The Washington herald., 1918-08-25
REVENUE BILL
| REJECTS IDEA
| OF TREASURY
Ways and Means Adopts
Rates on Profits Above
Present Law.
TO REPORT THURSDAY
Consideration to Begin
September 3, Chairman
Kitchin Announces.

The war profits tax and the excess
profits tax rates were adopted by the
Ways and Means Committee yester-
day for the new revenue bill. They
are counter to the suggestions made
by Secretary McAdoo and consider
ably higher than the rates In the
present law.
In another respect the committee
voted to disregard the recommenda-
ton of the Treasury Department and
fixed the normal income tax rate at
10 per cent. with differential against
unearned incomes Of per cent, so
that this class of incomes will pay
ID per cent Secretary McAdoo had
asked the committee to make the
rates u and Is per cent, respectively.
The section providing for the as
sessment of a tax on profits and war
profits directs that after the amount
of tax under each system shall have
been computed the Treasury Depart
nent must collect the higher amount.
The Method.
The "war profits method" as It Is
defined in the draft adopted by the
committee calls for the payment of
q tax OF so per cent on the net in
come OF all classes of business above
the credits allowed for war profits.
These credits. defned under "subdl-
vision (a)" of the section are:
81. A specific exemption Of $4,000.
and ...r
80. An amount equal to the aver
age net income Of the corporation
for the prewar period. plus or
minus. as the case may be. 10 per
cent Of the invested capital added
or withdrawn since the close OF the
prewar period. II the corporation
had no net income for the prewar
period. or IL IL was not In existence
during the prewar period. or IL the
amount computed under paragraph
2 pf subdivision (a) is less than 10
Per cent OF its invested capital for
the taxable year. then the war pro-
fits credit shall be the sum Of:
81 A specific exemption of $1,000,
and
Ten Per Cent of Capital
20. An amount equal to 10 per
cent of the invested capital for the
taxable year"
The excess profits method of
taxation stipulates that whenever
the amount of tax to be collected Is
computed in this manner. it shall be
thu sum of the following:
rThirty-iye per cent OF the
amount of the net income in ex-
cess Of the excess profits credit and
not in excess OF Is per cent of the
invested capital for the taxable
year;
Fifty per cent Of the amount of
net income in excess of Is per cent
and not in excess of 20 per cent of
the invested capital for the taxable
year: and
eSeventy per cent of the amount
offthe income in excess of 20 per
cent OF such capital"
Shall BE Deducted.
In any case where the full amount
Of the credit is not allowed under the
first bracket above provided by rea-
son Of the fact that such credit is in
excess of Is per cent Of the invested
capital. the part not so allowed shall
be- deducted from the amount in the
next successive bracket. and IL not
then fully allowed the remaining part
shall be deducted from the amount in
the last bracket.
That the excess profits credit shall
orsist Of a specific exemption of
1900. plus an amount equal to per
cent of the invested capital for the
taxable year"
Foreign corporations are excluded
from the exemption in both cases
Chairman Kitchin announced that
he bill will be reported to the House
Thursday Of next week. and that con-
sideration of IL will commence Sep
;enber 3