New-York tribune., 1918-10-03
Change in Tax Bill
To Help Oil Men
Proposed in Senate
lmpost Would Be Based on
Value of Property on
March l, 1913
By Theodore NJ. Knappen

WASHINGTON, Oct. 2.-Thc Senate
FINANCE Committee to-day decided on
an amendment to the Kitchin bill Gov
crlng the subject Of depreciation or
depletion of mines, oil wells and other
natural deposits, that is designed to
meet the complaints of the owners of
such properties that they were he;no
taxed on their capital as we'll as their
income
The amendment is as follows:
In the case Of mines, oil and gas
wells. other natural deposits and tim
Der reasonable allowance for depre-
clation AID for depreciation of i'm
provcmcnts according to the peculiar
conditions of each case, based upon
COST plus costs Of development. Pro-
Vlocc that IN the case of such prom
critics acquired prior to March /. 1913.
inc lar market value OF the property
'or OF the taxpayers interest therein>
on that date shall be taken in lieu
oi inc cost, such reasonable allowance
IN all Of tho above cases to he m,do
under rules and regulations to be nrc-
scr1bcd by the commissioner with tho
approval OF the secretary In the case
" nonresident alien, individual de-
ouct1on under this paragraph shall be
ailo"eo ohly as to property within the
United States"
Strong pressure is being brought to
bear on the Finance Committee to
persuade 1t to eliminate the excess
prohts feature of the Kitchin law. or
TO retain it merely to catch a small
minority OF companies that though en-
Joylng large profits, might otherwise
escape anything except the normal in
come tax.
Two different methods are proposed
One would retain the fiat so per cent
war profits rate of taxation and attain
an equitable distribution Of the burden
by rewriting the definition of investcd
capital and increasing administration
discretion, while the other would apply
a graduated tax to all corporation net
income above certain amount, much
IN the same way as sur-taxcs are ap-
pied to individual incomes. These
taxes arc levied without regard to
individual worth or capital investment.
1t makes no difference whether an indi-
vidual or partnership engaged in
business has ii capital of one dollar
or ten millions. If there is income
above $4,000 it Is subject to sur-taxes.
Peace Time Profits Hit
Objection is made to the excess
profits provision because it tends to
create the belief that excess profits arc
excessive profits, and to establish the
to Of,
be assigned to ali businesses With
the end of the war war profits will
cease. but the kind of profits the cx-
cess profits provision is aimed at are
not war profits, but peace time profits.
The establishing for such businesses
of a fixed rate if profit of eight per
cent as the normal rate on such a
very uncertain quantity as invested
capital is held to be inequitable and
to tend to discourage initiative and
enterprise. With the idea Of the gov
ernmental right to take profits in ex-
cess of eight or some other per cent
firmly entrcnched by several years
usage, it is feared that the taxation
function will be turned into social
istic appliance for redistributing
wealth.
Advocates of both the straight war
graduated rate maintain that the al
ternativc scheme as now written into
the bill levies taxes most ineQuitably.
Many actual instances are advanced to
show that corporations with inflated
capital will not pay their fair share
of taxes under either provision, while
others will pay far more than their
share, according to actual profits and
real investment.