The Washington herald., 1918-06-11
NEW REVENUE
SOURCES PUT
TO COMMITTEE
Heavy Taxes on Gasoline,
Tobacco, Coffee and
Tea Urged
PROFESSOR ADVOCATE
Sprague, of Harvard, Out
lines Scheme to Cut
Bond Issues.


New sources Of revenue which may
be drawn upon to supply war funds
for the government, were brought to
the attention of the Ways and Means
committee when hearings on the eight
billion dollar revenue bill were re-
sumed yesterday.
Among the new taxes suggested were
a tax Of Is cents a gallon on gasoline,
from so to $50 on ,chauffeurs, on silk
shirts. shoes costing, more than IS,
and pajamas costing more than 81,
and heavy consumption taxes on
conee, tea, tobacco and soft drinks.
The taxes were suggested by Oliver
NJ. W. Sprague. professor OF banking.
at Harvard University.
Economy Bonds Suggested.
Another new method of drawing
money from the people for war
purposes, for which Professor
Sprague claimed originality, would
be an assessment of 10 per cent on
the income of eeery taxpayer. Ex-
emption from the payment of this
tax could be secured by the pur-
chase Of bonds, which Professor
Sprague suggested might be called
Economy Bonds" to expire one
year after the war, pay the same
rate of interest as concurrent Is
sues OF liberty bonds, and to be
nontransferable.
Professor Sprague also advocated
heavy taxes on war profits and on
incomes
Il do not believe that people ef
large incomes have any right to be
better on because OF the war" he
said. while those of the stationary
income will be worse on"
Professor Sprague declared that
80 per cent of the war profits had
come naturally as a result of heavy
demands and the consequent rise
OF prices. Chairman Kitchin asked
him how he reconciled this with the
statement of the President In his
address to Congress that there had
been profiteering.
Says Prohteerins Rare.
Il do not doubt there has been
some" was the reply. but IL has
been here and there. I don't accept
the view that when steel went I'D n
year ago 1t was due to some Machia-
veiiian act of some persons in charge.
IL was rather that the demand came
with sudden burst and prices went
up"
In elaboration OF his recommenda-
ton for a tax on chauffeurs and paso-
line. Professor Sprague said that the
two fundamentals at the basis of
luxury taxes are to raise revenue and
to set free labor and materials re-
quired In their production. He classed
the automobile as the luxury topping
the list.
There Is little evidence of economy
In using gasoline in running cars for
purposes of recreation he said. at
is difficult to convince the ordinary
man he should scrimp and save to
buy war stamps and liberty bonds
when he sees pleasure cars going
about the country In swarms.
would not tax the autos but would
impose a tax of at least twenty-five
cents gallon on gasoline used for
purely pleasure purposes. England
taxed 1t six pence a gallon, and now
1t cannot be obtained at all for pri-
vate cars"
81 Meal Tax Suggested.
Professor Sprague suggested a tax
OF 20 per cent on the bills for hotel
rooms for which more than $3.50 a
night Is paid, and 20 per cent tax on
bills for meals costing more than 81.
He said the latter would tend to re-
duce the consumption of food. In the
same connection he suggested a tax
OF - a barrel on -four made entirely
or wheat, saying 1t was absurd to
urge people to use wheat substitutes
when the latter cost more than the
wheat flour.
The tax on tea. Prof. Sprague said,
should be at least 25 cents a pound,
while that on coffee, cocoa and soft
drinks should be 10 cents. He thought
tne tax on tobacco should be very
nigh England taxes 1t rs cents a
pound, while the tax in this country
Is now 13 cents a pound. England's
beer tax Is $3.50 barrel, and this
country's, $3.50 barrel. Prof
Sprague expressed the opinion that
the American taxes should be brought
nearer the English standard.
In reply to a question by Repre-
sentative Garner as to whether he
regarded tobacco as a luxury, Prof
Sprague replied that he believed to-
oaceo to be a luxury in the sense
that 1t is not a necessity. q
Prof. sprague laid down the general
principle that IL the wars cost for
the coming year was $4,000 900 900 Il
would mean an enforced saving by
the people Of the same amount mi
other words, he said. the consumption,
OF necessities, luxuries and comforts
must be reduced by $4,000, ,Ooo, 900 IN
order to raise the funds for the war.
Representative Moore, Of Pennsyl-
yania, made the quick calculation
that this would mean that every con-
sumer In the United States would
have to spend $3.50 a year less. and
that every family Of four would have
to save 1900 year.
Would Discourage bonds.
Further issues of bonds should be
discouraged as far as possible, Prof.
Sprague contended, so that
the heavy burden of the war might