New-York tribune., 1918-07-15
Levy of 80 Per Cent on
Excess Profits Pro-
posed in Report
$40 a Barrel on Beer;
Zoe. a Pound on Tea
Economy Bonds Planned
for the Investment of
Large Amounts

WASHINGTON, july 1a-deaNy IN
creases in war taxes with an excess
profits tax as high as 80 per cent are
proposed by a special committee ON
financing the war Of the Chamber OF
Commerce of the United States in a re
port Just sent out to the chamber
membership for referendum vote
After repeating earlier declarations
against special profits arising out OF
the war, emphasizing anew the neces-
sity of economy and elimination OF
waste and extravaganza, and quoting
the committees statement OF last year
regarding the advantages of heavy tax
alton in war time, the report presents
eleven specific recommendations, as fol
lows:
That exemptions allowed before
war taxes are imposed should be ade-
quate for the safe conduct of bust
ness enterprises, and that power to
make adjustments that will prevent
inequities should be given to the ad-
ministrative authority under the tax
law.
That liberal provisions for amor
should be made, with opportunity for
subsequent readjustment to correct
errors.
That there should be limited num-
ber of regional boards of review, ap-
pointed by the administrative author
lty and making recommendations
upon appeals from preliminary as
sCsGmentS.
That there should be equalization
Of Federal taxes.
Exemption for Charity
That in computing taxable income
make two deductions (interest and
charitable gifts) which they are now
denied.
On condition that proper exemp-
tions and opportunities for adjust
ment are allowed, that war profits
tax should be imposed at high
rate. and should be levied when it
would exceed the excess profits tax
That upon the present general
basis, but with inequalities removed,
the excess profits tax should be in
creased,
That rates of income taxes should
be increased and unearned incomes
should be taxed at least as much as
earned.
Heavy taxes upon a few articles of
widespread consumption.
Heavy taxes upon a selected list
of luXuries.
Heavy taxes upon selected list of
war extravagances.
Referring to the $4,000 100000 to
be raised during the fiscal year, the
committee suggests that the best pos
sible plan of taxation should be sought
in the hope that it will raise at least
$4,000, 100000.
ut is important" says the commit
tees report, "ln considering present
taxation to remember that the heavier
the taxes which are now imposed the
more rapidly can taxation be decrea sed
after the war, and the more advan-
tageous the position OF our country
VIII be in that period of keen. inter
national commercial competition when
countries then bearing heavy burdens
of taxation will be correspondingly
handicapped. At present, however
favorably the ratio of our taxes to our
expenditures compares with the ratios
OF other countries, In such countries
as England the rates Of tax imposed
are very considerably higher than our
rates"
Where Tax Failed
The committee points out that the
excess profits tax, although fruitful in
revenue and apparently efficient as to
four-ffths of our business concerns,
has failed adequately to reach large
profits directly due to the war of the
other fifth.
"For this reason it is proposed to
enact war profits tax, with exemption
of fair return as earned on capital or
turnover of sufficient spread as q fair
and equitable basis, but with a verv
high percentage of the excess turned
over to the government in taxes. This
would not be additional to the existing
excess profits tax, but in each case one
or the other would apply accordingly
as the result in taxes would be greater.
We suggest the desirability of
maintaining the general basis of the
present excess profits tax, but with in
creased rates, perhaps as high as so
per cent instead of the present 60 per
cent"
The chief SOURCES of new revenue
as outlined by the committee should be
the income tax, tax on the excess of
profits over the present exemption and
drastic tax on all war profits above a
certain return sufficient to permit a
business to be carried on with safety.
Regarding consumption taxes the re-
port says:
For the purpose of enforcing reduc-
tion in unessential consumption and
economy, which is by all students of
war finance deemed of vital Importance.
taxes on certain articles of general
consumption and taxes on variety of
articles of luxury are proposed There
is a threefold purpose in these taxes:
The first obvious purpose is to obtain
hot
result in less waste by inducing more
economical use of commodities thus
taxed and result in a greater margin of
earnings over expenditure. which saw
ings can be invested in Liberty bonds;
the third purpose is TO reduce demand
for articles thus taxed so that materi-
ais. equipment and labor which other
wise would be employed to produce
these commodities will naturally turn
toward more essential employment"
Consumption Taxes
1t is suggested that both consumption
taxes and the tax on luxuries be placed
upon few articles, and that they be
made heavy, rather than that light
taxes be put upon a large number of
Some suggested consumu-
tlon taxes are: Tea, 20 cents a pound.
coffee, 8 cents; tobacco, so cents; beer
$40 a barrel. A moderate tax is pro
posed on the use OF gasolene. Articles
classed as luxuries include jewclry and
instruments.
Proper allowances from earnings for
amortization, especially of plants
created for war work, the committee
considers of great Importance. 1t sug-
fests two methods. In the first place.
1t thinks that At a taxpayer engaged