The sun., 1918-11-15
M'ADOO ADVISES
CUT OF WAR TAX
TO SIX BILLIONS
Tells Congress 4 Billions
Will Be Sufficient for
Levy Covering 1919.
TO MEET PEACE DEMANDS
Formulates Financial Plan to
Correct Injustice and Give
Spur to Business.
TO MEET PEACE DEMANDS
sreciai Despatnh TO TIE srN


WASHINGTON, Nov. IA new finan-
eisl programme. aimed to meet the
conditions arising from the transition
from war to peace, was laid before
Congress tonight by Secretary Nc
Adoo. In effect 1t discards the whole
programme OF war taxation which has
afen under consideration in Congress.
Thc McAdoo financial plan follows
closely the outline given In THE Sun
yesterday.
In a letter to Senator Simmons IN.
c.l, chairman of the Finance Commit
tee, Mr.. McAdoo recommends that the
new revenue bill be cut to $4,000. .000,-
900 for the present fiscal year and that
provision be made for reducing this
the next year to $4,000. .O00,0 900.
Summed up, the letter put the ma
toms financial problem before Con-
.ress in this way:
l. The existing revenue law is not
satisfactory to the country nor to the
ADMINISTRATION and the pending revenue
bill Is more stringent than the situation
nos jnstines.
g While expenditures for this fiscal
scar had the war continued would have
reached the estimated amount OF S24,-
900 100000. 1t is now estimated that
they will reach only SIS 5000, 100000 by
June 80. 1919. though a decrease in the
Governments expenditures. while great,
cannot be at avery rapid rate.
Would Extend Allies Credits.
g. Congress is asked for authority to
continue extension of credits and loans
10 the Allies even after the peace proc
Lamation,
T. The excess profits tax should not
be greater than in the existing law and
should be paid only when II would yield
greater revenue than the war profits
tax. while both war and excess profits
taxes should end after the collections
Tor The calendar year 1918 are made.
3. II il Is necessary for the calendar
year 1919 to increase corporation and
Individual income normal taxes to
bring revenue up to $4,000, 10000 after
the war and excess profits taxes are
abandoned this action should be taken.
.. While there is yeome uncertainty
foretelling the Governments revenue
needs when the country returns to
real peace basis the necessary expend!-
lures by the Treasury Department make
/ appear that an annual revenue of
sfnoo.o9o,o00 seems very moderate
one"
. Adequate safeguards to business in
NE form of liberal amortization tax ex-
emptions are recommended for incor-
poration in the revenue bill and a plan
Sor spreading incomes and profits tax
payments over the Whole year In quar-
'erly payments on the. fifteenth day OF
March, June, September and December
IS suggested. This would also give relief
to taxpayers during the readjustment
period.
Paying One-thfrd by Taxation.
The fact that Mr.. McAdoo estimates
;hat expenditures for the present fiscal
year by the Government will amount to
$4,000, 900, 900 and that he desires the
revenue bill to raise $4,000. 600, 900 is in
serpFeted 70 mean that throughout the
remainder OF the business year and until
real peace basis 10 reached it is the
Administrations plan to maintain the
. ratio OF paying one-third of the nations
bills through taxation. II the McAdoo
Simate is correct II means also that
Only $4,000, 900. 900 more In bonds will
have to be sold instead of the estimates
.. nine and ten billions which have been
made.
The Plan OF providing virtually two
revenue bills In one in the coming tax
measure as foreshadowed In THE SUN
"-day Is urged, Mr.. McAdoo explained
70 his letter. In order that business may
now well In advance the tax burden II
II have TO bear. and may know also
lat t.. taxes will be lowered instead OF
increased.
According TO the Secretary of the
Treasury II Is impossible at this time to
tate exactly how fast the expenses Of
The Government can pe decreased, The
1'ocess OF liquidating contracts for a
''mt may result in an actual accelera-
Lon OF expenses instead of a diminution,
Ne Secretary pointed out. The letter
,o!n,sd out that many heavy expenses
mast continue for months regardless OF
20 cessation Of hostilIties
The necessity OF continuing credits
nd loans TO the Allies is IA very real one.
ir McAdoo declared The Allies can
,'' ray in gold for all OF their supplies
rom the United States. This country
''s foodstuffs. raw materials and manu-
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