New-York tribune., 1918-10-23
Senate Committee Takes
Out Doubtful Features
and Cuts Revenue
Income T AK Rates
Are Also Changed
incomes Of Less Than
100000 to Pay Less Than
Under Kitchin Scheme
By Theodore M. Knappen

WASHINGTON. Oct. 22.-The Sens@e
Finance Committee to-day amalgamated
the McAdon war profits tax and the
OF the A'.ernative proposition that
has been opposed as of doubtful con
stitutionaity A corporation will still
N effect ue taxed under the one p an
or the other. but it will automatically
ind it's method within the COMPOUNDED
scheme If it isn't war profits con-
Germ it will Slip into the excess profits
method without raising the question
Of whether ;ts taxes would be more
oy the one plan than by the other.
Under TIE new scheme, which was
adopted in principle, but not fully
written into the bill today. the cor
coration super-tax. whether it be ca led
an excess profits tax or q war profits
tax, will be the sum Of amounts com
puted in three ways. as follows:
First Thirty per cent of the net i'm
iuction of per cent of the invested
capital
Second-Sixty per cent of the net in
come in excess of 20 per cent of the in
Cested capital.
Third The amount by which so per
cent Of the net income. in excess of the
war profits credit or deduct on. exceeds
the amount of the tax computed under
The first and second paragra phs.
Follows McAdoo's Idea
BROADLY speaking TIE net result of
tbe change is only to reduce the ex
., So pronts tax from where Mr..
Kitchin had it to about what Mr.. Nc
Adoo would have it. In the Kitchn
DILL excess profits above the credit and
cot over Is per cent pay 80 per cent,
between that and 20 per cent. lnc.u-
sive. they pay SO per cent, and over 20
they pay 70 per cent.
The Finance Committee has merely
tound d way to eat the alternative
method cake and keep it. The taxpay-
lng corporation now goes automatically
% its maximum shearng If it is
ZEAL war profits corporation it will
pay the same tax as provided in the
Kitchin bill, but if it is simply peace
profits concern of greater magnitude
than 8 per cent on its invested capital
t will be slowed away in the excess
-
"tHmmed."
Revenues Are Decreased
The exemptions are % be the same as
before except that the allowance Of 10
Der cent for new capital will be calcu.
ated on the dltfere nee between the in
vested capital during the pre-war
period and tne CAPITAL of the taxable
year instead of between the latter and
The amount O. the capital at the end
of the pre-war period. II the rates in
he first two paragraphs of the new
nlan had been left the same as the ex-
less profits rates Of the Kitchn bill
The total amount of the resu. ting rev.
enues would not have bAen altered but
On account of the changes in those
rates the total will be somewhat re-
5uced.
In place of the Kitchin bill para
graph (302), designed to establish an
abs olute limit on the taxes Of small
corporations making large profits on
relatively small capital, the Finance
Committee substituted provision to
The effect that the excess or war profits
tax shall in no case be more than 35
per cent of the net income in excess
Of 100000 and not in excess of 500 600,
olus 80 per cent of the net income in
excess of $4,000.
Changes Income Tax Rates
The committee also settled another
gexed question to day by rewriting the
individual income surtax section OF he
bill as follows: Income between $4,000
Ind $4,000 to pay l per cent; each
additional $4,000 of income up to
100000 inclusive, to pay an additional
surt sur do OF per cent; 100000 %
100000, 50 per cent; $3.50 600 to
100000. 56 per cent; 5000 600 to
EGO ;sOO coo, GOO, GO per cent; 100000 to
b50O, 63 per cent; $500 900 to
81 goo 600. GA per cent, and over
S1,0OO000, 65 per cen.
AS compared with the Kitchin bill.
The Senate scheme slightly increases
the surtaxes on incomes in excess of
5000 600 and slightly decreases them
on incomes unde" that amount the
maximum decreases being just be ow
rhe 500 600 mark, where taey attain
AS much as points. whereas the in
creases do not exceed ha of | per
cent. The total revenue under the SEN
ate surtaxes viii be about $23.OOO,O 600