New-York tribune., 1918-08-15
Secy M'Adoo Outlines
Plan for War Tax

fall upon the rich, who are best able
to pay them. The graduated excess
profits tax disregards this. and often
produces the reverse result.
But, though these great defects in
the excess profits tax lead me very
strongly to recommend that you should
seek additional sources of taxation
IN the war profits tax and not in an
increase of the excess profits tax,
have from the beginning favored the
continuance Of the existing excess
profits tax with the inequalities and
lnJustlces remedied, because this is
not time when the Treasury can af-
lord to dispense with any existing
source of revenue. Rather, it is nv
duty to point out to you additional
sources of taxation.
AS have. already indicated. am
opposed to increasing the excess profits
tax. This does not mean that l think
the existing excess profits tax cannot
be improved. On the contrary. I have
peatedly, that think it can and should
be improved
''lf, as ! now understand, you con-
template an increase in the exemption
then there must also be an increase
in some of, the excess profits tax rates
to make the tax produce an equal
amount of revenue. Similarly, if, as
seems probable, additions to invested
capital made during the past year will
result in a reduction of the revenue
produced by the excess profits tax
under the existing rates, notifications
must be made on that account
Modify Present Law
"My thought has been not that the
existing rates or law should be re-
Carded as sacrosanct, but that the ex-
listing law should receive modification,
ing additional revenue from the excess
profits tax, but from the point of view
of producing the same revenue and with
reduced and not increased injustice
and inequality.
III have read in the newspapers, with
a good deal of surprise, the intimation
that the plan of the Treasury Depart
ment was calculated to produce less
rather than more revenue, and to re-
lieve certain large corporations from
taxation.
81 should like to make part of the
record memorandum which DR.
Adams, of the Treasury Department
has prepared for me, showing com
parson of the war profits and excess
profits taxes as applied to twenty-five
selected corporations, including the cor
porations which have been named in the
newspapers as most likely to benefit By
the omission to increase the exces:
profits tax.
DR.. Adams's Report
81 shall state now only his genera
conclusions:
II. Twenty horrible examples
selected deliberately to ascertain the
worst the war profits tax and the best
the excess profits tax can do--yield just
! four cases in which the excess profits
tax would be as productive as the wal
profits tax.
"'2. Eleven corporations, including
ca company and some of the wors
of the other horrible examples get NJ
benefit from the war profits deduction
while they would pay the 80 per cen
rate which is an integral part of the
war profits tax.
9. Contrasting the SO per cent with
the 80 per cent bracket in the two pro
posed new excess profits taxes, it ap
pears that in only one case (name "
company would the change from tn
80 per cent to the so per cent bracke
affect the tax. Of course, the total
show higher amount for the exces:
profits tax with an extreme bracket OF
80 per cent, but in only one case where
the corporation pays excess profits
rather than war profits tax would the
substitution of a 60 per cent for an 81
per cent bracket affect the tax
Steel, Company to Pay More
when | speak of the increased ex
cess profits tax under consideration b,