Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1918-08-18
EXCESS PROFITS TAX
RATES SHOULD STAND
But Secretary McAdoo Explains That
He Is Not Opposed to Certain
Changes.
WANTS INJUSTICE REDUCED
Shows How Present and Proposed
Laws Affect Twenty-Five Corpo-
rations-Small Coal Companies
Harder Hit Than Big Ones.

w ASH lN1iION, august l7.-Secrctary
McAdoo laid before the House Ways
and Means Committee recently his
plan for an excess profits tax with an
alternative war profits levy to be in
cludcd I'm the new revenue bill. The
plan proposes the retention Of existing
rates in the present excess profits law.
with the alternative application Of an
excess profits tax with maximum OF
so per cent. affecting about 80 per
cent OF all the business corporations
coming under this schedule. Discuss
ing the tax, McAdoo said:
The war profits tax would tax all
war profits Mt one high rate; the cx.
cess profits tax does. and, for safety.
must, tax all excess profits at lower
and graduated rates. Any graduated
tax upon corporations is indefensible
In theory. for corporations are only ag-
Eregations of individuals. and BY such
a@the numerous small stockholders
OF great corporation may be taxed
Al higher rate than the very wealthy
large stockholders OF relatively
smaller corporation. The object OF Il
graduated tax should be to make taxes
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 in
crease OF the excess profits tax. | have
from the beginning favored the con-
ttnuance OF the existing excess profits
tax with the inequalities and lnjus-
tees remedied. because this is not
time when the Treasury can be con-
sidered to dispense with any existing
source of revenue. Rather, 1t Is my
duty'to point out to you additional
sources of taxation.
ENCESs PROFITS TAX
CAN DE IMPROVED
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. have
indicated from the beginning and re-
pea,edly that think 1t can, and should,
be improved.
IF. as l now understand. you con-
template an increased exemption, then
there also must be an increase in some
excess profits tax rates to make the
tax produce equal amount OF
revenue. Similarly. II. AS seems prob
able, additions to invested capital made
during tho past year Will result in a
reduction Of the revenue produced by
the excess profits tax under the exist
ing rates. notifications must be made
on that account.
"My thought has been. not that the
existing rates OF law should he re-
Earded as sacrosanct. but that the
existing law should receive modifca-
ton. not from the point OF producing
additional revenue from the excess
profits tax, but from the point OF view
OF producing the same revenue and
with reduced and not increased In
justice and inequality"
Secretary McAdoo gave to the COM
mittce a memorandum showing a com
parison OF tie war profits and excess
profits taxes,as applied To twenty-five
selected corporations, including the
corporations which have been named
in the newspapers as most likely to
benefit by the omission to increase the
excess profits tax. Here are the con-
illusions from this comparison:
Il. Twenty-Five horrible examples
selected deliberately TO ascertain the
worst the war profits tax and the best
the excess pronts tax can do-yield
Just four cases in which the excess
profits tax would be as productive as
the war profits tax
- Eleven corporations. including "A.
Company and some Of the worst OF
the other horrible examples. get no
benefit from the war profits deduction,
while they would pay the so per cent
rate which is an integral part OF tho
war profits tax.
%. Contrasting the so per cent with
the SO per cent bracket in the two
proposed new excess profits taxes, II
appears that in only one case
would the change from the so per cent
to the SO per cent bracket affect the
tax. or course, the totals show
higher amount for the excess 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 sub
stitution Of n so per Cent for an 80
per cent bracket affect the tax
"All OF the steel companies will, OF
course. pay far greater tax under the
war profits method than under the ex-
cess profits method.
From A. Company the war profits
method will. it is estimated. produce
nearly 100000 more than excess profits