Evening journal., 1918-08-22
PROFIT
TAXPLAN WEIGHED
Rates Likely to Win Are
s. and 50 Per Cent.
Over Exemption
KITCHIN WOULD!
TAKE EVEN MORE

WASHINGTON. Aug. 22.-The Ways
and Means Committee has narrowed
down to two Of the plans for an excess
profits tax, and one Of the. two sugses-
lions Will be written into the new rev
enus law. The two proposals, both OF
which the exemption OF tax free Income
will bo 5000 plus per cent. OF the
invested capital, are
plan 4. on income exceeding the ex-
emptlons and not exceeding 10 per cent
OF invested capital a tax OF 30 per cent
On income exceeding 80 per cent. and
not exceeding 90 per cent. or Invested
capital tax OF 80 per cent.
on income exceeding 20 per cent. o.
Invested capital tax OF 70 per cent.
Plan 2 On income exceeding the ex-
cmptions and not exceeding 20 per cent
OF Invested capital 40 per cent.
On income exceeding 20 per cent. ol
invested capital a tax Of 70 per cent:
While Chairman kitchln prefers th'
second plan tho first plan evidently Il
favored by majority Of the committed
and probably viii be adopted. The twC
plans will be drawn up by Mr.. Ktchl1
today and tomorrow, when there VII
be no meetings OF the committee. The
plan 70 be finally adopted as part OF
the bill will be voted on Saturday.
As result Of the necessity OF draft
ing this portion OF the bill, which has
bean held up by the squsbble betweer
the committed and the Treasury De
parlment, Mr.. kltchln estimated last
night that The bin would not be ready
for the house before the middle OF nexi
week instead OF August 90, as has been
the plan.
Either Of the excess profits plans will
yield from s200.0O0,00O to s3OO,OOO,OOC
more than the present scale of'excess
profits taxes said Mr. Kltchin. In COM
blnation with the war profits tax be
tween s2.750O0O 900 and $1,000 100000 In
revenue will be realized, he estimated
His estimate, he said, allows for q
dlminution In corporate earnings Tor
1918 as compared with 1911
The committee finally Strengthened
out the war profits tax yesterday. The
exemption agreed upon provides that
for all classes OF business the pre-waT
earnings, based on the years 1911 10
1918 inclusive, shall be deducted and
that earnings amounting 10 10 per cent
OF the capital added since then may be
deducted. It Is provided. though, that
the deduction shall not be less than ~
per cent. OF the total invested capital.
In order that large corporations shall
not escape payment under either the
excess profits tax or the war profits
tax a provision was added that all cor
po-atlons having an invested capital OF
as much as 100000 shall be taxed al
least 10 per cent OF their net income
as excess profits
To take care OF the smaller corpora
tions. provisions were added so that or
corporations whose invested capital {,
not in excess Of $4,000 the excess
profits or war profits tax imposed shsl
not amount IN all 10 more than 30 pei
cent. OF the net income. and that or
corporations whose invested capital Il
not IN excess Of $4,000 this tax shal
not amount IN all to more than 40 pei
cent. OF the net income. Mr.. kitchir
explained why this was done.
Nineteen-twentieths OF the corpora
tlons IN this country whose net income
Is over so per cent. Of their capital he
said, "are corporations whose capital
IS $4,000 or under. and OF the corpora
tions whose net income amounts 10 100
per cent. Of their invested capital nearly
all OF them are capitalized at $4,000 or
under.
Their apparently enormous profits
are due TO personal efforts OF the few
people who own the stock"
The provisions that for corporations
whose capital stock amounts TO a mil
lion or over shall pay at least 10 per