The Washington herald., 1918-08-13
M.ADOO FIGHT
FOR HIGH WAR
lTAXLAUNCHED
Returns to Assume Person
al Charge and Will See
Committee Chairman.
KITCHIN HITS SAVAGELY
Charges Treasury Plan Is
= !. to Let Big Fellows Es-
; cape Taxation"

Secretary McAdoo. upon his re-
turn to his ONCE in the Treasury
Department yesterday. assumed
personal charge of the tight for
n high war profits tax in the new
revenue bill. He win see Chairman
Kitchin Of the Ways and Means
Committee today and undertake to
convince him that the plan worked
out by the Treasury Department,
under Mr.. McAdoo's direction.
should be followed. rather than
that already agreed upon by the
committee.
Secretary McAdoo Is prepared to
insist that the only way TO get the
real war profiteers is through an
50 per cent tax on the profits made
in the current taxable year. as con-
trasted with the pre-war period.
He will also oppose the committees
plan of raising the excess profits
rates to 30, so and so per cent, upon
the ground that such a tax would
spell ruin for capital invested in
all kinds of legitimate industry.
"A Camounage."
Chairman Kitchin last night de-
clared that the Treasury plan rec
commended by Secretary McAdoo Is
mere oamouflage. and intended
for the sole purpose OF letting some
Of the big fellows escape taxation"
II the committee yields to the
Treasury demand, il Is probable the
fight will be carried to the floor OF
the House by those who, like Mr..
kitchin. insist upon raising the ex-
cess profits rates. Mr.. Kitchin said:
= arTSE Il. NS
ton prepared by the Treasury De-
partment and submitted TO the COM
nittee could all be told in four
lines. 1t would be simply this: An
act to give the Treasury Department
the discretion OF taxing corporations
Just as much or as little as it may
see ht' That is all it amounts to.
Never before has Congress been
ssked to give such discretionary
power into the hands of a DEPART
Thent of the government.
The committees scheme of rails
ipg the rates on excess profts
would catch all the profiteers and
squalize the burden on all forms of
business. II we put on a high war
brofits tax and let the excess profits
rates stand as they are, ii would
mean that, OF two corporations of
- same amount of invested cap
ital and making the same income,
He might be taxed $4,000 and the
other $4,000. 1 can't see any JUS
tce in such plan as that
SFrom an Official of the Treasury
Vas obtained a digest of the Treas
dTy's argument, which is as follows:
Treasury View.
"It is perfectly simple that the
Sar profits tax hits profits directly
Eaceable to the war. while the ex-
cess profits tax discriminates
2ainst small business and in favor
Of big business. The excess profits
tax fails to reach war profits in
Rany cases and often reaches in
comes which have not benefited by
TIE war. Experience shows that the
capital deduction, which is an es-
Sntial element of the excess profits
tax. works a hardship on the small
concerns which is very frequently
pdercapitalized and in which the
energy and brains Of the individual
court for more than capital. where
a. big business is generally fully
capitalized. il not overcapitalized.
Consequently the capital deduction
hits small business unjustly
THE Treasury Department dis
agrees with the committee as to the
amount of revenue which may be
rslsed through it's plan. and insists
that il the recommendation of Sec
retary McAdoo is followed the max
ipum amount OF $4,000. 100000 will
be produced. This recommendation
i'd A IL per cent normal income tax