The Washington herald., 1918-11-16
SENATORS WAR
ON M'ADOO'S
TAX REVISION
Committee Opposition m
Reused by Proposed
Changes in Revenue Bill.

Secretary McAdoo's recommends
tions for the revision OF the revenue
bill provoked violent opposition
among members Of the Senate FL
nance Committee yesterday. He ap-
peared In person before the commit
tee to explain the suggestions made
in his letter to Chairman Simmons,
but failed to convince all the mem
bers of the committee that his recon-
nendations should be followed.
Although Senator Simmons at the
close of the session ventured the
opinion that a majority of the COM
mittee would agree to modify the bill
in the manner Mr.. McAdoo suggested,
a bitter fight is in prospect and the
passage of the bill may be delayed in
definitely. It is certain that the Re-
publican members of the committee
are not willing to accept all of Mr..
McAdoos recommendations.
Objections Raised.
The principal objection made by
Senators to the changes proposed oy
Mr.. McAdoo is directed against the
following recommendations:
1. That the excess profits tax rates
should be lowered and the rates on
Individual incomes should be raised
2 That in the pending bill Congress
should fix the maximum TO be raised
in 1890 at 1900, 10000 and establish
policy OF rates in accordance with
this amount.
When Mr.. McAdoo was before the
committee he was sharply questioned
by the senators on these two points.
He gave as a reason for raising the
individual income tax rates the ex-
planation that the excess protts tax
is not satisfactory. He said that
such a tax was inherently burden
on business and in essence a tax on
consumption.
Senators Smoot and Penrose. the
only Republican members or the
committee present, objected strongly
TO the removal of the excess prohts
tax and the corresponding increase
in the income tax rates. They told
Mr.. McAdoo that they did not be
lieve an increase m the individual
tax rates afforded the only solution
of the problem, and announced that
they would strongly oppose such
proposal.
Senator smoot Dtsagrces.
Senator Smoot said after the meet
ing of the committee:
II am not at all in harmony with
Mr.. McAdoo in this particular, be-
cause the money needed can De
raised very much more easily by
other means than by raising the
taxes on individual incomes. or
course. when the war is over we
shall have to do away with war
profits taxes; but there could be
normal tax on the business Of all
individuals, partnerships and cor
porations which would raise all the
money needed without increasing the
rates on individuals as he has rec
commended.
"I am strongly of the opinion that
there ought to be money collected TO
go into a sinking fund for the pay
Inent of our national debt. This
could be done by a tax OF not less
than l per cent on all sales, and l
intend to do all ] can to get such
provision in the bill"
The other recommendation made by
! Secretary McAdoo. that the limits OF
the tax bill for 1920 should be fixed in
: t1e penang Dill. Is pal hlSNAoiiS -
! iectionable to the Republicans be-
; cause thev believe that il is an at
/ tempt to legislate so far in advance
| that an extra session of Congress will
| not be necessary. Unless an extra
session is held they will not begin
| to exercise their control of affairs in
| the Senate and House until gear
| from the coming December. They
are counting upon the holding # an
| extra session in order to give them
| immediate control over Congress.
McAdoo Foresees Delay.
Secretary McAdoo's reason for this
recommendation was that it is of the
! highest Importance that business be
\ advised in advance what taxes II
will be called upon to pay. He said
/ that If this policy was not fixed in
| the pending bill an extra session
would be necessary and that il
might take four or five months &c
| get a measure passed. Mr.. McAdoc
said he felt very strongly that the
bill should provide for a diminutior
of the taxes. so that the amount
raised in 1920 should not exceed
! s.. .O0a, 600 900.
| Senator Smoot and Penrose scoffed
at the suggestion that it would bC
possible to make any provision foI
the 1920 taxes Outside of the COM
mittee room they denounced 1t as an
attempt to postpone the time wher
the Republicans should take contro
of Congress.
| Mr.. McAdoo told the committee that
his present estimate of $500. .O00. .OO
was nothing more than IAN enlight-
ened guess" He said 1t was i'm
possible 20 get from the War De.
partment and other departments any
thing like accurate information as tc
what the expenditures for 1919 might
be. Neither is it determined. he said
how far this country will go in the
matter of continuing the loans and
advances to the allied countries. The
estimate. however. is based on tht
assumption that these loans will be
continued.
If the bill should provide for rails
1 ing $1,000, 900, 900 by taxes, Mr.. McAdoc
said, he thought he would be able
to finance the government for tht
vear. With this sum assured, Ger.
tificates of Indebtedness may be is.
sued to meet expenses as they arise
and these can be redeemed as tht
money from the taxes flows in.
cnarNY nnrlVC yNyTTIv