New-York tribune., 1918-10-18
Senate Committee Also
Cuts Out Tax on Federal
Judges's Salaries
Provides Rebates
For Business Losses
Chairman Simmons Calls
Action of the Body "A
Right Smart Thing"

WASHINGTON, Oct. Ito quote
the language Of Chairman Simmons the
Senate Finance Committee did "right
smart" thing to-day. 1t eliminated
from the House bill the provision spc-
cifcally levying an income tax on the
salaries Of the President, the Federal
judges, and all other Federal and state
officers, and also excused the obliga-
tions Of states and other political sub
divisions from income taxation. More
over, it adopted provision which has
the effect Of rebating taxes paid in a
prosperous year to Offset losses in an
unfortunate year, and points a way
out for persons or corporations that
dispose Of their war plants at loss
The committee disposed Of the sala-
ries tax question in "A sort of neutral
way by simply striking out the parcn-
thctlcal clause in section 213, which
defines gross income as including sala-
rics "of tho President Of the United
States, the judge Of the Supreme Cour,
and inferior courts of the United
States, and all other officers and en-
rloyes, whether elected or appointed,
of the United States or of any state
Alaska, Hawaii, or any political sub
division thereof or the District of
Columbia"
Will Revert to Custom
The section still generally defines
gross income as including salaries,
wages or compensation for personal
service Of whatever kind. The effect
will be that administrative practice
will revert to custom and refrain from
attempting to collect tax on the sala-
rics of the President, state officers and
Federal judges Administrative inter-
probation has always been that such
salaries we're constitutionally exempt.
The present law specifically exempts
them. Income taxes will be collected
under the present bill, when it becomes
law, from congressman and all Fed
eral officers, except the President and
the Federal judges.
In the case of state and municipal
securities, the position is positive, as
the law will definitely state that gross
income does not include the interest
from such obligations.
In dealing with the question of COM
pensaton for a year of net loss the
committee took the position that the
government should share losses as we'll
AS profits in a continuous business by,
in effect, viewing income taxation as a
sort Of continuous process.
Way for War Manufacturers
1t also provided specifically that
manufacturers of war goods might
count as losses in this connection the
sacrifice involved in disposing of a war
plant at less than cost. The amend
ment covering these points constitutes
Il new section of the bill, viz, 2O3, and
provides that a person suffering loss
in the operation of his business might,
by submitting adequate proof to the
refund from the tax paid by him for
the preceding year. Should the amount
of the loss result in the refund being
more than the total amount of taxes
paid by him, then the amount in excess
would be credited to him on his taxes
for the coming year. Refunds would
be made only tor losses suffered prior
to December 81, 1916.
The committee reconsidered its IN
come tax discrimination between army
and naval officers in field or sea duty
at home and abroad. and those doing
office work, and decided to make no
broad distinction of that kind, but it
Will seek to find some way of reaching
the "slicker' and intentional swivel
chair officer.
1t will also reconsider the question
OF making all officers salaries above
some limit subject to taxation. The
House placed the limit Of exemption as
below $500, but the Finance Commit
tee tentatively struck out the limit.