New-York tribune., 1918-08-30
House Subcommittee APP
pointed to Meet With
Secretary To-day
Last Minute Move
Distresses Kitchin
Republicans See Political
Strategy in Course of
Treasury Chief
By Theodore M. Knappen
Special Dispatch to The Tribune)


WASHINGTON. Aug. 29.-The Ways
and Means Committee has been greatly
disconnected by Secretary McAdoo's
letter Of yesterday to Chairman
Kitchin. The latter is plainly dis
tressed. After apparently being al
lowed 70 have his way in many matters
of major Importance, he has practically
heen driven into salient at the last
minute and now the Administrations
pincers are closing in on him. The
committee was desirous of having the
Secretary come before it to-day and
set forth finally just what he would
like to have it do, but the Secretary
WAS unable to come, and so a sub-com-
mittee was appointed to confer with
him tomorrow.
The committee is made up of Chair
man Kitchin, Oldfeld, Of Arkansas;
Garner. of Texas. Democrats, and Ford
new, of Michigan, Republican.
Some of the Republican members OF
tbe committee profess to see much un-
DERIVING political strategy in Secre-
tarv McAdoos course They hold that
in case the Secretary's way does not
ultimately prevail he will be able to
noint 10 his letter of yesterday as nav
ing done the best he could to protece
the great business interests OF t9e
country from discriminatory and un-
lust taxation.
Radical Changes Asked
Here are some of the things that the
Secretary wants:
First.The elimination of the addi-
tional per cent normal tax on corpo-
ration net income which is retained as
surplus and undivided profits, making
the rate on that part of the income lo
instead of u per cent.
Second-Distribut of the credits
or deductions on account of income
from exempt securities over the surtax
brackets corresponding to the whole
income.
Third-Reduction Of the surtax
rates in the higher brackets.
Fourth-Abandonme of the plan to
tax the securities OF states and lesser
political subdivisions.
Fifth-A very elastic definition of
invested capital giving the Treasury
wide discretionary powers in dealing
with the difficult matter of determin-
ing what it is in varying circumstances.
Sixth - Numerous and sweeping
changes in the administrative division
Of the bill.
If the Secretaya' s wishes in these mat
~te=s are met in whole or in part the
present draft of the bill will be radi-
cally changed.
No Income Distinction
1t is practically certain. too. that the
attempt to distinguish between earned
and unearned income will be aban-
doned. This attempt was first made at
Secretary McAdoo's request, but now
he has apparently come to the conclu
sion that it is unavoidable.
The plan for distributing the deduc-
ton for incomes from exempt securl-
ties is designed a a substitute for
their taxation. The amount Of the in
come from such securities would then
be included in the whole amount of
taxable income, and then in each of the
grades or brackets of surtaX into which
that income would fall. Allowance
would De made proportonately for it
after applying the surtax for that
grade. The object is 10 avoid permit
ting the inclusion of income from ex-
empt securities to establish the appli-
cation OF the lower grades Of surtax to
eAe pdldhce CT tne income. nus, II
person had an income of S20OO of
which 100000 was from exempt Sc
curities, he would pay the same rates of
taxation on the other 100000 as an
other person with a 100000 income
from uneXempt securities would pay on
the whole of that amount. AS the bill
now stands the 100000 would be de-
Quoted first Of all, so that the highest
surtax the balance would pay would be
IN the 100000 bracket, instead of in
the $500 0O0