New-York tribune., 1918-08-27
Revenue Bill Trainers Vote
Down Resolution Urging
Supervision
DiHerential Rates
On Incomes Planned
McAdoo Opposes Levying
of Taxes According to
Ability to Pay
By Theodore M. Knappen

WASHINGTON, Aug. 26-By a strict
party vote the Ways and Means Com-
mittee to-day acted adversely on a res
olution offered by Representative ],
Hampton Moore, of Pennsylvania. call
ing for the appointment of Joint
House and Senate committee to su
pervise government expenditure. The
resolution embodied the old idea of
measure of Congressional control over
war expenditures. 1t provided for six
Senate members, divided equally be-
tween the two parties, and seven House
members, of whom four would be Dem
ocrats.
After to-day's session Of the commit
tee Chairman Kitchin said that. as
there was no chance of passing the
revenue bill by September 2s. as de-
sired by the Treasury Department, it
had been deemed wise to take time to
consider all parts of the act with care.
He said he thought that by tomorrow
the committee and the department
would agree on that section of the bill
relating to a differential rate in the
income tax (earned and unearned in
comes), and that the rates likely
would be 10 per cent on earned in
comes and IS per cent on unearned
Extra Incomes Affected
The committee decided to-day that
lnadmissible assets in ,onnection with
the determination of invested capital
would include the interest and divi-
dends from stocks and bonds, other
than United States bonds, the income
from which is not computed in calcu
ating income subject to the normal
tax.
The prospect now is that the bill will
be completed Thursday or Friday.
The responsibility of taxing the
American people $4,000, 100000 in one
year, which is approximately a third
Of the entire income prior to the war
and more than the entire amount of
the annual savings, weighs heavily on
the Ways and Means Committee,
While there may be some disposition
TO use the taxing power as a means of
social reform and economic eoualiza
ton, there is apparently no intention
of using it to destroy any business
simply because it is successful The
underlying principle is to tax accord
ing to ability to pay rather than ac-
cording to nice proportion of dis
tribution of the burden.
McAdoo Opposes Plan
Secretary McAdoo opposes the prin-
ciple of levying taxes according to the
ability to pay. He would tax war prof
ITS heavily because they are incidental
to an exceptional condition and do not
generally represent the fruits of in
dustry, foresight and sagacity. In prin-
ciple he would tax industries that do
not profit by the war on a straight in
come basis, the small corporation pay
ing the same percentage as the large.
though the larger would be better able
TO spare its percentage.
The Secretary's view is shared by
many economic authorities, but there.
are not lacking those who maintain
that the principle of levying taxes ac-
cording to ability to pay is a sound
one. DR.. T. S. Adams, professor of
political economy at Yale, who is at the
mead Of the Treasury Departments
advisory board, appears to hold no such.
adverse view Of the excess profits
plan as Mr. McAdoo holds, though in
his official capacity he has championed
the war profits plan very strongly.
Chairman Kitchin has held out
strongly for the excess profits tax be,
cause Of his belief that in war time, at
any rate, the makers of all large prof
ITS, whether larger now than before the
war or not, should be taxed heavily
because they have the ability to pay
and stand a heavy tax.