Evening star., 1918-08-17
TAX ON UNEARNED
INCOMES DEBATED
Excess Profits Also Before
Committee Drafting
Revenue Bill.

Taxation of excess profits, designed
to raise a large portion of the $s,000,-
900 900 sought in the new revenue bill
was considered again today by the
House ways and means committee en-
gagged in drafting the measure. The
differential on unearned incomes,
which has provoked number of lively
discussions, also was to come up to-
Preliminary action in drafting the
excess and war profits taxes was
taken yesterday by the committee In
writing into the bill an per cent
exemption in addition to a specinc
$4,000 exemption on all excess profts
of corporations with tax OF ~ per
cent on all excess profits between y
per cent and 20 per cent, and tax
of so per cent on excess profits ex-
ceeding 20 per cent. The Treasury
plan for fiat so per cent tax on war
profits also was adopted.
Classiications, of Business.
The committee agreed to three
cIassifications of business for pur-
poses of deduction from the wal
profits tax. The deduction for pre-
war earnings is: Financial and
transportation corporations, 8 pei
cent; manufacturing. farming an6
general business. 10 per cent. and
mining and kindrea hazardous bust.
business corporations, it is estimated
will be affected by the war profits
tax and the remainder by the exces:
profits tax.
Estimates show excess and wal
So, ,000, 100000, which would bring thu
total of the bill much nearer the
$4,000, 100000 goal.
Chairman Kitchin of the commit.
tee said that the Treasury expected t.
submit today some further sugges
tions regarding the income tax. HI
said unless there is something II
change the situation the normal in
come tax rate will begin with 5 pei
cent on the first $4,000 and 10 per cen
on all incomes between $4,000 ant
$1,000. the surtax beginning at $4,000
Surtax Schedule.
The surtax schedule, Chairman
Kitchin said, probably would stand
as agreed to, with the following per.
centages: From $4,000 to $500.
per cent; $500 to $4,000. 6 per cent
10000 to 5000. 10 per cent: $4,000
to $4,000, Is per cent; $4,000 to $780,.
600, 20 per cent; 100000 to $40 900. 2;
per Ncent; $4,000 to $4,000, 30 pei
cent; $4,000 to $780, 40 per cent cent
900 to $4,000. Al per cent: $4,000 tc
$50, 900, 4S per cent: 100000 to $780,.
900. 40 per cent; 100000 to 100000
so per cent; 100000 to 100000, 81
per cent: sso0. 1000 to $500, goo. go pei
cent, and s1,o00,0 900 to $4,000, 900. I(
per cent. All incomes over $4,000, 90.
would pay a surtax Of 15 per. cent
which, added to the normal tax. woule
make such incomes taxable to the ex'
tent of S5 per cent.
Chairman Kitchin made this state
1--WE changed the plan for paymen
of the taxes by insta1lments. at thu
suggestion and request of the Treas
ury Department SO that one-thirt
will be due when the taxpayer make.
months thereafter and the remaining
third two months later. The commit
tee decided against a rebate for cast
payment of taxes.
EOI oA .k0 %
"The committee appropriated thu
s25. .0O0, 900 requested for the admin
istration of the revenue laws by Com
missioner Roper and authorized two
additional deputy commissioners ol
internal revenue.
aIt was decided to make a differen.
tial of per cent in favor of earned
incomes as against unearned. The
tax will be 10 per cent normal or
earned incomes and Is per cent or
unearned incomes. Unearned, income
means that part of the net income
derived from dividends on preferred
stock. from interests. rentals. royal.
ties and annuities."
Mr.. Kitchin indicated he did not ex.
meet the committee to resort to the
tariff in order to raise the total
IS. .o00, ,000,0 though subcommittee
is considering the proposal.
The committee agreed to a proposal
by Representative Rainey of Illinois
that the name of every person MAX
ing returns under the income tax law
be posted in county courthouses in
order that the public may know, who
have not made returns. The amounts
will not be posted. The proposal OF
Representative Treadway of Massa-
chusetts to put tax on billboards
was rejected. a4