The sun., 1918-08-20
INSISTS Up. C.BE -.
NORMAL INCOME TAX
Treasury Seeks This Rate on
Earned Receipts and Is
on Unearned.
HALF ON FIRST $4,000
McAdOo Rejects Committees
Proposal for Compromise
Excess Profits Levy.
HALF ON FIRST $4,000
Special Despatch to The suS.

| Specfdf Despdfch 10 HE SUN.
WASHINGTON. Aug. 19.--with the
Ways and Means Committee and the
Treasury Department still far apart On
the question OF excess profits taxes, an
other element of discord between the two
was injected to-day. when the Treasury
renewed its insistence that the normal
income tax rate be raised TO IL per cent
on earned incomes and Is per cent. OF
unearnsd incomes. ....4
The committee had a letter before II
from the Secretary Of the Treasury fatly
rejecting The ,proposal Of the committee
for compromise of 40 per cent. and 90
per cent excess prolts rates in lieu OF
either the present rate on the "30-S0-So
per cent rate favored by the commit
| tee.
slight Increase In PROFITS Tax.
The compromise would have imposed
tax of 40 per cent. on profits above
an exemption of $4,000 plus s per cent.
OF the invested capital. and not ex-
ceeding 20 per cent. of the invested cap
ital. and would have imposed the go per
cent. tax rate on all income in excess of
20 per cent. of invested capital.
Ii developed to-day that the commit
chairman. Representative. Kitchin IN.
c., will make some slight increases in
the present excess profits schedule. but
will not nearly approach the high rates
| upon which tentative decision was
reached some time ago 1t is practi-
cally certainty also that the Treas
ury Departments wish that the income
| normal tax be made IL per cent. and IS
per cent. instead OF 10 per cent. and Is
| per cent will be approved eventually.
The Treasury insistence on this fea-
ture of the new law is largely on account
OF the coming fourth issue OF Liberty
bonds. Exempting these bonds from the
normal tax will make IT highly advan-
tageuos to rich men to invest money In
these Government bonds instead of other
SECURITIES The difference would be a
very appreciate one to them. as the
income from such bonds would be ella ssed
as unearned income. hence the proposed
normal tax of Is per cent. on unearned
income would be saved through invest
ment OF money In Liberty bonds instead
OF al some other security.
The committee has taken no final ac-
ton on this suggestion, but the Benti-
ment OF the majority of the members
toward II. in view Of the reasons given
for the Treasury attitude. favors In
creasing the income normal tar.
& or Per Cent. Up to $4,000.
The present form Of the income Sec
tons of the new law provide that the
normal tax shall be 10 per cent on
earned incomes. but that on the first
$4,000 Of income the tax shall be only 5
per cent II the normal tax OF ~ per
cent, IL adopted the tax on incomes I'D to
$4,000 will be made 6 per cent-half of
the full tax
The committee to-day went over the
stamp taxes in the existing law, and
tentatively decided to leave all but one
unchanged. This was the stamp tax
on playing cards. which at present pap
cents on each package. This tax was
raised to cents The administrative
sections OF the income tax section werA
discussed at some length but no definite
action was taken
decision was reached to -day to lea We
the taxes on beverages until the last in
order that the committee may have the
benefit OF the Senate's action on the
bone dry rider to the food stimulation
production bill. II possible. All sorts or
suggestions have been heard for this tax
ransinS from a rs per cent Increase
over the present tax UP to 1876 per cent.
increase. In any event the committee Is
forced to wait until the last moment in
order to provide for other taxes to take
the place Of the liquor tax IL II Ia certain
that this source OF revenue will not
exist.
Worried over Liquor Revenue Loss
To what form OF taxation the commit
tee can turn IL the liquor revenue Of ap-
proxinately $1,000. 100000 Is denied in
causing a great deal Of discussion. Con-
sumption taxes Of some sort will have to
be levied, It is feared II there is such
tax 1t Will be on coffee, sugar, tea and
the like. Cotton will not be touched.
II the Ways and Means COMMITTEES
finally does follow the lead of Chairman
Kitchin and writes a high excess profits
rate into the revenue law which is I'M
likely. the Treasury Department can
count on the Senate Finance COMMITTEES
to change the bill to suit the purposes OF
the Administration the fundamental
ground Of the objections of the Treasury
Department to a high excess profits rate
10 that II Is in effect tax on efficient
management OF business and puts a pre-
MUM on waste and extravagance in
business