The Washington herald., 1918-07-30
HEAVY TAXES
ON WAR TRADE
TO BE LEVIED
Alternative Plan Devised by
Ways and Means for
Revenue Bill.

war prOnts are TO De neavlly taxed
In the new revenue bill. In addition
to the excess profits taxes which the
Ways and Means Committee has al
ready decided upon, there will be q
schedule Of heavy imposts upon profits
directly resulting from war trade.
The bill will, in effect. provide an
alternative system, giving to the
Treasury Department the option OF
applying to the profits of business the
particular method of taxation which
will bring the largest return of reve-
nue.. In other words, IL a corporation
would pay bigger taxes under the ex-
cess profits schedule, the rates on net
income for the taxable year will be
applied; IL larger returns can be de-
rived by taxing on the basis OF the
excess Of present profits over those
OF the pre-war Years, that nthod
will be adopted.
The committee has before II evil
dence that a number of the largest
corporations in the country would en-
tirely escape taxation under the pre-
war method In practice in England.
Such incomes will be taxed. however.
under the excess profits schedule.
The intention of the committee to
apply the war profits tax in this man
ner was announced yesterday by Rep
resentatiee Rainey Of Illinois. acting
chairman. The tax will follow the
recommendations made by the Presi-
dent in his revenue speech to Con-
gress.
Three Decisions. t--
Three important decisions were made
by the committee yesterday, touching
upon taxes on transportation, on in
surance and on alcoholic beverages.
They were:
/. To make no change in the trans
portation taxes. The-reason for this Is
that the increase Of freight and pas
senger rates granted by the Director
General practically amounts to the
same thing as a higher tax on the
people.
.. Favorable consideration by a ma
jority OF the committee to a proposal
to raise the rates on life, casualty
and marine insurance. The committee
passed the question temporarily, in
tending to return to 1t later when in
formation requested Of the Treasury
Department Is received.
g. A decision to postpone to the last
the consideration of increasing the
taxes on beverages. The reason for
this action by the committee is that.
confronted by the prospect Of nation
| prohibition. it does not want to in
crease the rates IL they are to be
withdrawn later. Mr.. Rainey said in
this connection:
Liquor Taxes
The committee does not know
whether it is going to increase the
tax on liquors or not, on account of
the temperance sentiment arising
and the possibility of the country
gong bone dry; so we did not con-
slider it at all, but left 1t for the
very last"
The committee today will take up
the question of increasing the to-
bacco taxes.
1t is understood that in the mat
ter of liquor taxes, a majority of the
committee has evolved the idea that
the bill when reported to the House
should contain a proposal to raise
about s1,250. 1000, 900 by doubling the
liquor taxes and as an alternative
proposition a series of taxes on
coffee. tea. sugar and other articles
in general use to raise the same
amount. The House will then be
told that unless the liquor taxes
were agreed to and the prohibition
measure headed OF, the heavy tax
would be laid on every breakfast
table to hit the consumer on the
articles in most common use.
The origination of this scheme is
credited to some of the opponents
of the pending prohibition measure.
They seem to be of the belief that
If the threat of a stiff consumption
tax is held over the heads of Con-
gressman many of them would be
slow to vote to kill off the trafic
in liquor and impose consumption
tax that might prove to be univer-
sally unpopular.