The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-09-05

SENATE COMMITTEE u
TO REVISETAX BILL
elimination of Excess Profits
Feature Regarded as AL
y most Certain.
McADOO PLANS FAVORED
Senator Sm0Ot Asserts Kitch-
ms Revenue Measure Is
an Absurdity.
McADOO PLANS FAVORED
specfai Despntch TO TIE sus.


WASHINGTON, Sept illumination OF
Che excess. profits tax and material
change in the corporate income tax are
regarded as almost certain to follow the
Senate Finance Committees considera-
eion of the 200,000,000 revenue bill.
These changes will meet the views OF
Secretary McAdoo. which Chairman
Kitchin Of the Ways and Means Commit
tee saw At to disregard In drawing up
that measure. Objection to the bill In
some of its important features is strong
IN Administration circles. and Mr..
kitchin's recalcitrancy is the subject OF
considerable comment
While Mr.. McAdoo's appeal for
straight war profits tax as being equita-
bic and just did not prevail with Mr..
Kitchin, many members of the Senate
committee regard McAdoo's views as
sound, and believe with him that the
excess profits tax insisted upon by Mr..
Kitchin is bound to cause serious finan-
cial disturbance through the inordinately
heavy burden the new rates would place
upon business.
Secretary McAdoo's Answer.
Mr. Kitchin's sole argument In favor
Of his excess profits tax has been the
fear that certain powerful corporations
which made large profits before the war
would escape paying any tax at ALL. Mr.
McAdoo in answer to this produced the
figures to show that out of twenty-five
corporations OF the character, named by
Mr.. Kitchin only four would fall under
the excess profits tax. as in all the other
Ea In
greater revenue.
Even in the face of this Mr. Kitchin
refused to give up his pet schedule and
Il was then the Treasury Department
abandoned its hope of having Mr.. Kitchin
write a bill embodying the Administra-
ton tax policy. 4s-
Another feature Of the bill in which
the views OF the Senate committee are
likely to coincide with those Of Mr.. Nc
Adoo is the corporation tax. Mr.. Nc
Adoo wrote a letter to Mr. Kitchin on
this subject detailing at geat length the
reasons OF the Administration for oppos-
ing a differential in the tax on distrib-
uted and undistributed income.
The principal reason the Administra-
ton has for Directing to Mr. Kjtchin's
plan is that the higher tax on undistribr
uted earnings will impel business con-
Germs to pay out more than sound busi-
ness policy should sanction and that this
would have the effect OF weakening the
business structure. Sentiment in the
Senate committee seems in favor of a fat
normal tax Of IL per cent. on both dis
eributed and undistributed income.
Opposition Quickly Develops.
The Senate opposition to the Kitchin
revenue bill reported to the House yes
terday developed without any waste of
time to-day. Senator Smoot (Utah),
the Republican oracle of the Senate on
financial matters, was bitter in his de-
nunciation Of the measure in Its present
form.
1T is companion piece to the all
surdity of last year." he declared, "only
that 1t contains more absurdties. The
whole plan adopted in the bill is open TO
criticism. The bill as It went to the
House apparently is designed to reach
as few voters as possible and put a pro-
hibitive tax on the productivity OF Amer
team Industries"
Senator Smoot was one of those who
Endorsed the objections raised by the
Secretary OF the Treasury.
The excess profits tax is bungiing
absurdity," said Senator Smoot. There
should be a purely war profits tax, be-
cause the industries making money out
of the war should be the ones to pay the
bills. The object should not be to crush
business altogether. There will be a
great many changes made in the bill"
Senator Smoot said that In his opIn-
fon the rates on incomes were too high.
but he did not expect much Of a fight
on that feature of the measure. He
called attention, though. to the fact that
while business was being penalized to
The fullest extent possible as the bill
ROW stands consumption taxes had been
left severely alone by Mr.. Kitchin and
his followers.
(, "A consumption tax OF 1 per cent on
all sales. excluding sales of articles
costing less than ST." he said. would
raise at least $1,000, 900. 900. Some es-
Inmates are that $4,000. o00,0 900 would be
raised. but 1t is safe to say that half
that amount would be realized. Instead
OF placing all of the burden possible on
business It would have been better to
levy a consumption tax"