Bisbee daily review., 1918-06-07
Would Raise One-third of 1919 Expenditures by Tax alton; Asks Higs Excess Profits Levies.
By Review Leased wire,

WASHINGTON, June 6.-SecretaTy McAdoo today recommended in a let ter to Chairman Kitchin of the house ways and means committee that the new revenue bill be drawn to raise SS,Q0, 0,00QO00 by taxation, one-third of the estimated S24000. .000. 900 eXpen- ditures in the fiscal year, 1919.
 He also recommended that a war profits tax be established at high rate to be superimposed upon existing ex- cess profits taxes; that the normal in- come tax on unearned incomes be raised and that heavy taxation be im- posed on luxuries.
 Prepare for Liberty lssueo
 The suggestions weer given in re- sponse of a letter from Mir. Kitchin and constituted an outline of the treas ury's ideas not only of taxation to meet the nations huge war expenses in the future, but of preparing the way for fiating of additional billions of Lib erty bonds are exempt, said the sec retary will tend to make these bonds better investments and to permit them 10 compete with industrials and munic- ipal securities bearing higher rates of inteerst.
 MT McAdOo made no attempt to specify the means of carrying out his suggestions in revenue legislation and did not intimate what articles might be classed as "luxuries" for heavier taxation. He stated. however. that in many cases the present excess profit taxe do not reach real war profits. for instance where a corporation with biz earnings made directly out of the war has also a big over-caDitalization and. theerfore, an apparently low rate of profit
 Maintain Presetn Ratio
 After explaining that his estimate of S24,0OO, ,000,0 900 expenditures in the fiscal year starting next July l, is based on expenditures in the past and a calculation O. the rate of increase, | Mr McAdoo said. it would constitute unsound financial policy to raise s20.- 0O0,O00,000 of the sum by Notation of Liberty loans. to make up the deficit v that would follow if there were no in- crease in the S4,00O O0O. 900 revenue ob- i tainable under existing law
 About one-third of the $12500 000.- i 900 or s13.000, ,000, 900 expenditure this fiscal year. ending June 90. will come from taxation and this ratio he sug- gested. should not be reduced.
 If I may offer a suggestion as to | the ervenue measure. wrote the secre- ! tary, q should recommend
 "0) That One-third of the cash ex- penditures to be made during the fiscal year ending June 30, 1919. be provided by taxation. According to my esti- mates this would involve raising $S,000, 100000 through taxation
 Real War Profits Tax
 "(2) That a real war profits tax at a higher rate be levied upon all war profits. This tax should be super-im- posed upon the existing excess profits ! tax in such a way that the taxpayer should be required to pay which ever tax is the greater. The existing ex- cess profts tax should be amended in. certain important particulars so as to remove inequalities.
 "(3l That there should be a sub stantial increase in the amount of nor ! nal income tax upon isocalled un- | earned incomes.
 Under existing law earned incomes | above certain exemptions are taxed l 4 per cent. as an income tax. and | ner cent as an excess profits tax. mak- ! ing total of 12 per cent, while un-i
 l~onffp,,ad on Pa1a Txvol