New-York tribune., 1918-08-07
Pre-War Profits
Likely To Be Basis
For Certain Taxes
trainers Of Revenue Bill
and Treasury to Settle
Differences Soon
I wo Alternative Plans
Consideration of Ante-Bellum
Gains Opposed by House
Body Unless Necessary

WASHINGTON, Aug Differences
between the House Ways and Means
Committee and tax experts of the Treas
Department over the methods of levy
ing excess profits taxes to be inserted
IN the $4,000. 100000 war revenue bill
now being framed. were cons dered to-
day by the committe and DR.. T. s.
Adams. chairman OF inc Treasury's ex-
cess profits advisory board
Chairman kitchin at the close of the
session announced that the committee
probaly would adopt an alternative sys-
tenn of applying pre-war profits as a
basis where they would produce greater
revenue than the excess profits tax.
He also said that the committee and
Treasury would get together" on the
excess profits tax as soon as Secretary
McAdoo has gone over the system ten
tatively adopted by the committee.
The plan of supermposing a strictly
war profits tax in addition to the ex-
cess profits tax did not develop much
support IN the committee to-day.
Issue Over Deduction.
The excess profits levy, upon which
the Treasury and the comm ttee differ,
hinges largely on the matter of deduc-
tlons to be allowed The English plan.
for which the Treasury contends, allows
the deduction to be made by corpora
tons to correspond to the amount Of
the profits in the pre-war years 1911-13
he effect is that corporation making
big profits before the war can deduct
a corresponding amount from the in
come of the taxable year and then be
taxed only on the balance.
The original committee plan ignores
the pre-war profits and allows deduc-
tions to all corporations based on the
invested capital. The alternative plan
to be substituted by the Treasury, if
the Treasury finds it will produce
moro revenue, is based on strictly war
profits
Chairman Kitchin made this state
ment to-night:
"We read the income tax section Of
the legislation at this mornings ses-
sion and got down TO the deductions
and credits without taking any further
action. DR.. Adams discussed the ex-
cess profits and alternative war profits
plans at the afternoon session. He
takes the same view as the Treasury
Department as to having the two
methods.
Two Plans Urged
Their proposition is for 80 per cent
tax on excess profits, and they want
the alternative plan with it. They
want the excess profits rates as in the
existing law, and real war profits TAX
as an alternative. We are going 10
have an excess profits tax. We have
already tentatively agreed to one. The
majority of the committee seems to
want the alternative plan, too.
''If we have a war profits and excess
profits plan with the latter rates the
same as in the present law. nine -tenths
of the corporations in this country will
paw an increased tax of from so per
cent up to as high as 800 or 400 per
cent more than in 1917, while onetenth
of the corporations of the country will
pay no tax at all on their increased
income. This is because they were
making practically as much before the
war as they have been making during
the war.
"The committee wants the present
law excess profits raised to equalize
this situation.
eve will probably take up the in
come tax Tomorrow"