Evening journal., 1918-07-27
EXCESS PROFIT TAX
At $3.50 RATE
Only Corporations Will Pay
the $5OO,O00,OO In.
crease Hereunder
COMMITTEE NEEDS
$2,OO0,OO0,OOO MORE

WASHINGTON, July 27.-The grad
uated excess profits tax Of from 80 to
so per cent. on net income beyond ex-
emptions practically has been adopted
in a final form by the House Ways and
Means Committee. thereby ratifying the
tentative agreement reached on Thurs
day.
The committee has also decided upon
the same specific exemption OF $1,000,
plus 10 per cent. on the amount Of in
vested capital. as tentatively decided
yesterday.
Adjournment was taken by the com
mittee until Monday, when taxation OF
luxuries, estimated by the Treasury as
capable Of raising s2,0OOOO00O0. VIII be
considered.
Complaints Of inequalities are ex-
pected to be remedied by the commit
tees action in repeating a section OF
the present revenue law. The effect
will be that the excess-proflts tax under
the pending bill will not apply 10 in
dividuals and partnerships. but only to
corporations. individuals and partner
ships Will be amply reached through
.he normal and surtax provisions OF the
income tax law.
The committee decided to retain sub
stantially the same text OF capital in
vested" and other definitions as are In
the present law. There had been sug-
gestions that invested capital should
include borrowed money and good Will
and other considerations.
While not definitely deciding the mat
ter, a majority Of the committee was
favorable TO a provision that in no case
should the excess-proflts tax exceed GO
per cent. Of the net income. nor be less
than 10 per cent. OF the net income in
the case Of corporations with a capital
exceeding $4,000.
Common carriers and public utility
corporations, whose rates are subject
TO regulations by Federal. State or
municipal government. were excepted
from the 10 per cent. minimum, be-
cause the committee regarded such
rates as already regulated to a low in
come basis.
Treasury experts reported that the
excess profits plan adopted would pro-
duce approximately s5O0,OO0,O00 more
revenue than was derived from the
same sources under the present law.
that II the revenue from excess profits
under the present law yields 81 200 000,-
600, IL would raise under the proposed
plan 81 100000. OF. II the present law
raises only Si,0O0OO0,OO from excess
profits, considered by some Of the COM
mittee members as more nearly correct.
the revenue under the proposed plan
would be cOrrespondingly less.
A.
were disposed 10 favor a flst tax OF so
per cent. the maximum proposed In
the finally adopted plan. but the COM
mittee rejected the proposal as one that
would discourage initiative In industry
and business.
The committee disregarded altogether
pre-war comparisons for taxation. There
is still a discrepancy Of almost 5000
100000 between the revenue estimated
TO be yielded by the excess profits and
income taxes. as proposed. and the
So, ,O00, 100000 sought from those sources
under the 5000 10000 revenue program
on which the committee is working.
So far however. no new source OF /
tax has been considered, but new tax /
able sources may be found when lux |
uries are considered. Treasury experts /
have advised the committee that by !
the present tax on liquors. TO-
bacco, soft drinks. admissions 10 amuse-
ments, transportation. club dues and |
excise tax on such articles as automo-
biles and perfumes. the present revenue
from those sources Of sec, 10000 can be
A new section may be agreed upon |
so that corporation whose capital Is OF /
little significance may construct" a
capital, which would take care Of good-
will or similar considerations.