The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-10-03
RADICAL CHANGEM
WAR REVENUE BILL
Arbitrary Date Set for Valu-
ing Mineral Oil and Timber
Properties.
Special Despatch TO THz sux,

opeCtdt DeSputCh 10 lHt Dun
WASHINGTON. Oct 2.-The Senate
Finance Committee is engaged in ham,
mering its way through the most tedious
portion OF the war revenue bill. that de-
viduals and corporations In regard to the
income tax applicability.
The work involves the closest applica-
ton OF the legal knowledge OF the conf
mittee members and a stan of experts on
revenue law. To-day's grist was q re-
draft of the paragraph Of the measure
dc aling with allowance for depletion and
amortization in mines, oil and gas wells,
timber reserves and other natural re-
sources.
The committee ratified an amendment
which reads:
'In tho case OF mines oil and gas
wells. other natural deposits and timber
a reasonable allowance tshall be madel
for depreciation and for depreciation of
improvements. according to the peculiar
conditions OF each case. based upon cost
plus costs OF development provided that
in the case Of such properties acquired
Irior TO March /. 1918. the fair market
value OF the property Cor OF tho taxpay
er's interest therein) on that date shall
be taken in lieu OF the cost such reason
able allowance In all of the above cases
to be made under rules and regulations to
DO prescribed by the commissioner, with
the approval OF the Secretary. In the
case OF a nonresident alien individual
deduction under this paragraph shall be
allowed only as to property within the
United States
The radical change In the bill made by
mil Ia ha ~
an arbitrary date for the establishment
Of the market value of mining oil and
timber properties as the basis OF calcu-
lation OF values rather than the cost of
such properties.
Sharp criticism of the revenue bill was
voiced by Representative McFadden. Re
publican (Pennsylvania). who charged
In a public statement that the Demo-
cratic Administration was seeking to
tax property directly under the euise Of
applying the income tax. He said the
bill in this respect was highly detective
section 2oI AssaiIed.
IT refer" said Mr. McFadden, ito
Section 201, which provides that for the
purpose Of ascertaining the gain de-
rived from the sale of real or personal
property the basis shall be the fair mar
ket price or value Of such property in
the case of property acquired before
March l. 1913. the price or value on that
| date tMarch 1. 1870. and in case Of
property acquired on OF after that date,
the cost thereof or inventory value.
This section declares that any gain
in the sale of property over the pur-
| chase price or II the property was bought
before March l, 1913. the value on that
| date shall be considered income for 1918
and subject to the almost confiscatory
taxes to be levied under this bill.
AN example will clearly illustrate my
statement. A farmer buys a farm for
$4,000 on March l. 1913. Five years
later. on March 1, 1918. he sells this
farm for 5000. Mr.. Kitchin says that
price. and $4,000, the purchase price,
which Is $4,000. Is income profit and
shall be added to the income of the
farmer and taxed.
Calls II Levy on Property.
This Is a levy against property ana
not a tax on income. The exchange or
commodity value of the dollar has shrunk
SO per cent In Ave years. In 1913 a
dollar would purchase as much as 50
will buy to-day. This Is the same thing
as saying prices have risen 100 per cent.
since 1913. which OF course we all realize
to be true. Now. when the farmer wishes
to sell the farm~which he bought In 1915
for $4,000 he must receive $1,000 as the
selling price In order to be able to use
this money (if he wishes to spend ~ In
securing the same amount OF commodi-
ties now which he could have bought for
$4,000 in 1913.
THE revenue bill il fatally defective
In not recognising the great increase in
prices Of everything during the last fiye
years. No income tax should be levied
on the proceeds OF sales OF property held
over a period Of years until an increase
over the purchase price Is estimated cor
responding to the decrease year by year
In the value OF the dollar.
''rhe bill as II stands now amounts to
levy on capital in many instances
where an attempt Is made to tax in
come"