The sun., 1918-08-15
M ADOO INSISTS ON
SOPER CENT. RATE
Tells Committee War Profits
Should BE Made to Pay
Greater Revenue.
COMPROMISE IS EXPECTED
Chance of Revenue Bill Being
Reported to House Mon
day Is Slim.
Special Despatch to THE sUN.

Special Despatch to The sUN
WAsHtNGToS, Aug. IA - Compromise
of the wide differences between the plans
of the Treasury Department and those
of the Ways and Means Committee for
taxing business profits Is certain as re-
suit of the appearance Of Secretary Nc
Adoo before the committee to-day.
This was admit following the hear
ing granted the Secretary to-day. Mem
bers OF the committee practically were
all of this opinion.
Chairman Kitchn tN. c. did not
commit himself. however. He has stood
out for high rate of excess prof,ts
faxes to alterMte with the var profits
tax where it would raise more money.
The Treasury Department has been ad-
a lower scale OF excess profits rates so
that the war profits tax would apply in
most cases
McAdOO Explains His stand.
Mr.. McAdoo explained in detail to the
committee the reasons for the stand he
h,s taken. The outcome OF the confer
cnce with the Secretary of the Treasury
and several OF his observation-disclosures.
Love. LeffinRwel and Adams. excess
profits advisers OF the Department and
Daniel Roper Commissioner of Internal
Revenue, with George Cooksey, assistant
to the Secretary, were before the conf
mittee---is somewhat Of "A surprise, in
view Of the statements recently credited
to Chairman Kitchin.
Mr. Kltchin IL understood to have de-
clared that he would stand pat on the
scale OF excess profits taxes the COM
mttec has devised. and that any COM
promise would have to come from the
Treasury Department II is understood
also that no threatened TO take the
fight TO the floor Of the House II the
Treasury Department plan was backed
by a majority Of the committee.
Mr.. kitchin left the committee with
Mr. McAdoo, however. and his atti-
tude had apparently been considerably
altered.
kItchin Does Not Dissent.
You can see there i, no insuperab.e
difficulty between Mr. ktchin and my
self" said M, McAdoo. Mr., kitchin
did not dissent from this statement.
Before hearing Mr. McAdoo the COM
mittee quickly disposed of two sugges-
lions for raising certain tax rates which
had already been tentatively decided
upon These were the proposals TO
increase the rates in some OF the higher
brackets OF the estates tax and to raise
four OF the rates in the income super
tax. They were easily beaten. as was
expected.
with the task Of drawing and writing
into the bill compromise between the
Treasury excess profits rates and the
committee plan the chance OF reporting
the bill to the House when 1t meets
Monday IL very slim indeed. Only quick
agreement on n set OF rates by a COM
promise call effect this. With the strong
feeling which has marked the discus
sion OF this feature of the bill such
an agreement in short time is almoSi
an impossibility.
Quotes Wilson'S Message.
Opening his statement before the com
mittee. Mr.. McAdoo quoted the Prcsi'
dents message to Congress in May
when Congress was asked ITO turn &c
war profits and incomes and luxurie'
for additional taxes"
ury seeks to have imposed differ:
materially from the excess profits plan
Mr. McAdoo explained. The former plar
finds It's sanction in the conviction Of
all patriotic men of whatever economic
or political school that no one should
profit largely by the war said the See
Rotary He declared the excess profits
tax must he based upon the wholly in
denfensible notion" that taxation SHOULD
bring all profits to one level with rela'
ton TO invested capital and to depriv,
industry and sagacity OF their fruits
THE excess profits tax exempts cap
ital and burdens brains. ability ant
energy" Mr., McAdoo asserted. The ex
cess profits tax falls less heavily on bis
business than on small business because
big business is generally overcapitallzet
and small businesses are often under
capitalized"
Indcfensible In Theory.
All war profits would he taxed at one
high rate. he pointed out. under the
war profits tax, while the excess proht.
tax must tax excess profits at lower and
graduated rates, and he added that any
graduated tax on corporations is indie
feasible in theory.
Mr.. MCAdoo explained his oppost or
to increasing the excess profits taS
rates on the ground that II Is an in
equitable impost, The Secretary said h,
had heard with surprise the intimatior
that the Treasury Departments plan 70,
taxing profits was calculated to produc,
less revenue and relieve certain larg,
corporations from heavy taxes.
To refute this Mr.. McAdoo cited III,
cases Of twenty-five corporations-ho r
rible eXamples--in which II was founC
that In only four instances the exces
profits tax proposed by the COMMITTEES
would be as productive as the war prof
its tax,
Summing up Secretary McAdoo sal,
there should be a war profits tax a
Nat rate of so per cent. and tina
the excess profits tax should not b.
depended upon to produce increased. rev
enue. He admitted that modification
in the present scale OF excess profit
taxes are desirable to make the Law
more equitable. In making these mod
ifcatlons he urged the committee 4
refrain from increasing the rates II
the higher brackets to avoid hardship
10 small business concerns.
SUNDAY SHIP WORK STOPPED
Fleet CORPORATION Ends DOubI,