New-York tribune., 1918-12-18

were received from taxpayers by the
committee generally, and by the ind-
vidual members.
Under the present law income for a
single year is subjected to the full
ra'e OF tax without regard to the past
~ luture financial operations Of the
taxpayer. IT, in the previous year,
however. the taxpayer now to be taxed
sustained loss instead of making a
proht. 1T Is clearly unjust to tax this
years profits without letting him first
make up last years loss; and. if for
the next year he should show loss
instead of gain, it seems Just apain
70 permit him to apply against his
previous years income the amount bv
wnich his outgo exceeds his income. In
osher words, in enforcing high rates
of tax there should be taken into c' oce
count the taxpayers operations over
some series of years, and not merely
ms operations for single wear. in
winch special conditions NAV prevail
What 49, in effect, averaging of income a
is permitted by the special provision
bill. ''' -Vs oh 'he
Many taxpayers, however. have OK.
pressed fear that this new provision
aoes not tuily prevent injustice through
TAXING profits largely dependent upon
inventories of goods at war nrcns rol
"hen the value OF these goods may
suffer sharp decline.
Loss on Stock Held
Ihe committee could not agree to
permit reserves necessarily arbitrary
against inventory values, but did pro-
V,de' IN section 214 (9) and 234 (13O,
anao II after any years profit had been
oalcu.ated loss is for the first time
as,scertained. due to the shrinkage in
ene ieVel OF inventory values or other
De an adjustment of the tax for the
past year, allowing full recognition of
thls loss, even though not sustained
through, actual sales.
II nave already referred to the ad-
hllfaole character and work of the tax
Soard Other administrative features
also received careful study by the COM
mlttee. Every effort was made to make
the law clear and capable of prompt
and just enforcement.
"Ot course, | do not maintain, as I
nave already stated. that this measure
IS by any means perfect. | do say,
however, that it has received more
careful thought by far than any pre-
vious internal revenue bill in this
country, and that it is more clearly
and consistently drafted and supplied
with wiser administrative provisions
than any other measure ! cannot dis
gulse the fact that feel anxious as to
the effect upon the country Of the at
tempt to apply such higher rates of in
come and profits taxes as are provided
in this bill.
On Top of Other Taxes
at is to be remembered that all this
weight of Federal taxation comes on
top Of the enormous levies of state,
municipal and other taxation, the bur-
den of which | previously had occasion
to refer to at length during the con-
sideration of past revenue bills in this
body. Yet in their application upon
incomes and profits for the war year
the only limit to Federal rates that I
recognize is dictated by the necessity
of preserving our industrial fabric
from stagnation and even destruction.
"With the demobilization of our army
and the return of our 100000 sol
diers it is, of course, imperative to
maintain industrial activity unim-
paired, if only for the purpose of fur
nishing employment. My belief is,
however, that the collection of cuch
taxes for the last year only at the rates
fixed by the bill would probably in
most cases not injure or destroy the
business or financial structure, al
though ruin would result from con-
tinuance of such rates in future years"