The Richmond Virginian. (Richmond, Va.) 1910-1920, 1918-07-27
EXCESS PROFITS
TAXES TO YIELD
S1,69O,O0O,O00
WAYS and Means Com
mittee A d o p t S the
} New Revenue Bill
ONLY WAR BURDEN
Places T axation Only On
Returns From Or
gained Business
During the Year.

Washington. July 26.--The ways
and means committee today formally
adopted for the new revenue bill a
schedule of excess profits taxes est4-
mated to yield 81, go, 100000 during
the next fiscal year. II was also de-
eided that in levying these taxes. pre-
war profts OF the corporation will be
entirely ignored and the revenue will
be collected solely upon the net in
come for the taxable year.
The ars. OF these decisions. both OF
which are OF Importance in the gem
erai framing OF the bill. was reached
after the committee had been advised
by treasury experts that 1T would be
unw3se 10 attempt placing any heavier
burden on American business than the
rates adopted Will impose. The sec
ond decision means that corporations
ard organized business generally wifi
pay only on wha, is made during the
year without regard 20 whether these
profits are greater or less than they
were before this country entered the
war
The new rates will be as follows:
Thirty per cent on the net income
in excess Of exemptions and not in
excess Of 30 per cent OF the net in
comes.
Fifty per cent in excess Of 20 per
cent OF the net income and not in ex-
cess of IS per cent.
Eighty per cent on the net income
in excess OF % per cent.
The rates are the same as those ten
,sattvely agreed TO by the committee
yesterday, The exemptions VIII he s2.-
600 plus 10 per cent on the amount of
Invested capital
Place Regulation.
A majority of the COMMITTEES favor
ed proviso 10 the effect that In no
case should the excess profits tax ex-
coed 90 per cent of the net income.
nor be less than 10 per cent of the rret
income In the case of corporations
with capital exceeding s20o.o 600.
Common carriers and public utility
corporations whose rates are subject
TO regulation by federal. state or mu-
nicipal government would be excepted
from the 10 per cent minimum, In
dividuals and partnerships are not
included
Although II was admitted by mem
bers OF the committee that the new
excess profits rates would ieaye the
committee short by one and a half
billion dollars OF the total amount
which was expected TO be raised on
income and excess profits taxes, the
general feeling among the members
was that 1t would be unsafe to so
higher in taxing the profits OF bust
ness, and that higher rates would
merely mean the disruption of or
ganized industry. Those who had
argued for a fiat tax OF 10 or so per
cent on the profits Of all business re-
luctantly admitted that the returns
from the treasury would not Justify
such an exhorbitant levy upon the
business OF the country.
This was the more readily seen
when calculations were submitted to
the committee showing how the tax
will work out. For example. corr
poration organized with 100000
capital. making a profit of 100 per
cent. or 100000, would pay. under
the excess profits rate agreed to. $64.-
800. Under the income tax rate pre-
viously adopted by the committee, OF
Is per cent on undistributed profits
and l2 per cent on profits distributed
to shareholders. II one-half OF the
profits were distributed, the corpora
ton would pay as income tax. S4.sS5
This makes a total Of $69,S65, leav-
ing to the corporation $30.l35, or so
per cent of its net income.
Under the same method, a corpora
tion making fifteen per cent would
have about 8 per cent left: one max
ing rs per cent would have i6 per cent
left; and one making so per cent
would have 20 per cent left.
The committee held long discus
sion on the question OF defining 'in-
vested capital" and at length decided
Ito leave this as 1t Is In the existing
law. There were some members who
favored the inclusion of borrowed
money as part of the invested capital
but no decision was reached on this
point.