The Washington herald., 1917-06-02

tax. which is 5 per cent on the surplus
over per cent OF the invested capital
ms has given rise TO much discomfort
.oT not only Is the restriction OF earn
lngs 10 per cent unjustifiabIe, but the
'Tllerlon Of capital invested creates all
manner OF inequalities, injustice, and ad
minlstratiVe difficulties. II We are TO have
an tAcess-pTohl tax II should be levied
on the excess over profts secured in the
period before the war.
strictly speaking. the tax ought to be
limited TO industries which have dealt
IN war materials. The ditficuhy how
ever. ~ 10 distinguish between those in
dustIcs directly and indirectly affected
by the war Increase in the output Of
finished products utilized in warfare
means an augmented demand for the raw
mater!a., and in one way and another
The impetus created by the wars demands
Affects industries in general. The diff
c4iLy. therefore OF distinguishing between
war profits and other pIOtts becomes SO
great as 10 warrant an extension Of the
war Droht tax TO virtually all excess
prohts. The pre-war period should. IN
deed. be an average Of say. three TO five
years. But what pTe-war period should
be taken? Should We take an average OF
the three years before the European war
or an average OF the three years before
our entrance into the war? II the period
before our own entrance into the war IS
selected it will be urged by some that the
average obtained is TOO high and that We
have not taken sufficient account of the
large profits OF the last year or two. We
must remember, however that We are
only fixing a base. the excess over which
is TO be taxed. obviously. il FITS existing
conditions better to fix that base as near
possible to the period the profits OF
which are to be taxed. If We took the
years 19l2-l3-l4 the administrative diff
"ultv OF assessing plants started since
1914 as well as Of measuring the earnings
Of the then existing plants by the side
Of the now existing plants, would be
much greater than II We took the years
lgi4-l5-l6 II must not be forgotten that
The last three years in this country have
been CpoCh-maHnE, so far as industrial
growth is concerned The exports OF
America have increased from &, los, SA.l4S
In 1913 to g. 333, ,65s. SS5 in 1916. For the ten
months Of the present fiscal year endlnS
April 81 the total exports We're Sic Vr"h
a tremendous amount Of additional plant
facility has been required To produce the
goods which have gone into those exports.
1t would seem, therefore. that the best
base would be say. the three years 1873
l"-l6. or these only the last was an an
normal year. The 1915 year was a year
Of rapidly rising earnings. the year l'I4
was the worst year in our recent history
II these three years were deemed moi 20
and 1913 might be added, making the basE
the hve-year period from 1872 To 1916 in
elusive. ,
II would be essential not to dlsCouraSe
increase in plant capacity nj a time tns.'
It Is sorcly needed by the goEcrnmeIl.
Therefore, some allowance Shoulo ne
made for the additions to plant whlcn
will he producing the earnings OF I'l' anu
subsequent years.
II makes, however. little difference as
a producer OF revenue which one OF inc
two average periods Is selected. A care
full estimate has shown that II the thTee-
year period before the outbreak 81 the
great war were selected. the Prohts OF
1915 in excess OF the average OF the tnre.a
year period before 1914 would amount 10
ep thraa nd han billions Of dollars
SO that every 10 per cent or tax Vould
yield about $3.50 OOO.OOo on IN" other hand.
II the three-yenr period before our en-
trance into the war were taken. rate
OF al least double the amount would he
necessary to yield the required sum
Whatever be hually decided upon win
reference to the criterion. II Is TO he
hopcd that the rate will h" 80 adjusted
as TO yield at least Ioo0o.0" revenue
from the eXccsa-prontS tax.
Titles and deal with liquors and
tobacco. which are universally conceded
to be proper objects OF additional taxa
ton. Title ; includes tho tax on trans-
portation. electric lights and gas, tel"-
graph and telephones. advertising ana IN
suranCe. To this Title there ARE serious
objections. The tax on electricity and
gas Is tax upon what hnr become IN
modern times n prime n"ccEHiN A tax
on insurance In thN on thrifl. tax
on Advertising IL from many points OF
view lnlldicioua The pHnHrng"r tax, cal
culated To Yield tGh ono b0 In perhaps tho
least hurdCnsOnc uf tho set hui the tax
on treiEht ana empress. calculated To yield
SNloN,NH. ought 10 hp impurrd only In tho
case of urgent neerHHiIr
Title contains ~ tho must Important
cement tho automohlir lnN Tho hin
haSeS tho tax ppnR the erroneous prin-
PIE OF groaE receipts FROM sales II Is
ar nettcr To levy All tStlHr 81 ruuHump-
ioh taN, according lu unu 1T iw" riirriH,
elther horso power ~ selling Nniu' The
Z I1NSntagc Of horse ruWrf II that II can
oe absolutely datefNilnud hY standard
formulas The hdVHhihH ~ selling
Saloe Is that automnkiiss with tho same
m price. on The Oiher hand The dis
: s1Nantage Of value ns o lsbi - 10 hc
Sc1nd IN tho rAHs ~ need rats Per
uon OF tho iwn ffIIatla sarinF ,alus in
onSrSuEn as pAaH sRE