The sun., 1918-09-24
Colorado Senator Says Basis
Proposed by House Bill
is insufficient.
HE CITES IRREGULARITIES
Speech Forecasts Radical Re-
vision of Kitchin Measure
in Upper Body.
sp.eia, Dsspofeh to THE stN.

Committee warned the Senate that the
bill in the form It had passed the House
admitted OF serious and just criticism. |
Senator Thomas's address was only
preliminary to the action which he will
advocate In the Finance Committee.
lie took occasion to warn the Senate
that the sanctifed ratio OF 80 1-3 per
cent. of taxation to each IS 2-3 per cent. |
of bond issuance was In danger, but ne
expressed no particular concern ms to
the safety OF the nation either in war or
peace IL this particular ratio should fail
TO be preserved. He told the Senate
frankly that the preservation OF the es-
tablished re ito would require within tho
course OF the ensuing fiscal year yet
another revenue bill, yet more taxation,
unless victory In the fields of war was
achieved sooner. THE war expenses
must increase progressively as the war
proceeds" said Senator Thomas.
In the opinion Of the speaker the
preservation OF the Industrial energy.
the earning power and the capability OF
sust aimed maximum productivity was of
higher Importance than the preservation
OF a mathematical exactness OF ratio be-
tween revenue income and income from
securities issues.
The financial needs of the Govern
ment consequent upon the war with Ger
many have imposed recently upon Con-
gress the most gigantic task It ever en-
countered." said Mr.. Thomas IAN es-
tlmated expenditure of $4,000. 900. 900
for the current year and the desire OF
the Administration to realize one-third
Of tho amount by taxation has necessi-
tated framing a measure designed to
raise the vast sum Of IS 900, Uo0, 900 a
year without seriously disturbing the in
dustries or menacing the commerce of
the nation.
These figures are nearly one and a
half times the total supply OF our cur
rency. including gold. silver. nickel
copper and paper. They represent about
per cent of our estimated wealth.
They exceed the combined value OF our
imports and exports for any year OF
our history. 1t would much more than
!lquidate the money cost of our civil war
on both sides. 1t will subject the In
! dustries of the nation to supreme test
Of endurance. 1t will absorb virtually
the annual profits OF production and
must be made to do so IL possible
without discouraging continued pro-
ductive energy.
I'VE propose by this bill to raise
33 Id per cent. of our war expenses
by taxation. This task none of the
| belligerents has attempted. No nation
at war In the past ever has done SO IL we
| except from the reckoning minor con-
! ficts OF brief duration. We are the
, first to make the experiment II we
adhere to It and the war shall endure
after 1919 we shall be required to
enact other revenue legislation laying
heavier taxes and continue to do SO
| until 1t shall have terminated because
our war expenditures will increase pro-
sressively as the conflict proceeds
"Pay as You Go" Policy.
! Writers of authority say that II the
\ revenue OF Government falls below a
| fair percentage OF It's bond issues their
values are seriously affected and their
sale is possible only at a heavy dis
count. This is logical.
| NO man can challenge the soundness
, OF that doctrine or the wisdom OF ad-
| herring to 1t whenever possible. But ex-
| ceptlons to all rules. whether of con-
| duct or OF finance, are bound to occur.
| and the present world war is an excen-
ton to all that has preceded II In hui
! man history. Rich as we are We cnn-
not supply our Government through
taxation with one-third the money
required for It's expense unless the war
| eHus quickly, a contingency which leg
isiators cannot assume as probable.
But the Government In a large degree
can relieve itself of much of its credit
requirements much as II has done in
the past. which its allies are doing and
| as II must do should Germany remain
| unsubdued twelvemonth from now.
| Il do not protest against heavy taxa
tion In times like these. On the contrary
we should Impose them as fairly. as uni
formly distributed and as extensively as
commerce and industry. as production
ana consumption will Justify. But we
should not In my judgment establish a
mathematical percentage based on esti
mated expenditures and make its real-
| ization the prime goal of our revenue
laws.
Integrity of Industrial Fabric.
I'm times OF unprecedented stress and
prodigious outlay It must be remembered
always that the integrity of the indus
trial fabric In all it's subdivisions is as
essential to military success as the army
ana the navy and that to overburden Il
! Is to cripple 1t and to cripple it is to in
vite disaster. AS to this we are all
agreed. Our differences proceed from
the result we apprehend from proposed
schemes OF legislation. question
whether after the first year of the oper-
alton OF this annual tax roll OF So, OOO,-
100000 II will prove efficient and sue
cessful. I am convinced that such an
unduly heavy imposition is not a pres
ent necessity"
The apparent lack of appreciation on
the part OF the proponents of the revenue
laws of the fact that the proposed tax
constituted only n part of the burden
which will fall on the taxpayers was re-
marked by Senator Thomas. who in
stanced State. county, school and mu.
nicipal taxes, the aggregate of which he
said was prodigious
s7BO.OOO.OOO Prohibition Loss.
The loss In Federal revenue through
the enactment OF the war time prohibit
ton laws Senator Thomas said was now
estimated at more than S750,00O, 900.
which had to be made UP from other
sources. lie denounced as folly" the
imposition OF taxes on the one hand and
the destruction of the bases of taxation
on the other.
Taking up the constitutional features
OF the bill Senator Thomas said: This
bill s obnoxious to the Constitution OF
the United States In not less than three
> important particulars: TIE proposed
taxation OF Presidential and judicial
: salaries. OF State and municipal securi.
| ties and OF salaries and the alternative
, method OF assessing and levying take.
by the war profits method or the excess
profits method. which would Clothe the
Government with authority az stated In
, the bill TO resort to whichever OF thu
two methods will yield the higher amount
OF taxes 1t may be that the constitu