Warren sheaf. [volume] (Warren, Marshall County, Minn.) 1880-current, 1918-10-02
HOUSE REVENUE
. BILL TAXES PROPERTY
INSTEAD OF INCOMES

Washington, d. e.. October DE
claring that the House revenue bill, a
democratic administration measure
assesses property under the guise Of
taxing incomes, Representative Louis
T. McFadden, Of Pennsylvania, in the
following statement today pointed out
this defect in the bill (: @
'"rhe revenue bill contains5--a pro-
vision for taxation which amounts to
an assessment against property and
not a tax on incomes. -.
II refere to Section POI which pro-
vides that for the purpose of ascertain
ing the gain derived from the sale Of
real or personal property the basis
shall be the fair market price or value
of such property in the case of proper
ty acquired before March /, 1913, the
price or value on that date (AIarch /,
1879 and in the case of property ac-
quired on or after that date, the cost
thereof, Or inventory value. ;
+ '"This section declares that any gain
in sale Of property over the purchase
price or if the property was bought be-
fore March 1, 1913, the value on that
date shall be considered income for
1918 and subject to the almost con-
fiscatory taxes to be levied under this
bill. An example will clearly illustrate
my statement. A farmer buys a farm
for $1,000. on March 1, 1918. Five years
later, on March 1, 1918, he sells this
farm for $1,000. Mr.. Kitchin says
that the difference between $4,000 the
sale price, and. $4,000 the purchase
price, which is $780,, is income profit
and shall be added to the income of the
farmer and taxed.
'"rhis is a levy against property and
not tax on income. The exchange or
commodity value of the dollar has
shrunk so per cent in five years. In
1918 a dollar would purchase as much
as 5000 will buy today. This is the
same thing as saying prices have risen
100 per cent since 1913, which of
course, we all realize to be true Now,
when the farmer wishes to sell the
farm which he bought in 1913 for
81 800 he must receive $4,000 as the
selling price in order to be able to use
this meney (if he wishes to spend it)
in securing the same amount of com
modities now which , he could have
bought for $4,000 in 1913. =
'The revenue bill is fatally defective
in not recognizing the great increase
in prices Of everything during the last
five years. No income tax should be
levied on the proceeds of sales of pro
perty held over a period Of years until
an increase over the purchase price is
estimated, corresponding to the de-
crease year by year in the value of the
dollar
$50, too, in estimating war profits in
taxing the income Of corporations the
selection Of the years 1911-1912 and
1913 to ascertain average pre-war earn.
ings and comparing such average earn
ings with the earnings in 1918, the
Kitchin bill ignores the fact that a
corporation must earn twice the mum
Der of dollars this year in order TIC
make the same amount of profit OF
the pre-war period on the same amount
of capital. !;
"The plant today, machinery, stock
buildings, real estate and other assets
smust be estimated to- be worth double
the number of dollars, the. plant was
worth in 1911, 1912, 1913, to$,accoun11
for the depreciation in the purchasing
Epower of the dollar:sin five years.: OF
course it .1nay> we'll Beg that certain
plants have increased three or fonl
fold dug II location and special .marke11
! conditfo 1ana vNar demands, and afte1
allowance has been made. for The
shrinkage in the value of the dollar
such Appreciation in value can justl!
be considered as war; profits.
The bill as it stands now amounts
to levy on capital in many instances
where an attempt is made to, tax in
comes. -