The Washington herald., 1918-06-07
ONE-THIRD WAR
COST FROM TAX,
M'ADOO PLAN
Secretary Sends House Sug-
gestions for Revenue
Bill Drafting.
LESS BONDS POLICY
Total.
Measure to Produce $8,-
0O0,0OO,0O
LESS BONDS POLICY

Secretary Of the Treasury McAdoo
made his recommendations concerning
the new war revenue bill yesterday.
They virtually have the approval OF
Congress in advance, for the members
of both House and Senate charged
with framing the new law have been
working on Identical lines with those
laid down by Mr.. McAdoo.
The following outstanding features
in Secretary McAdoo's recommends
tions probably will be adopted with
out opposition:
That the new bill be drawn to raise
5000, 100000 annually by taxation as
one-third of the war expenditures.
That a real war profit tax be en-
acted that will reach and tax UP to
50 per cent profits made out of the
war,
Heavy taxes. perhaps as great as
war profits taxes, on unearned in
comes. A fiat rate OF u per cent on
incomes now paying that rate, inclu-
sive OF supertaxes.
A heavy tax on all luxuries.
Congress, In advance Of Mr.. Nc
Adoo's recommendations, has been
studying the English system Of war
taxation, which levies heavy taxes on
war profits and unearned incomes.
Secretary McAdoo's letter of recon-
mendation was as follows:
Mr.. NeAdeo's Letter.
Dear Mr.. Kitchin: Replying to
lnffaNs SNR TYa0.n At,I l.,rr
to our recent conference on the ques-
ton Of new revenue legislation. per-
init me to submit the following for
your consideration:
'Tf the present rate Of increase In
expenditures should contlnae for six
months, the Treasury will actually
have to disbnrse during the fiscal
year ending June 30. 1918. approx
mateIy s24.OO0, 900, COO
This estimate is not based merely
upon appropriations. nor merely upon
estimates made by other departments
as to their probable expenditures, al
though they have been obtained and
considered; it is based upon the ac-
tual experience Of the Treasury dur
ing the past year. which has shown
that actual expenditures. exlucsive of
transactions in the principal of the
public debt. have increased at the
average arte of s10o,O0o,oO0 per month
since March, 1917.
You will observe from the in
closed statement Exhibit Az that In
March. 1917. the expenditures were in
round figures s1O0.OO0.OOO. In Nav 1916,
they were Sizes, $4,000. II there should
be no further increase during the
coming fiscal year. the cash expendi-
lures upon the May basis would be
more than s1S.cO0.OOO,OOO.
IL. as seems inevitable, the increase
IN expenditures should continue at the
rate Of 800 100000 per month for the
next six months, or until December
1918. and IL thereafter the monthly
expenditures should remain STATIONARY
until the 3Oth of June, 1919. the Trea G.
ury would have to finance expendi-
lures aggregating s24,OO0. .0OO, 900 during
the hscal year ending June 30. 1919:
or. to put it another way, IL the aver
age monthly expenditure should ex-
ceed that for the month of Nav. 1918.
oy 81 l-3 per cent. We shall spend
SZhoVo'oo,oco in the year 1919.
one-thIrd BY Taxes.
IN the ilscal year ending June 90.
lsH' our cash disbursements will
amount to between $12. 500. .OO0, 900 and
sl0'Oo.ooo.oo or this amount, about
one-third will have been raised Ly
IaHes ana two-thirds by loans all OF
"hich VIII be represented by long
time obligations. that is, bonds of the
''rst' second and third liberty loans
CONTINUED ON PAGE SEVEN