
the bill which the Senate is to take up this
week will show to what enormous advan-
tage the slovenly work of the House has
been redone. The Senate committee has
stricken out the obnoxious retroactive
income tax for 1916, designed to raise
S10S,000,000. 1t has dropped the ridicu-
lous 10 per cent horizontal increase in
tariff duties, including duties on foodstufs
and essential raw materials. 1t has
dropped the equally ridiculous fat 10 per
cent levy on articles now on the free list
IL has discarded annoying taxes on gas
electric light and telephone bills, jewelry
insurance policies, club dues, musical in.
struments, etc. It has nearly tripled the
taxes on excess profits, and it has added a
bank check tax, one Of the simplest and
easiest of emergency taxes. 1t has drawn
a bill which concentrates taxation instead
Of scattering it and which apportions
burdens with some degree of scientific sys.
tenn. A workable, well balanced bill has
supplanted crude and amateurish one.
On one point, however, as The Tribune
has said before, the Senate's judgment Is
at fault. IL has yielded TO the influences
which have 50 long DISTRACTED reform OF
our postal system. IL has failed TO GRASP
the opportunity, which the House grasped
TO withdraw the costly subsidy granted &c
the benefciaries of undercharges on sec
ond class postal matter. The government
needs money. II should cease 10 carry
second class mail at huge annual loss
simply because the publishers Of news
papers and magazines with long hau