The Birmingham age-herald., 1918-12-10

before the signing of the armistice and the enactment of prohibition legislation. Proposed taxes in 1920 of s4,OoO, ,oOo, 900 the the manner in which they will be raised also are explained.
 PRINCIPAL CHANGES
 The most distinct changes made by the Senate--and House draft of the bill are noted by the committees report ass fol- lows: Elimination of the per cent cor poration tax on undistributed corporate earnings; fixing a 20 per cent maximum on bona fide sales of mines and oils and gas wells; elimination of the tax on new state and municipal bonds; substitution of a single war excess profits tax for the alternative.
 Senate debate on the measures will be- gin tomorrow with a statement by Sena- tor Simmons. A dissenting report on the plan to fix 1920 taxes in the pending bill will be filed by Senator Penrose of Penr< sylvania, for the republicans of the finance committee. Separate views also will be presented by Senators Shoot of Utah, and LaFollette of Wisconsin, re- publicans.
 A considerable part of Senator Sim mons report is devoted to the plan for reducing taxes in 1920 to s4.Ooo, 100000
 WOULD BE AN EVIL
 The country has a right to know how soon and in whaHdegree the burden or war taxes can prudently be reduced" the report says. During this period or reconstruction, business, particularly new business, is entitled to go forward without the burden of an 80 per cent tax on war profits. In time of peace the existence of an so per cent profits tax would be an absolute evil, for the per- petuation or continuance of which no sufficient reason has or could be given. For 1920, the report estimates reduc- tion of $1, 400, GOO, 600 by eliminating the 50 per cent war profits tax reduction of the excess profits rates and reduction from 12 to per cent in the normal rate on in- dividual incomes and of the corporation tax. A further reduction of about $30O, 000,000, it was estimated, will occur from miscellaneous sources and shrinkage in beverage revenues.
 OUTLINE CLEAR
 The main outline of the programme proposed by the committee thus becomes clear" the report states. For the fiscal year 1919 it is planned to raise nearly s4, 500, ,000000 from income and profits taxes and something over $1, 400, ,000,O00 from other sources; for the fiscal year 1920 it is planned to raise somewhat less than 5000, 100000 from income and profits taxes and about $l,00o,e0O0 GOO from other sources. About the general wisdom of such programme we entertain no se- ,rious doubt. It is imperative that profits and income for the year 1918 be heavily taxed This is not only necessary but it is equitable and in accordance with sound public policy.
 The profits realized during the year 1918 are in large part war profits; they are now in the pocket of the taxpayer; they should contribute heavily before they have been dissipated or reinveeted toward the payment of the expenses of the war to which in large measure they are attributab ble.
 SHOULD BE REDUCED
 But it is equally important that these special taxes should be reduced as the occasion which inspired and justifes them recedes into the past. To fail ade- quately to tax the war-prohts sof-19ls would constitute A manifest miscarriage of fiscal justice. Not to provide now for the reduction of the war porfits tax would be equally inexcusable.''
 In addition to the tax reductions due to the fact that the government now copes with peace instead of war conditions. prohibition is expected to reduce revenue returns greatly.
 Beverage taxes under the House bull were estimated to raise $1,137,000, ,009 during their first 12 months of opera year.
 At the present time under changed conditions," the report states 'it IS possible to count only upon $500, 000,- 900 for 191S-1s19 and $93.00o.00o for l919-1920 from this source"
 TAXES MORE EQUITABLE
 Analyzing in detail the committees $ radical changes, Senator Simmons re- port explained that the revised indi- >vidual surtax rates graduated upward 1 per cent on each 5000 over $500 are more equitable than the arbitrary graduations of the House bill.
 The bill retains the House provisions for income taxation of salaries. includ- ing those possibly of the President and federal judges. lesality of. which. the report stated. is left to the\coNrts if the question is raised. The report, however. says that the House clause for federal taxation of new State and municipal bonds was stricken out as it seemed unwise for Congress to at tempt to impose this tax upon the ob- ligatlcns of states and municipalities as long as the states arS>not free to tax in similar manner obligations of the United States"
 The plan of requiring affiliated cor porations to make consolidated in come tax returns, the report states will do much to prevent tax evasion, and the new tax on life insurance companies true incomes from invest ments in lieu of war excess. income. capital stock and other taxes is more equitable
 EXCESS PROFITS SIMPLIFIED
 The war excess profits section, the report states has been simplified and reduced The House alternative plan of levying war and excess Hrofits at which ever rate would yield the most revenue. the committee found objec- tionable. because it's constitutionality mn IATE T0 CTAVCTEV