Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1917-08-07
WAR TAX BILL
Continued from Page One)

upon the public. A substitute report
with the substitute bill is expected
from Senator LaFollette, Senators
Gore and Thomas also plan a separate
report.
Senator Simmons report stated that
flexible scientific war tax super
structure had been constructed by the
Senate Committee for the imposition
of war taxes-ttie largest tax budget
in American history-as well as for
future tax increases declared prob
able.
Income, war profits, liquor and to-
bacco tax increases, the majority re-
port pointed out, form the nucleus of
the revised bill.
In a general statement for the com
mittee, Senator Simmons said:
1T has at all stages acted with a
keen sense of the extreme import
ance Of it's action in it's effect upon
the country and the successful pros
ecuticn of the war. Nor was it un-
mindful that those who will have to
pay these exactions will also have 10
furnish the larger part Of the money
to purchase the bonds for expenditures
not provided for by taxation and also
as we may be called upon to loan to
foreign governments engaged with us
in war against Germany.
"YCur committee was profoundly
impressed with the expediency and ne
cessity of broadening and developing
our system of special taxation so as
to present a scientific scheme. logic
All, taI 70 nroxyi1o
structure sufficiently strong and flex-
ible to meet not only our present but
our future war needs. and so adjusted
as to distribute equitably the neces-
sary burdens Of taxation and safe
guard the activities Of the nation by
imposing no tax which would not leave
the tax payer a reasonably com
pensatory return from his investment.
Income and War Profits
THE basis of the system proposed
by your committee is the income and
war profits taxes, internal revenue
taxes upon whiskey and tobacco, and
certain moderate subsidiary levies in
the nature Of excise taxes. The sys-
tenn presented is in form much the
same as that in the House, but it has.
it Is believed, been systematized, CO.
ordinated and made more consistent.
LAS the result Of these changes. it
is estimated that about two-thirds of
the additional revenue expected will
come from the income and war profits
taxes. In fixing the rates upon in
comes and excess profits your commit
tee kept constantly in mind the fact
that The amount of revenue derived
from thes sources would depend upon
the prosperity and activity of business
andthat to impose taxes which would
tend TO discourage enterprise and
danpen these activities would tend to
defeat the legislative purpose. More
over, 1t thought that If the rates upon
ircc mes and excess profits were fixed
at the highest level there might be but
little margin left for further increases
in rates"
The report defends the elimination
of the so-called Lenroot surtaxes on
incomes Of over $4,000 added in the
House, designed to raise $50, 100000 as
fellows:
"In view Of the fact that in addition
to the large increase in the normal
tax and surtaxes upon incomes, the
bill provides for large increase in the
war profits tax of corporations and
partnerships and includes individuals
! in the scope of that tax, and in view
Of the proba bility that it will be nee
essary hereafter to further increase
these rates in order to provide for in
creased war expenditures, your COM
mittee believes that for the present II
is il advisable to increase the surtax
rates beyond those proposed in the
original House bill
! Regarding the elimination OF the
House retroactive income taxes on
! 1915 incomes, which would have pro.
duced s10S.00o,o00. the report stated:
This tax seemed in principle both
morally and economically unsourd
! Incomes of the last year have paid
their taxes and the balance has either
been spent or saved and added to cap
| ital, in which form it will yield re-
turns in the ensuing years. To tax
! this taX-paid income again is not only
! double taxation Of a peculiarly obnox-
! ious kind but would possibly compel a
tax pair to impair his capital and thus
diminish government sources Of taxa.
! ton. 1t would be one Of those dis
! turbing taxes which would alarm bus
mess and check industrial productiv-
ity. 1t is very poor economy and
would hold out a threat Of uncertain
| ty"
| In recommending the graduated wa,
profits tax Upon individuals as we'll as
corporations in lieu of the present
eight per cent excess profits law. the
committee said it's plan Is similar tc
that Of European countries. where II
has had marked success.
| Probably Higher Taxes
I'VE must face the possibility. ever
the probability" the report stated, "o1
even higher taxes than are now pro.
posed in this country and we mus,
adjust our system so that it will work
satisfactorily even under increased
rates. Your committee has not beer
able to find any satisfactory reason
why individuals engaged in trade and
business should not be subject to this
tax (war Profits as we'll as corpora
tions and partnerships" Under the
present law, the report stated, infiat.
ed values to patents and trade marks
and watering OF corporations stocks
makes evasions of the revenue Law